It Costs How Much?

Every year there’s a major high-end audio show in Munich, Germany, held in a large convention-center type facility. By all reports it’s the biggest such event in the world, though it began as a modest hotel show in Frankfurt (also Germany, not Kentucky). I actually attended two of those 80s shows when I was stationed in Germany in the Air Force, an hour’s drive from Frankfurt.

But this isn’t about audio shows, though from what I’ve heard about the Munich event it’s more about viewing than serious auditioning. And since home theater isn’t nearly as significant in Europe as it is in the U.S., Munich is mainly about 2-channel audio. I have no issue with that; I’m a fan myself. But the high-end 2-channel market isn’t doing itself any favors with the current trend toward crazy pricing. While a new, $250,000 pair of monoblock amplifiers from an industry icon may be an outlier, it’s symptomatic.

It isn’t so much that it costs a ton to build such gear (though it does) as the fact that the higher the price, the smaller the market for the product, and the smaller the market the higher the price has to be for a company to stay in business. Thus the tail chase begins. Dealers also demand significant margins, which is one reason why some companies, though largely in the more affordable sphere, are now bypassing the retail market and selling online only.

I know a bit more about what goes into a loudspeaker than what goes into an amp, though in either case the use of premium parts can add up fast. One introduction at the Munich show was a new, small speaker from Wilson Audio. Wilson’s first small, 2-way speaker was the WATT, (Wilson Audio Tiny Tot), launched in the early '80s. Originally intended as a location monitor for Wilson’s live recording work, it was soon sold commercially at $4,400/pair. Though the price was outrageous at the time for a small speaker (it still is for most folks), it was nevertheless the least expensive product Wilson Audio has ever offered. It was commercially successful, and lived on for years coupled with a bass bin, a pairing known as the WATT-Puppy.

Now we have the Tune Tot, a new, 2-way, Wilson Audio design. At 15.6” x 8.6” x 10.2” it’s the smallest speaker the company has built since that original Tiny Tot. (I’d have called it the TuneyTot as an homage of sorts, but I have a bizarre sense of humor.) It can be yours for just under $12,000 (including the recommended Isobase but not the cosmetic options — grilles, optional colors, trim rings, etc.). All the promotional materials I’ve seen for it so far show it on bookshelves, not on conventional stands.

With its 5.5-inch woofer and soft dome tweeter, the Tune Tot has generated a lot of web chatter about its cost, not all of it flattering. It certainly won’t be used in many 7.1 home theater installations! But is it really overpriced? That depends on whether or not you think premium parts are needed in a loudspeaker, an argument I won’t get into here. But I can present a rough idea of what it might have cost to make. I can’t nail down everything precisely, but will make some educated guesses.

I do recognize the drivers, or at least something similar. Like many boutique speaker manufacturers, Wilson claims that the drivers are made to order for them. That might be, but while some manufacturers actually make their drivers in-house, others engage a high quality driver manufacturer such as SEAS, Scan Speak, or SB Acoustics to provide them. These are often either that manufacturer's stock designs or a modification of an existing driver. The latter might be costly, particularly if significant re-engineering is required, though I suspect it’s rarely needed. It might be as simple as a small change to the voice coil winding, or perhaps an extra QC step in precise matching of each sample.

I’m 99% certain that the two drivers in the Tune Tot are from Scan Speak, either stock models or a variation on them. These are expensive drivers. The woofer is similar to a coated 5.5-inch Scan Speak woofer anyone can buy from a supplier such as Madisound for just over $200 each. I can’t pin down the tweeter as precisely, as it’s a relatively easy mod to fit a stock tweeter with a different faceplate, but I’ll be generous and call it a tweeter that costs roughly the same as the woofer. So we’re now up to $800 in drivers for both speakers.

Don’t forget the crossover. A two-way speaker with relatively well-behaved drivers doesn’t need a lot of trap filters to reduce troublesome resonances (and the paper-coned Scan Speaks are known to be well-behaved). But for a high order crossover you’ll likely need at least seven parts, including capacitors, coils, and resistors. If you go for the best, these will also be expensive, so here I’ll estimate $400 for a pair of crossovers. I don’t know what grade of parts Wilson is using, but photographs of the complex crossovers in its larger speakers suggest that some of the best offerings from high-end suppliers are likely in the mix. Google Mundorf, for example, if you want to see how pricey some of the best premium caps and coils can be.

OK, so we’re now at $1,200/pair. Doesn’t sound too bad, but we haven’t built the cabinets yet. Wilson doesn’t use the MDF found in most commercial speakers, or even the pricier Birch ply or bamboo. Those original Tiny Tots had cabinets made of Corian countertop material. Since then, Wilson argues that it has developed its own proprietary product that’s extremely dense, heavy, and likely difficult and time consuming to mill, assemble, and finish to automotive quality. So let’s throw in another $1,200 for a pair of cabinets and miscellaneous parts (terminals, internal wiring, etc.). We’re now up to $2,400.

It’s possible that a manufacturer can get drivers and crossover parts for less than you or I can when buying from a supplier such as Madisound, Meniscus, or Solen. But in the quantities required for small production runs this isn’t likely to be a major factor. No one expects Wilson to build and sell 25,000 pairs of Tune Tots, so we’ll leave such possible quantity-discounts off the table.

So why is the retail price $12,000? We’ve often been told that the multiplier for the selling price of an audio product is typically five times the parts cost, and sometimes more, to allow manufacturers and retailers to stay in business. That might be less for products made in places like China, but Wilson and many other high-end companies do all their manufacturing in their home countries. Five times $2,400 is $12,000. And we haven’t included design time, manufacturing overhead (apart from the labor as part of the estimated cabinet cost), shipping boxes, shipping costs, advertising, review loans, and warrantees in our estimate.

Whether or not the costs incurred here will produce a product that can do significantly better than the best $2,000 or $3,000/pair loudspeakers (many of them made overseas) is a completely separate discussion. The parts chosen, together with the realities of manufacturing and retail sales, means that the Tune Tot has to cost that much. Whether or not the audible result offers sufficient value is up to the buyer, hopefully made with one’s eyes and ears wide open. But that’s a decision most of us will never have the opportunity to make!!

brenro's picture

Coupled with the article on album sales disappearing it's pretty apparent that fewer and fewer people are taking the time to listen to quality music. The high end of audio equipment has always been hideously expensive but even more modestly priced equipment is a tough sale any more. I would wager there are numerous people who have never heard music any other way than through some sort of mobile device and earbuds. Sad.

bsher's picture

Piggy-backing on brenro's comment, if the industry really wants to encourage younger listeners to buy equipment and albums, price has to be the first consideration. Elac gets it, as do a handful of other companies in this space. A $20 Tidal subscription and a couple Bluesound speakers is probably a good entry point for the target demographic. The upgrade path to NAD, Elac, KEF, etc. is easy. But Wilson and their competitiors are made for people who own thousands of vinyl records, and $20,000 phono cartridges. Two completely separate markets.

gfrancis0's picture

I would wager that most of those who buy the uber expensive products of ANY kind mostly do it for their egos. They want people to be jealous of their money and/or like to brag about how much they spent on something that is available at basically the same quality for 10 or 100 times less. It truly makes me sick and disgusted.
I have a good friend that was requested to design and build the absolute best pair of speakers for a very rich potential client. When he presented them, he was blown away and asked the price. When he told him they were $100K for the pair he was disappointed, they were not expensive enough so that he couldn't really brag about them, so he didn't buy them. If he had said $300K he probably would've bought them!
I do realize that there are enough uber rich collectors of the ultra high end art, watches, cars, etc. that some of that stuff actually holds (or even grows in) value due to rarity. There are also a few "cult" AV products that hold their value, McIntosh springs to mind. No matter how much money I have I will never piss away enough to feed a small village on any of those overpriced vanity products. I believe in getting good value for my dollar in everything I buy.
Finally, I've written to S&V in the past about my pet peeve of them wasting valuable space in their magazine on full reviews of the stupid expensive products, sometimes even giving them favorable value ratings!!! They justified the high value rating by saying that is "compared to similarly priced products" lol. Yes, one stupidly overpriced product might be a good value compared to another ridiculously priced product, so what? We are looking to buy the best AV products we can afford PERIOD. I can't believe that they don't realize that the vast majority of their readers have that attitude as well. Most of the 1% don't pour over reviews before putting in any kind of system, they HIRE PEOPLE to make those decisions and install it for them.

SuicideSquid's picture

The author's using retail prices for these components - even though Wilson isn't buying in mass quantities, they're certainly not paying wholesale. Wilson is undoubtedly using fine components in its speaker construction, but I would be stunned if the cost of these speakers was more than about $1,500 a pair.

Wilson's entitled to mark up their products as much as they want. There's a sucker born every minute, a fool and his money are soon parted, and all that. Anyone with sense, though, should recognize that it's unlikely these sound significantly better than a speaker that costs 1/5 as much. There's a huge stupid tax in high-end audio - it's just a shame it goes into the pockets of disingenuous hucksters and unscrupulous business people who feel no shame in charging a 10x or 50x or 100x markup (see: $2,000 cables and $200,000 monoblocks for examples of 100x+ markups), when a person could spend 1/10th as much, still have a ridiculous stereo they can self-stimulate over, and give the rest to charity.

Billy's picture

I agree with yours and these other comments as well. A quarter of a million dollar pair of amps is for showing off. The company isn't selling stereos, it is selling vanity and bragging rights to the super 1% (Probably the same people who under pay their workers saying they need to be "competitive") Is those amps really worth 20 times what a McIntosh amp can do? I have heard Mac amps, might be worth 5K, hard to say, but they do sound stupendous. Would that not be enough for some trust fund baby who says, "I want the best!"? This is all a symptom of the vast income disparities in our world, and history has shown us that never ends well, sooner or later the selfish upper classes suffer. Why can't they ever see that earlier and give back a little? Also to blame are merchents that make money pushing this stuff. Look at a company like Outlaw Audio, they make great sounding stuff that most of us can afford. Not glamorous, but practical and of high quality. Do we own audio/video gear to use or to show off? I think you are wrong, though, assuming that high end audio will disappear because of inflated pricing, just the opposite. It will disappear for regular folks, but the 0.001% will still have it, but will they enjoy it like we did? Buuutttttt, there is a silver lining to this dark dreary cloud, we CAN encourage young people to appreciate quality sound. I myself pick up cheap garage sale amps/receivers from garage sales, and second hand stores, clean them up and give them to young people. When they hear music through a 1970s vintage piece of equipment, the looks on those faces are priceless. Music isn't for status, it should be for enjoying life to its fullest..

jeffhenning's picture

• While the parts may cost as listed at Madisound, given that Wilson will be buying them in bulk directly from the manufacturer, I imagine that that all of the bought-in parts for the Tune Tot are half (or less) of what a retailer will offer to a DIY builder

• I understand that R&D is not cheap, but you can't necessarily brake it down by product in a business like Wilson's. That's especially true of the cabinets when you've already been applying that research to existing products and have been using products from OEM's for years. This lends itself to economies of scale.

• While I agree that cabinet design is important and, when done wrong, can be a significant source of coloration in a finished speaker, I'm somewhat dubious of the efficaciousness of exotic cabinet materials compared to new methods using standard materials. I'm even more skeptical of the need for these materials for a mini-monitor where there is no real low end content.

• Since Wilson's business is selling over-priced speakers that sound no better than competition that is 1/4 to 1/5 the cost, selling a $12k min-monitor fits perfectly into their business model

• Bottom line: you can get custom speakers made for $4,000 that will sound as good or better than these

funambulistic's picture

Man, I wish we could post images here! The one that comes to mind is of Zach Galifianakis playing poker in The Hangover (with all of the equations swirling about...). I look at all of the maths going on and remember that I really do not care - well, I do enough to write this wee note. The market will dictate whether the Tune Tots will sell or not and that is all that really matters. Do I think they are worth the money? Well, it's not up to me. I really do not enjoy Wilson Audio's offerings: I had the good fortune of having a pair of CUB IIs gifted to me (and sold them shortly thereafter). I know now that I would never buy a pair, but that is my personal taste...

Anyway, good for Wilson Audio and good for whomever buys them!

RH's picture

Interesting article Thomas, thank you.

What I'd REALLY love to see is a similar parts break down for the ludicrously priced AC and interconnect/speaker cables by certain you-know-who companies.

I just can not imagine the mark up on $20,000 speaker cables!