Economics of high end gear

[nicoff]

Originally Posted by PHC1

I'm sure most of us don't need a reminder how expensive this hobby can get but perhaps it would be an interesting thread if we focus on it and analyze our habits and approaches to building a system.

I was reflecting back over the 30 years I've been into high end audio and what I would have done differently today if I was to start from scratch... Well, I kind of am again. So here goes.

I actually got the inspiration to post this after reading some Luxman reviews online. Luxman has been around since 1925 and throughout history they have a tendency of bringing out new products and refreshing the line every 8-10 years or so. (Perhaps some changes such as USB inputs became a necessity and triggered a shorter span update)

All too often the road to building a great system is fraught with baby steps and many upgrades along the way. No doubt this is Psychological. We tend to need time to overcome the sticker shock, the inner battle of paying for gear sometimes more than a nice car or even a condo or more.... audio gear is many financial sacrifices for most of us. We work our way towards that dream build, breaking ourselves down and beating down that inner voice that says "NO" "Control yourself!" Finding justification for owning expensive gear and finally succumbing to the desire just like any other purchase of an object of "desire".

While the justification of starting out small and "working your way up" may seem like the financially responsible thing to do, I think it is quite the opposite.

Let's break this down. Typical scenario for most of us is that we know what we covet. We have done our research, we have visited high end audio boutiques, we have heard the ultimate for our ears within a lofty but still not insane all things considered level.

I want amplifier XYZ which costs $15,000. We will assume retail prices and the typical 50% recovery if you are lucky, often it is less.

So, the $15k amp is out of reach for now. Let's work our way up to it.

I will settle for ABC that costs $4k for now. Exactly one year later but let's say 2 years for the sake of argument, I will sell ABC at a loss and recover 50%. Armed with $2k we now buy amplifier DEF for $6k by adding another $4k we have saved up over the 2 years for the next purchase. Now we own amplifier DEF and we have spent $8k total.

Another 2 years down the road we sell the DEF and recover $3k. Armed with the $3k we buy GHI for $10k. Still coveting the XYZ at $15k, we finally convince ourselves that the GHI needs to be sold and the dream amp finally becomes a reality. We sell the GHI, recover the $5k and by throwing another $10k on top which seemed like an insane purchase 6 years before, we finally buy the XYZ...

So the road to XYZ at $15k has cost us $25k and the whole time we were thinking of XYZ instead of being truly happy and content with our dream purchase of the said XYZ.

Now, had we bought the XYZ at $15k, having sold it 10 years down the road as something else is finally truly worthy of an upgrade and recovering 40%, it would have cost us $9k. $9k divided by 10 years or 3650 days is $2.46 a day.

I think it is pretty clear that taking baby steps to your goal is simply the worst economical way to achieve that goal.

So.. what would I do differently or suggest to someone just starting out. Get as much exposure to high end gear as possible, get to know the brands, listen to them, know what you want. Set a lofty but not unachievable goal. Either save up without blowing your money on lesser gear or take out a loan or simply write that insane check but LOVE, RESPECT and ENJOY your gear for a very long time without having to upgrade and YOU WILL SAVE MONEY.


Thoughts? Comments?

The person who saves the money is the guy that is buying the equipment from you. He ends off paying half what you did but only gets to enjoy it after you do.

[djwhog]

I would never judge anyone that spends their money on their likes etc. I hope they take care of the family 1st.

That said most audio gear purchases are like buying a new car, soon as at leaves the lot you take a major hit, but how do you put a price on enjoyment?

You cant take it with you.. As "Jamie Colby says"

Just wish I had more green backs, I for sure would own even more gear, I love this stuff!

[mulveling]

I agree with OP's premise. I have LOTS of time and money wasted over the years with half-measures, side-steps, and searches for giant killers or lower-cost synergistic matches. Getting a sizable chunk of money and addressing the WHOLE system in (roughly) one go, with my "end game" components, is what finally delivered me deep into truly high-end musical bliss territory. Even given the huge expense, it was well worth it to me (nothing else is enough of a priority for spending this cash), and now I get to bask in the result every day instead of playing the perpetual "find the weakest link" and "what if I swap X with Y" frustration games. And there are no longer "good days" vs. "bad days" with my system! I think that phenomenon is a sign that something in the reproduction is subtly "off", and some days your ear/brain system is more forgiving of the flaw than others.

Also, now I have dealer warranties and support on nearly all of this stuff.

That said, all the back-and-forth gear churn over the years did eventually hone into what I really wanted. It was just a really inefficient way to do it. Working with a knowledgeable dealer can help a lot.

[nicoff]

Just to add, most folks who are starting in the hobby do not have the money to buy the latest or best. They have to gradually walk their way towards that perfect system.
I agree with the OP that one can do lots of research and learn about brands etc. Also, a good (knowledgeable) dealer can help immensely. Quite often dealers have excellent used equipment that was traded by a customer.

[62caddy]

Don't like the depreciation hit so I only buy used/vintage in the best condition I can find. With McIntosh, this usually means you don't lose much and very often there is even some potential for future appreciation. Nearly impossible when buying new.

Speakers I will buy new.

[PHC1]

Some really good thoughts and comments so far guys. Appreciate it.

Yes, buying preowned, barring some rare and unfortunate incidences of things that can and do go wrong with preowned gear transactions, is the most economical way. Most of my gear in the first decade of this hobby was purchased preowned and resold often at the same amount some time later if purchased at the typical 50-60% discount from retail prices.

[PHC1]

As a side note, manufacturers constantly bringing new models to the market are eroding the resale value and hurting the brand value long term. Not going to mention the names since they are quite popular and it is not just one or two of the better known brands... At 70% off and still no sale there is very little desire in buying any of their new, expensive models.

[jdandy]

Serge.......There are times when it isn't so much about the money, but more about a desired goal. While I agree that purchasing gear in incremental steps to ultimately arrive at your final goal is an expensive route to go, it does provide satisfaction along the way, as well as a learning curve that builds a knowledge base. Most of us cannot plunk down $120K or more to set up a dream system right out of the chute, so we crab walk our way in the general direction while hoping to arrive at our desired destination sooner than later. In the end, though, I think it is less about money, and more about reaching a long term goal. No doubt about it, personal discretionary dollars have many avenues to be spent, and family commitments can put a big damper on the amount of funds that can be funneled elsewhere, but audio enthusiasts will manage to divert some discretionary income to support their end game. As I see it, the actual amount of money spent isn't the true yardstick. It is the personal satisfaction we gain from assembling a first rate sound system one way or the other.

[crwilli]

Not sure it was mentioned here but along the way of buying ‘not quite what I was striving for’, I learned a lot about the art of acoustics, what I liked and what I didn’t. Buying used really reduced the overall cost of buying and selling.

My current system is a dream for me but it is not what I dreamt of when I jumped back into this hobby six years ago. At that time, I dreamt of vintage Infinity Betas and any McIntosh amplification I could afford. I achieved that and learned along the way the state of the art in speakers had advanced.

At present, I don’t strive for anything else in the sound I have and am pretty set in my equipment purchases - save perhaps for digital pieces as they evolve. That is not to say I think I have the end all system. I know that is not the case but there is a balance against my fixed income stage of life.

I will keep exploring other ways to advance my room with things like isolation devices and other room treatments.

[PHC1]

Originally Posted by jdandy

Serge.......There are times when it isn't so much about the money, but more about a desired goal. While I agree that purchasing gear in incremental steps to ultimately arrive at your final goal is an expensive route to go, it does provide satisfaction along the way, as well as a learning curve that builds a knowledge base. Most of us cannot plunk down $120K or more to set up a dream system right out of the chute, so we crab walk our way in the general direction while hoping to arrive at our desired destination sooner than later. In the end, though, I think it is less about money, and more about reaching a long term goal. No doubt about it, personal discretionary dollars have many avenues to be spent, and family commitments can put a big damper on the amount of funds that can be funneled elsewhere, but audio enthusiasts will manage to divert some discretionary income to support their end game. As I see it, the actual amount of money spent isn't the true yardstick. It is the personal satisfaction we gain from assembling a first rate sound system one way or the other.

All good points Dan. It is not strictly about the money because if it was, we would never be "audiophiles". The bean counter in us would never allow it.

It takes a certain amount of self convincing, support groups such as AA (which is actually the opposite of any support group by definition of a support group's mission of ridding one of those habits or offer emotional support ) love for the gear and music and of course there has to be some physiological explanation why grown men salivate at the sight of an expensive amplifier and secrete enough adrenaline and testosterone to lift a 100lb amp and drag it across the house to fire it up immediately when the box arrives and there is no one to help! It is an addiction for sure.

Agreed on enjoying "the ride", it is fun. We love to play with toys and the more the better. Establishing the frame of reference makes it much easier to justify the next purchase which will increase the level of performance.

The negatives that I do see is that once we reach some plateau which only years before we could have only dreamt of, pausing just enough to get a glimpse of the vistas and take a breath of the rarified air, we keep climbing towards the summit which is always covered in clouds and can be very elusive as to the actual heights... Then that $120k dream system becomes a $200k dream system and then a $300k system and so on.

Spend it if you got it as they say. I am not here to lecture anyone of course, this is just a good, healthy discussion.