Audiophile pricing

CGabriel

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Oct 31, 2013
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This is a question from "caesar" that was posted in a different thread. I have moved it because it is off topic from the other thread. I believe that "caesar" wants to talk about pricing practices - ours specifically. Let's see if we can have an adult conversation without a decent into chaos, with the end result being the shutdown of thread. I have high hopes.


Seems like a great product, but why does a sigma cord cost more than the 2000t model/ almost as much as the 6000 rectangular model?

Is this a matter of audiophile luxury pricing (nothing wrong with that , if this is the case) or is there an underlying economic logic behind this?

Hello Caesar. I am not sure if your comment is a passing quip of if you are serious. However, we are more than happy to talk about pricing if you like - our's and the audio industry's if you like. Just for reference all prices quoted will be US$.

I am also not sure if you think the Sigma is over priced or the Denali Series is under priced? When we price our products we do so based the BOM (bill of materials) +R&D recovery, +labor, +packaging, times a standard markup formula that brings us to a US Retail price. We do not price products based on its relative performance compared to competitive products. We do design some products to a specific price range or category. We always use the best materials possible within the constraints of a given price range. The result is that most of our products significantly out perform our competitors products within the same given price range. I am sure Grant would be more than happy to talk about the industry's (specifically cable companies) pricing practices in a subsequent post.

RE: Sigma Power Cord
The Sigma is our reference top of the line power cable. I was NOT built to any price constraint and is therefore our current best attempt at a state-of-the-art power cable. There are three models that range from $2500 to $3500. The Sigma competes with other power cables that cost over ~$7.5K with some priced between $10-20K. If we participated in the "luxury" pricing game - or to say it another way, "charge what the market will bear" then the Sigma should be priced at about $10K and it still wouldn't be the most expensive on the market. We have some distributors (you can guess where) that ask us to put higher retail prices on our reference products. They say this is because certain VIP customers will not consider our product because it is not expensive enough to be considered. In other words some people buy based on cosmetics and retail price. You can understand this to a certain degree. Why would a person shopping for a Mercedes price shop a Honda priced car even if the Honda was actually superior. They will compare to similarly priced cars like a BMW, Jaguar, Audi etc. Unfortunately, some cable products are not priced like cars and are not based on a BOM and standard markup. So the buyer needs to do some research and some listening - sometimes outside of a narrow price range. There are some gems and relative bargains to be had if you do some research.


RE: Denali Power Conditioners
Unlike the Sigma, the Denali Series is not our top reference product and it WAS designed to a specific price range target. Our goal was to create a power conditioner that uses some of our technology from the Triton, some from the Typhon and some from our sister company that is producing medical power conditioners. Further, we wanted to make a product that competes or exceeds the the performance of the best power conditioners on the market but make it affordable to the 99%er audiophile. This product was not built for the VIP's but for a working guy that loves music and audio. We have learned a lot about manufacturing efficiency in the last 15 years. And we are leveraging our medical division's volume production. Many of components used in the Denali series are shared by our medical products. So our audiophile products benefit from the medical product's volume.

Why did you (Caesar) link the price of the Sigma with the price of the two outlet Denali? There is a very comprehensive review about the Denali Series that has just been published in AudioStream by Steve Plaskin. Perhaps you read that? If so, Steve used a Sigma cable and an Alpha cable in the review. We recommended that the most appropriate cable to use with the Denali, given its price, would be a VENOM-HC at $295 or an ALPHA-HC at $1250. I told Steve that in my opinion that there would not be a significant enough difference between the ALPHA and SIGMA when used with the Denali. That is because the Denali has such a high level of noise reduction and DTCD performance that it tends to marginalize the power cords effects from the wall outlet to the unit. It does not however minimize in any performance impact of the cables going from the Denali to the components. You will notice that Steve confirmed that the ALPHA was near the performance of the SIGMA however he did say that if you are using very high power amplifiers that the difference between the two levels of cables was more apparent.

If you want to compare apples to apples: Let's compare our reference stack which consists of the HYDRA TRITON, TYPHON and DPC-6. This is our 3 component reference power conditioner which Steve also has and used for comparison with the Denali series products. The cost of that stack is about ~$18 - a pretty penny to be sure and not exactly for those on an audio budget. I would definitely recommend the Sigma power cords when using our reference stack.
 
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bonzo75

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Caelin, "You will notice that Steve confirmed that the ALPHA was near the performance of the SIGMA however he did say that if you are using very high power amplifiers that the difference between the two levels of cables was more apparent." - why is this, is that because of the higher current requirement from the amps?
 

microstrip

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Caelin, "You will notice that Steve confirmed that the ALPHA was near the performance of the SIGMA however he did say that if you are using very high power amplifiers that the difference between the two levels of cables was more apparent." - why is this, is that because of the higher current requirement from the amps?

As far as I have read one of the problems of high power amplifiers is that they need high current rectification diodes in the power supply and these diodes are much noisier that the improved diodes used in low power amplifiers, source or preamplifiers. We should not forget that power cables should absorb the noise generated by power supplies that would otherwise contaminate other equipment.
 

GrantS

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Oct 23, 2013
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Further to Caelin's reply, I would add that the labor involved in building Sigma is significant, i.e.: multiple hermetic seals, zi-tron circuit, filtering and applying the CopperConn connectors by hand. No untrained person could ever take them apart and put them back together. Anyone that asks for re-termiation of the power cords is in for a shock because of "our cost" in labor to re-build them.

The Sigma power cords are built as if they are a power conditioner for those more interested in, say, running amps direct. Labor is the #1 cost in manufacturing and the Sigmas are more than fairly priced in terms of what they cost us to produce. Look around at where cable pricing has gone? $20,000 power cords, $60,000 speaker cables, $18,000 interconnects? Now look at our range. Caelin could produce cables and power cords at those prices. It's basically the flick of a pen.

Some companies price their products high so they can have one international price, 1 MSRP, world wide. This helps prevent grey market and trans-shipping from a US dealer, or let's say an Asia dealer, to other countries. Some price them at exorbitant levels so this can pay for trade-in or trade-up programs, or so they can fly top dealers and distributors around the world to shows as a reward, or for new product releases, or for give-aways to press. I've seen all of this first hand. Some use the margin to incentivize large orders at deep discounts and these programs are especially popular in the US and overseas. There are dealer giveaways for showroom display that I cannot compete with. There is a down side to doing all that of course because the dealer will over-buy, sell what he can at deep discounts and the rest goes out the back door at even deeper discounts. Our products are not discounted at those rates, so they hold their value on the first and second markets. We don't offer big-buy incentives, free flights, trade-in programs or any of the above. We do have lower retail prices.

Our products are priced differently in each country based on shipping, taxes, differences in product design and parts cost--so there is a grey market risk for us with signal cable. We don't list US dealers on our web for this reason, but all of our dealers have been great about calling us regarding calls from over the border. We don't have trade in or trade up programs generally, but we do what we can. We run a different company based on reasoned retail prices, explainable science and hard to beat performance and value.

I hope this is of some help in explaining our pricing practices.

Regards,

Grant
 
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caesar

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Gentlemen, I appreciate the replies. I have a deep background in applied economics, and good economics tells us that things should be priced on value rather than cost. Obviously, costs need to be properly derived (not the $50 aspirin pill charge we see on a hospital bill!) and covered... Prices derived from a cost multiplier that we frequently see in high end audio is very amateurish and bad economics...

And if people find value - actual and/ or psychological - from a $20K power cord, more power to them. As long as they obtained their money in a legal way, why should anyone care? ...

So my question stemmed from a simple thought: does one get more value from a sigma power cord or a denali conditioner, which in some instances may be better option than the more expensive triton.
 

microstrip

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(...) I have a deep background in applied economics, and good economics tells us that things should be priced on value rather than cost. (...)

You have stopped exactly at the critical point - how do we establish value in high-end, that is essentially a subjective hobby having a relatively small market with very different products?
 
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CGabriel

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As far as I have read one of the problems of high power amplifiers is that they need high current rectification diodes in the power supply and these diodes are much noisier that the improved diodes used in low power amplifiers, source or preamplifiers. We should not forget that power cables should absorb the noise generated by power supplies that would otherwise contaminate other equipment.

We had written a white paper about this a few years ago and Michael Fremer did an article about DTCD (dynamic transient current delivery) also. It is not so much that the rectifiers are more noisy it is specifically that high power amplifiers have large capacity diodes and when in conduction mode they pull current deeper into the AC waveform. This creates higher order power line harmonics which are then kicked back onto all the other components connected to the same power line. Both the Alpha and Sigma cables have filters built into the cables to help reduce rectifier noise.
 
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bonzo75

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You have stooped exactly at the critical point - how do we establish value in high-end, that is essentially a subjective hobby having a relatively small market with very different products?


Perceived value - as perceived by the buyer
 

FrantzM

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Perceived value - as perceived by the buyer

Agreed... However much we would like to not say it, High End Audio is a luxury market: The value/worth is whatever the customer makes of it. Whether the perception is verifiable, repeatable or not.
 

CGabriel

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Caelin, "You will notice that Steve confirmed that the ALPHA was near the performance of the SIGMA however he did say that if you are using very high power amplifiers that the difference between the two levels of cables was more apparent." - why is this, is that because of the higher current requirement from the amps?

Generally speaking, a higher gauge power cable of the same basic design and materials will have more dynamic range when under heavy loads. As the power requirements of the connected component rise, as in turning the volume up, the more significant the difference will become. So if you have low power amps and listen at low volumes, save yourself some money.
 

bonzo75

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Generally speaking, a higher gauge power cable of the same basic design and materials will have more dynamic range when under heavy loads. As the power requirements of the connected component rise, as in turning the volume up, the more significant the difference will become. So if you have low power amps and listen at low volumes, save yourself some money.

By higher, you mean broader guage, so lowrr AWG?
 

CGabriel

Industry Expert
Oct 31, 2013
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Gentlemen, I appreciate the replies. I have a deep background in applied economics, and good economics tells us that things should be priced on value rather than cost. Obviously, costs need to be properly derived (not the $50 aspirin pill charge we see on a hospital bill!) and covered... Prices derived from a cost multiplier that we frequently see in high end audio is very amateurish and bad economics...

And if people find value - actual and/ or psychological - from a $20K power cord, more power to them. As long as they obtained their money in a legal way, why should anyone care? ...

So my question stemmed from a simple thought: does one get more value from a sigma power cord or a denali conditioner, which in some instances may be better option than the more expensive triton.

I agree with your observations of how the economics work - we have just chosen a different path. There are pros and cons for the manufacturer, the dealer and for the customer. The pros for the customer are higher performance at a given price point and long term resale value.
 

CGabriel

Industry Expert
Oct 31, 2013
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By higher, you mean broader guage, so lowrr AWG?

Yes, sorry I didn't explain that quirk of wire size. In the US the higher the gauge number (AWG) the lower the actual cross section of the wire. In the EU, wire gauge is a direct relationship because the millimeter squared measurement is used. Confusing.

When I say higher gauge I mean cross sectional area.
 

microstrip

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We had written a white paper about this a few years ago and Michael Fremer did an article about DTCD (dynamic transient current delivery) also. It is not so much that the rectifiers are more noisy it is specifically that high power amplifiers have large capacity diodes and when in conduction mode they pull current deeper into the AC waveform.(...)

Surely - the noise in diodes is created by the commutation, not intrinsic noise. For example John Curl and Ralph Karsten have explained it and how they deal with it in the diyforum www.diyaudio.com/. However many designers simply ignore it.
 

microstrip

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Agreed... However much we would like to not say it, High End Audio is a luxury market: The value/worth is whatever the customer makes of it. Whether the perception is verifiable, repeatable or not.

Fortunately most of the time the perception is verifiable and repeatable - if we are not forced to use methods that spoil it and have an open mind.
 

bonzo75

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Fortunately most of the time the perception is verifiable and repeatable - if we are not forced to use methods that spoil it and have an open mind.

Unfortunately once the purchase decision is made, the buyer gets locked in. You might not know the reality till he sells. Hence I like to stress what I like in different systems before i buy, that also gives time for the initial euphoria to fade off. Men have a tendency to end up in a relationship based on a one night stand that they might later regret
 

FrantzM

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Unfortunately once the purchase decision is made, the buyer gets locked in. You might not know the reality till he sells. Hence I like to stress what I like in different systems before i buy, that also gives time for the initial euphoria to fade off. Men have a tendency to end up in a relationship based on a one night stand that they might later regret

So True.
 

AudioEdge

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good economics tells us that things should be priced on value rather than cost.

maybe it does, and maybe it doesn't.
but good PRICING theory and practice can be based on cost or value or competition or what the market will bear or supply/demand. Any of these is a valid way to price and all are used or can be used under different market conditions and with different segments.
 

Mcbrion

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Would tube amps also need a high current power cord? Say, 200W or so? Are amps more voltage-oriented than current-oriented?
 

caesar

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maybe it does, and maybe it doesn't.
but good PRICING theory and practice can be based on cost or value or competition or what the market will bear or supply/demand. Any of these is a valid way to price and all are used or can be used under different market conditions and with different segments.


Agree that contextually these practices all may be successful by those setting a pricing strategy. Yet those setting the pricing strategy who really understand the value the customer assigns to the products relative to other alternatives will be most successful.
 

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