A question that's often asked by people thinking about a HiFi or a home cinema product for the first time: why do they cost so much for a bunch of components and a power supply in a case?
I thought I would take a little look at this for everyone and see if I could shed some light on the subject.
Let's take a product at a moderate price point like the Arcam SA30. At a little under £2,300, it's a relatively expensive piece of kit that does an awful lot and sounds great.
So let's have a look under the lid of one of these amps and see where our hard-earned cash ends up.
So, starting off with the biggest element of the unit: the toroidal power supply. In the case of the SA30, this has to be particularly large as it runs both the Class A module and the Class AB module to make Arcam's signature Class G amplification. As a single element, let's imagine this might cost between £150 and £200.
There is lots of metal work inside any one of this kind of amp: the chassis, the lid and of course the noticeable heat syncs. Metal build costs have gone through the roof in the last few years, so let's assume that's another chunk of our budget used up.
Capacitors, resistors and printed circuit boards are generally quite cheap elements, except when you use audio grade components which are much more expensive; the 4 large caps you see in the picture above are perhaps £20 each. Circuit board design is also very important in a HiFi product. They are designed to pay very close attention to the shortest signal path and least interference from noisy components to interfere with the pre amp stage, so the R&D costs of these are very high, along with the actual costs to produce them in high reliable and performance quantities.
Putting an HDMI board inside the SA30 for ARC needs is again not a cheap thing to do as these boards alone tend to cost more than a few hundred pounds.
The ESS Saber Dac chip inside again looks like as an individual element it could be about £50.
The terminals on the back of the amp for the speaker connections are again not a cheap part, perhaps another £50.
The Network card for streaming and Google compliance is not the easiest thing to integrate well and I'm not sure how to hazard a guess for the cost of this.
Now let's have a think about license fees. I tried to do a bit of research on this and Google did not seem to be very forthcoming, but to put an Apple Airplay logo on a product, Apple must get something back per product; to put a Google Chromecast compliance label again on a product must have an additional element of cost to it. It's a Spotify connect capable amp so there is another element to the cost.
By the time you have put in the LCD front panel and volume controls you can start to see where just some elements of the cost come from.
Factoring in the R&D, prototyping of the product, listening tests, build time man hours, HDMI board programming software and multi-platform app integration, it does not take much to see where a large proportion of the cost comes from besides the physical elements inside an amp such as this.
Given that many of the manufacturers we deal with still make much of their product in the UK, a great deal of which is made by hand, the cost element of this is substantial as well. It's part of the reason that even though Arcam design and test everything in the UK, they have little choice but to make it outside of the UK just to keep the costs and capabilities affordable to the end consumer.
The final element is of course margin. There is a factory and team that make the units for Arcam, Arcam then sell them to the dealer, who in turn sells to the public: each of these elements allows the other to function. However, as you can see from our large list of costs and parts, you are really not paying just margin through the system, you are getting a high quality piece of electronics designed from the ground up.
My personal opinion about costs in the HiFi industry is that, generally, you get what you pay for in terms of performance and specification. Everyone has a budget and you can pretty much always get something that suits that budget and will perform to a level that gives you enjoyment of your music or movies.
HiFi manufacturers spend hours listening to and testing their products to try and get the best performance for your money that they can achieve, and even with ever-rising prices and huge spikes in carriage costs, you still don't often feel that you are not getting value for money with a great piece of HiFi. In addition to this, the amount of years of pleasure you are likely to get from it will generally make the initial outlay break into a very small amount per day over the life of a single product.
Here is a quick bit of maths to make you feel better. Take the cost of the Arcam SA30 we have been talking about in this article.
The SA30's price of £2,299 divided by the average 10 year life span, so 3650 days of use (not including leap years, and you're likely to get much more than this out of many amps anyway!).
This would mean that the Arcam SA30 costs you 63p a day to use. Given the days that we currently live in, there are not many things in this world that would give you hours of enjoyment and mental wellbeing that cost as little as that.
If this is something you would like to discuss more with me then please don't hesitate to email us at firstname.lastname@example.org, give us a call on 01507499047 or pop in to see us at our Lincolnshire showroom and have a chat.
All the best for the season and try to stay warm
John | General Manager