John DeVore's primer on HiFi Economics--cost, retail, taxes, duties & tariffs, Plus customer photos!

[@JKadison]

Such a wonderful explanation of economics and how the real world works! This video should be shown EVERYWHERE and taught in every school! Thank you so much for sharing your expertise!

[@charlier7711]

Hi John, I have admired your speakers for years. Finally in a position to own a pair of O/93’s. And I don’t know what voodoo you used to put the magic in these speakers, but they are the most enjoyable speakers I’ve owned or listened to; I love the finish and the veneer work is beautifully executed. Thanks for explaining the business of making and selling speakers. No one thinks about the cost of packaging, buying a bunch of speakers and components to your spec and the time and labor to create that finish on the cabinets. And a big thanks to Erik at BEK Hi Fi. What a great guy, if you’re close to the Allentown area - pay him a visit you won’t be disappointed.

[@DeVOREFIDELITY]

Erik and BEK is awesome!

[@auggysimcity]

@@DeVOREFIDELITY as a poor audiophile I drove up from nyc, the record store attached to BEK, and the restaurant across the street with philly cheese steaks was a lot of fun.. great way to spend a day !

[@bobmorse5896]

Great analysis. I especially enjoyed the discussion of the tariffs that remain years after the original intent is no longer relevant. Thank you.

[@bobk3840]

Materials are variable cost. Fixed cost are things you continue to pay if you were not producing anything. Rent, insurance, heat, are examples. Variable costs include materials. As production increases, more materials are needed, thus material costs increase. Labor is also a variable cost. The more production increases, the more labor is needed

[@dksculpture]

Exactly. 👍

[@dandiljak8583]

Having priced high-end speakers with the hope/dream someday of being able to buy a set, I haven't found yours to be overly high-priced. And yours are an artisan product vs. something mass-produced. So, no complaints here. Informative video, as always. Give me 5-10 years and I'll hopefully be a customer. Worth the wait.

[@NawMan357]

I really appreciate your transparency and honesty. As an O/93 owner… keep up the great work 👍🏾 **Shout out to Gold Print Audio in NC!**

[@TheReal_DeanD]

Great explanations as usual. That O-Ref 93 setup is quite interesting. I don't think I've ever seen a corner set up like that for a sound system ever.

[@FOH3663]

I've experimented with such an approach, it can elicit outstanding soundstaging and ASW, despite overall lack of treatment. However, it places a premium on precise listening postion front-to-back, as the resonances can be high Q, and high magnitude. In my experience, a super chunk or equivalently effective bass trap helps tremendously.

[@Mark-j5h2b]

Devore speakers are boutique speakers. There is a premium for boutique speakers, as there are no economies of scale given low volume of sales. Would love to see the premium wood veneers used in your other models offered as an option. I’m willing to bet most consumers would gladly spend the extra premium.

[@philipgrills3961]

Hi John, great description, many many people do not believe how long it really takes to break in speakers, I had a pair of Wilson Sabrinas a few years back and Wilson states 300 hours which I tink are not enough. your statement with 500 is pretty bang on, this is probably between 6 months and a year. would love to see your thoughts on the Sudgen monos, or did I miss that. Thanks very much.

[@MitchAhlbaum]

Very informative! Thank you.

[@danielkromer2295]

I was manager of estimating for a fortune 500 company that made centrifugal pumps. Our rule of thumb was to add 50% to our direct cost to cover our machinist's salary, cost of their benefits (also a company pension), utility costs and all applicable taxes. We were located in northeast PA and I'm sure our costs were 20-30% less than your costs in Brooklyn. Given your scenario if you added 70% to your fixed cost of $1500, your profit margin is not out of line with what you need to continue in business.

[@2ridiculous41]

My ball park is to double at each step, so $1500 costs, double to $3000 to sell to a dealer who doubles to $6000 and (without looking at sales taxes) you have a reasonable approximation for a business about which i know nothing.

[@TheNaka9]

Another great video! Very good and simple explanation. Thanks :)

[@gerihifi]

Dear John I greatly appreciate to bring up this topic as an exklusive hifi manufacture. I'm also somone sometimes very skeptical with boutique vendors, because the price ranges are not compareable (components quality / price versus Sound impact with right match) and that makes our hifi enthusiast hobby very difficult and very, very controverse! I like DeVore speakers and their signature, for a more or less okay-price, concerning the hifi market craziness these days! Of course DIY community always brings up this price-topic, but dont tell the whole truth!!! I know the german diy-community pretty well and there are amazing engineers and for example my snell-based speakers, incl. active sub, where €12.000 in total (DIY highly professional build, yes with best components, but still components are expensive and good wood work!!) - so i FULLY understand your statements! Yes, I'm also a former company owner and know how expensive labour costs and especially taxes are! THANKS A LOT AND WISH SOME OTHERS WOULD EXPLAIN THERE PRICES, because going beyond €60k for (normal sized) speakers it gets for me too exostic with specs & materials 😊

[@bryantaylor2946]

My only comment about the effects of duties is that duties do not always increase prices by 25% if there is a 25% duty added at time of importation. Let's take a pair of running shoes - maybe the $100 running shoe costs $8.00 out of the factory. Then a 25% tariff adds only $2.00 to the landed cost and the running shoe still sells for $100. The tariff makes no difference in this case but there are lots of cases where a 25% duty might cause a significant rise in the price of the item. Just last month the Canadian government slapped a 100% tariff on electric cars in order to protect the US corporations like Ford and GM and also the Auto Workers from Chinese competition. I personally feel that a smaller tariff for a limited time period is a better choice of penalty. This very high 100% tariff just causes prices to rise hugely for consumers and slows down innovation from GM and Ford who now are under much less pressure to compete. Otherwise a very sensible talk by John.

[@nickroden]

Two comments about this video: 1) you managed to make tariff economics sound interesting, well done, and 2) that picture of Mao is perhaps one of the more bizarre pieces of artwork(?) I’ve seen in someone’s home. 😂

[@SonicPVC]

I always wondered why we never had the HiLux available. Now I know. Gracias. 🙏

[@nohandle54]

I for one found your closest dealer to me to be incredibly disappointing (doesnt keep in O/93s, not even sure they have a real showroom, not close to me at all, and was bad at communication). It made me wish you sold direct. So if I really want them I would need to add travel costs and shipping on top of the wait for build time

[@DeVOREFIDELITY]

Sorry about that--send me an email at [e-mail] I'd like to know more.

[@chrisfrank9288]

You actually went pretty easy on tariff economics, particularly in terms of how they prolonged the Great Depression and contributed to the political extremism culminating in the outbreak of World War II. If only we could learn from history.

[@neal-stewart834]

the depresion funded the war

[@jonathanthomas4722]

Tariffs are weird tools. Nice video. Never understood people with pictures of Mao. My wife would probably see herself out in record time.

[@nickroden]

I’m still thinking about that picture. May as well throw Pol Pot up there too.

[@gdwlaw5549]

I work in the high end independent optical eyewear business. The factory price is between 150 and 220 euros. Optcians have a margin between 2.5 and 3.0. We emlpoy 12 people just for polishing and adjusting the frames! The full axis CNC machines costs around 100.000 euros and you need two every time. I guess production costs vary but your business model is correct. Having reliable and the best resellers is the most important part of our business!

[@beflabbergasted325]

Who sells them in Portugal? I always thought they were beautiful and I always wanted to listen to them but even after years of audio shows even one in Germany I went to when I designed a line of speakers for a German audio company. Only saw MBL Extreme in Germany and Voxativ and several other more "exotic" speakers but I always wanted to see yours live and listen to them. And now I am listening to the manufacturer. Life is strange. By the way, there was a large loudspeaker factory here many years ago, there were more than one. But this one I knew personally. And if I am not mistaken, the price was 4 times the price of the materials used. Roughly. Your speakers are not overly expensive. They are the price they have to be. Those who criticize you probably never built a speaker in their lives. They don`t get everything that is involved in the process. Don`t worry. Be happy. You have a great product. They look "warm". That is the best way I can describe them. They bring some warmness to the room even before starting to play music. I love them. They look like they are made with love. If you get my meaning? Works of art.

[@bigdh31]

I live in a metro area that has a little over a million people. I would still need to drive 3.5 hours to find a dealer that sells your product.

[@commane21]

So move.

[@DeVOREFIDELITY]

Sorry about that. Yes, we are still a very small company with a dealer network in the US of only about 25. Email us with any suggestions you have of a local dealer.

[@tshingtenglim965]

Good sharing. 1 point to add is hifi speakers are not high volume products (like sound bars? ) so there is no economy of scale to bring price down.

[@hamidrezahabibi8111]

Hi John. As an audiophile and high end audio businessman with more than 4 decades of experience from Tehran Iran; I have to say that this import taxes (it was %15 and five years ago became %65!!!) killed my family business and it’s 5 years now that importing audio is banned because it’s considered LUXURY 😂. Can you believe that? So; next time I contact you please 🙏🏼 answer my email 😂. Add the following to this murdered audio business the followings: No record stores No Record Store Day No audio video magazines No advertising No audio shows No movie theaters showing movies 🍿 of the day No discos No live performances of bands of the day It’s a desert 🌵 in terms of audio business. But it seems Uncl€ $am is ripping everybody off by taxes but still people can become rich in America 🤑 if they want to. Last but not least; I truly admire your dedication to music 🎶 and your magnificent loudspeakers 📢 I simply hope one day I can exclusively import them to Iran and bring the Iranian audiophile community the experience of listening to your musical babies 👶 😂 Cheers 🍻 Yours truly. Hamid.

[@dksculpture]

Your prices are fair and reasonable. A lot of the critical people are absolutely clueless. I’m guessing that very few of them have ever owned a business.

[@dksculpture]

I think REL does both dealer and direct successfully, but they’re a rare example.

[@lapetitemortbis]

Look, your speakers are amazing, and design wise they are 90% there, but- and this is especially visible in the Oref system, the legs have to change. Sorry , I have to say this but I think this is a relevant point since the design solution you offered Jay-Z was amazing. So, I think he thought so too and that’s why you’ve offered him a different solution.

[@middleearthltd]

I have to DIY my speakers to get to the sound I want as I don’t have the $$$ to purchase $5k speakers I have no problem with what is being charged for anything I buy what I like and can afford I do tend to gravitate to direct sellers when I buy components I have a strong preference for direct sellers My tube amplifiers all come from niche builders and built to my preferences By the way, your O/BABY SPEAKERS are exactly what I am looking for or in my case building for I had not seen them before I would 100% buy those or the Sibelius speakers Some day I expect I will in fact do so

[@scrambaba]

I’m with you, man. Unfortunately a simplistic lie spreads a lot faster than the complicated truth.

[@jlutell]

fun!

[@Harrisongrey19]

Sell flat packs, I’ll do the work.

[@michaelsrensen8027]

Just burn in the speakers before you send them to customers! For the price, I would have you give me an working pair that is optimal in performance.

[@commane21]

Do you know any speaker company that does that?

[@craigenputtock]

Yes, things are "expensive" for everyone; and getting more expensive by the month. No question you're being fair about pricing, but things are the way they are for a reason.

[@2ridiculous41]

Oh dear, John... if VAT is at 19%, then from a $100 (or euro) base price, you get $119. Taking off 19% of that does not return you to 100 because you will be taking 19% of the added 19%. Such percentages can be the difference between Instead of looking for 81/100 of the total price(119) when you subtract VAT, you need to get 100/119 of it.. Such small errors can be the difference, or as dickens put it in the mouth of Mr Micawber: "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery" I used to be small scale manufacturer (not audio) and pricing is an absolute nightmare, and people will ALL reckon they are paying too much! Margins are never understood, not through ill intent, but simply... well I could say ignorance but it might sound more polite to say not understanding.

[@flippoo7875]

That‘s correct. Here in Germany the obabys sell for 6750€. Devided through 1,19 the netprice is 5672€ and not 5467€

[@2ridiculous41]

@@flippoo7875 thanks for doing the numbers for me! These small percentages of percentages can be the difference between success and failure.

[@2ridiculous41]

@Thunderbird139 I am sure John does, but when the video is about details such as taxes, information is either correct or it isn't. And it is always better to correct than leave the mistake when it makes up part of the perceived price differences..

[@overijsemuenster9665]

Dear Sir, I believe everything you say but let's not forget that other manufactures do have the same cost, taxes and duties. So why are they cheaper while not worse in quality? Because they can sell more items maybe? Thus, their gains per speaker might be smaller but they get the money through the number of items sold. So it all comes down to: do I want to support a small manufacturer instead of a big firm possibly owned by an investment funds or so. Some people say yes. However, it is understandable if other people say "I work hard for my money and I want the best quality for the lowest price possible". Let's be honest, the workmanship of a DEvore product is not really complex compared to some competitors. That does not say anything about the sound of course. In the end it is a matter of personal preferences, marketing and as always in hifi: believe.

[@UberPilot]

Yeah we went from tariffs to income tax. I’m sure everyone would rather pay income tax. MURICA

[@petemaloy51]

Let’s not play games with the math John,O baby’s in Ny Ny cost $6180 in Germany they cost $6750 not pretty much the same it is actually 8.9’%. More

[@christopherspiro9857]

I want to know why you have to explain yourself. Does Ferrari explain why their cars cost so much. Absolutely not! Actually you have to buy x amount of cars in order to buy some of their models. This gentleman is giving you a great deal to bring his art into your home. Long live Brooklyn! No sleep till Brooklyn! Ha!

[@pizzaearthpancakesandother2549]

Jon if I go to your factory in Brooklin with my Jeep, can I get some Yo babies for 1600 bucks cash? No box or manual needed. No receipt needed. I won't resell.

[@gdwlaw5549]

You're a very sad twat...I can give you mine for the Jeep

[@artyfhartie2269]

All American made goods will be very affordable soon. Except stuff made in China. Gas and groceries, pffffff. So cheap that it will be almost free

[@2ridiculous41]

Unless of course anything is imported, because a tariff is paid by the importer and thus the customer in the USA. So if anything (product, component, material) comes form outside the US, Trump's tariffs will be increasing the prices.

[@artyfhartie2269]

@2ridiculous41 Everything will become so cheap now. And plenty of space for everybody since he is going to deport 20 million people and is even thinking of abolishing birthrights of American born citizens. No traffic jams and no housing shortages, no crowded cities. Utopia, Heaven on Earth. All on day one.

[@Harrisongrey19]

⁠@@2ridiculous41the goal is to make those said products in the US which reduces prices, bc the tariffs will force companies to. Ie Toyota is a Japanese car maker well if they had plants in the US prices would be cheaper which they do.

[@2ridiculous41]

@@Harrisongrey19 possibly, but companies like Toyota have no found those economics to work out. The increases caused by tariffs on raw materials will still have to be paid, and there will still be the questions of the size of investment and quality off manufacturing in the USA and can it compete wit other places. Then there will be the completely separate question of whether or not America, lagging behind the fuel transition would need actual different cars. It all adds up to a major issue to bring manufacturing home when previously companies found it was not profitable. Obviously there is no one size fits all, but I fear American consumers will find they are paying for the political sloganeering.

[@alexhanna3921]

Separated at birth…Peter Ziehan and John DeVore. Even down to the irritating habit of closing eyes while talking about something conspiratorially. Post nasal drip swallowing, rubbing his nose while speaking. Uncanny……AI?

[@apmihai82]

Sorry but what a load of BS- speaker burn in and system matching.... just say you don't wanna provide customer support, don't wanna deal with product returns, and pass whatever responsibility towards the customer to the retailing network. It is WAAAAY EASIER, for you as a producer to sell to dealers/distributors, and the dealers/distributors can deal with maintaining the "high end" allure of your product. Because it must be "better" if it is more expensive. Don't get me wrong- i would do the same as a small manufacturer but don't sell us this BS. IF you REALLY wanted to pass the saving directly to a customer then just organize your business to deal with customer support and then increase your initial margin and end customer gets a cheaper product. Just like Buchardt do. SIMPLES!