How
does an upgraded product compare to something bought retail?
Quality
parts result in very high prices. Here's something to consider:
when one manufactures high-end stereo gear, every dollar spent on parts
adds $5.50 to $6.00 to the retail price. This is the industry standard
"multiplier." Charge less and you go out of business, charge
more and you are not competitive. There are a lot of reasons why the
retail price is so high.
First,
there are a lot of overhead costs associated with being a manufacturer.
Industrial space, utilities, advertising, cost of doing high-end audio
and consumer electronics shows, travel both domestic and overseas travel
to promote products, health insurance and other employee benefits all
add to the amount that you must charge the retailer for the product.
Read what Kevin Hayes of VAC had to say on the subject of the high costs
associated with being a high-end manufacturer here.
Second,
the retailer is obviously another big reason why the retail price is
so high. I have no complaints about the good high-end audio retailers.
They do a good job and help folks pick out the best gear for their systems.
But they can't work for free, they have their own overhead, so they
mark up the cost by about 45% to 55% over what they pay for the gear.
Additionally,
they aren't willing to pay for the stuff when they buy it, expecting
the manufacturer to carry them for 30 to 90 days. This costs the manufacturer,
adding to his overhead.
Now
there's certainly nothing wrong with buying retail, and if you're the
sort that wants that new-product fresh out of the box smell, then buying
retail is the best way to go. However, if you're trying to get the maximum
sound for the minimum amount of money, you need to consider that less
than 10% of your retail dollar actually goes toward the electronic parts
inside the pretty new chassis, and the rest goes toward the pretty new
chassis and other places that don't have anything to do with how the
component sounds.
Do
the math. Let's say you pop over to your local high-end audio dealer's
salon and after careful consideration, drop $4,000 on a new preamp.
As someone who is familiar with the pricing structure of high-end audio
equipment (as you will be after you finish reading this exercise) you
start to do the math while you're driving home. First, half of your
$4,000 went to the dealer. The manufacturer gets the other half, or
$2,000.
In
reality, very little of the money given to the retailer is
spent on the the parts that actually handle the signal. The
most costly items are the retailer and manufacturer's overhead
including advertising and high-end audio shows. By
contrast, over 50% of the money spent on upgrades with Alta
Vista Audio goes to high-quality parts.
Of that,
roughly 2/3rds goes to costs not associated with the actual product's
materials (the rule of thumb is to wholesale the product for three times
the parts cost). That means that your $4,000 preamp has $660 worth of
parts in it. Of those parts, more than half the money is spent on non-electronic
parts, like the pretty new chassis, the product's shipping carton, the
owner's manual, the knobs, the feet, the front panel, transformers, good-quality
connectors, an AC cord and the circuit board. What's left is less than
$340 for the parts that actually handle the signal -- the parts that make
the music. Now, open the top cover and count all the parts. How many $100
capacitors and $7.00 resistors do you think are in there?
Now, if
you're the sort of person that just loves having shiny new gear, and is
concerned about resale value over good value for money, then this sort
of math isn't important -- you're valuing things differently and that's
perfectly fine. But if you're trying to get as much music for as little
money as possible, getting an existing product upgraded makes a lot of
sense.
Alta
Vista Audio has entirely different economics than a manufacturer.
I am not paying for a whole lot of overhead, so I don't need to charge
as much for work as a manufacturer does. You're not buying the upgrade
through a retailer, so you're not paying retail. In fact, you pay less
than wholesale. Further, when Alta Vista upgrades a unit, you do not have
to pay for the product's shipping carton, the owner's manual, the chassis,
knobs, four rubber feet, front panel, transformer, good-quality connectors,
an AC cord and circuit board -- you already own them. Parts represent
over 50% of the cost of doing business for Alta Vista Audio. More of your
money goes to where you want it spent, so you get a whole lot more for
a whole lot less.
Let
me put it one more way:
you can spend as much on, say, interconnects,
and not hear 1/5th the improvement.
Putting it differently, with $2000 of upgrades most of the money goes
to the sound. You'd need to buy a $10,000 preamp on the retail level
to get the same level of internal componentry. And with regards to the
circuitry -- guess what? There are no new magic circuits! Power supplies are tinkered with, but as far as the audio signal path, the circuits that were invented 50 years ago are the same ones being used today. So it's not secret new circuitry that you might miss out on if you buy something new; your product is not obsolete
because of its age. The newer, more expensive products are prettier, perhaps,
and may have different features than an upgraded Counterpoint, but they
don't sound better. In fact, after a full set of upgrades, you could confidently
put your unit up against new components that cost MUCH more and, according
to some, will discover that your unit sounds better. A pleasant surprise.
And Alta Vista Audio L.L.C. warrants the materials used and workmanship
provided for upgrades to be free of defects for a period of three years
(for most upgrades and five years for selected upgrades) from the date
of sale.
