IF DIY kits like the Statements are so good why are they not commercialized?

[penngray]

A recent discussion over the performance/cost ratio of the best DIY design had someone asking (Not me).

If DIY designs are so good, maybe even better then commercial speakers 3 or 4 times the price why doesnt someone package and sell the DIY design as a real commercial speaker and make a profit?

I apologize if this isnt a thread that is allow here, I figured this is the home of the famous statements and it would be cool to get a reply from the experts.

Thanks
Doug

[BigguyZ]

In general, the reason that DIY designs are far less expensive than commercial speakers is the lack of a distribution channel and the markup required. If you commercialize finished speakers ala Klipsch, or B&W, or whatever, you remove that edge. The closest thing to commericalized DIY speakers are the kits PE has, or Clearwave... next after that are internet direct speakers like Axiom and the like. They are high value options that are more "completed" than just having a design such as the Statements, but aren't available at your local mid-fi or hi-fi retailer.

[fjhuerta]

I shudder to think about the shipping costs of a completed speaker. Especially when you consider how well braced designs like the Statements are.

Also, in order for DIY to compete with economies of scale, you'd have to cut your own profit a lot. I don't think there'd be any profit left at all for the speakers to sell.

Also, Joe Q. Public would always perceive a "JBL" as a better alternative than your own, home-brewed design.

I think Jed (http://www.htguide.com/forum/member.php4?u=4828) has a good idea - he sells the kits and crossovers for the list price, and earns an income from directing sales to PE (if I remember correctly). I suppose that's the only way to make some money off this hobby.

[penngray]

Yeah, I didnt comment that kits for different popular brands are sold on PE and Madisound already.

Good points guys, Thanks!!

[tf1216]

I guess you can consider people like Jim Salk, Rick Craig and Danny Ritchie as DIY guys with their own business.

[LuncHwagon]

I think I know why. Its because no woman is going to willingly let a speaker 6ft tall into their living room. They would rather spend twice the amount and get 10, 4in cubes on small, fashionable stands in the corners. They will tell you that a 6ft speaker cant sound good enough to make that compromise. These kinds of designs only make it one way: People hear them, like them, and decide to try a build.

[BigguyZ]

I think I know why. Its because no woman is going to willingly let a speaker 6ft tall into their living room. They would rather spend twice the amount and get 10, 4in cubes on small, fashionable stands in the corners. They will tell you that a 6ft speaker cant sound good enough to make that compromise. These kinds of designs only make it one way: People hear them, like them, and decide to try a build.

That's a good point. Not only would you have distribution costs, but your market would be very small indeed... Most everyday people will appreciate teh sound from two huge speakers, but they would rather have tiny speakers that dont' take up any room...

[penngray]

I guess you can consider people like Jim Salk, Rick Craig and Danny Ritchie as DIY guys with their own business.

Yeah, i think that was a point raised too that some have moved from DIY to building a business that offers great speakers.

[Rolex]

I guess you can consider people like Jim Salk, Rick Craig and Danny Ritchie as DIY guys with their own business.

In my opinion, these folks are offering much more value than a more commercialized company.

[Jed]

I think Jed (http://www.htguide.com/forum/member.php4?u=4828) has a good idea - he sells the kits and crossovers for the list price, and earns an income from directing sales to PE (if I remember correctly). I suppose that's the only way to make some money off this hobby.

This is exactly what I do. I then can use my profits to feed my speaker building obsession. Hehe.

Seriously, the reason the Statements hasn't been turned into a commercial product is because the intellectual property of the design belongs to the designers, and they appear not interested in marketing the design. Kudos to them for helping the DIY community and getting hundreds of people involved in speaker building!

I came to the realization that I can help people out, make a little profit, and design more speakers without taking everything out of pocket. It's a win win in my book. Plus I'm now contributing to the board with a banner to keep the forum alive and well; because so much of what I do came from this great place.

I'm also working on a new kit for Madisound that will be launched in the coming weeks. This is really exciting for me. Let's just say the price to performance ratio will be very high! I can't thank all you guys enough.

Regards,

Jed

[Hdale85]

600-1500 per speaker pair is a lot for a commercial speaker company. The speakers they build fall far cheaper for them to build. If the Nat P's were a commercial design they would probably cost ~1k bucks. Also these designs are generally made for private use only.

[Curly Woods]

Cost to customer is typically

5X the costs to manufacture as a rule of thumb. If it costs $500.00 to build and ready to ship, expect that the final retail price will be somewhere in the $2500.00 range. That maybe why you don't see a lot of quality DIY efforts being produced for resale :-)

[fjhuerta]

I think I know why. Its because no woman is going to willingly let a speaker 6ft tall into their living room.

Wrong! :T

[Curly Woods]

I agree

Wrong! :T

You have simply married the wrong woman! My wife has never given me grief about my audio hobby or the equipment, as long as it sounds good, she has been cool with it all. I have had 7' tall ribbons in the living room without issue. 25 years and she is still the greatest :-)

[PoorboyMike]

5X the costs to manufacture as a rule of thumb. If it costs $500.00 to build and ready to ship, expect that the final retail price will be somewhere in the $2500.00 range. That maybe why you don't see a lot of quality DIY efforts being produced for resale :-)

The thing about this though, is if a speaker costs us $500 to build, it's going to cost a company buying materials in bulk a heck of a lot less.

[penngray]

The thing about this though, is if a speaker costs us $500 to build, it's going to cost a company buying materials in bulk a heck of a lot less.

maybe a 20% discount if they are lucky, the internet has reduce the cost and wholesale is available to the public so how about we say the MSRP will be 3x more?

[tf1216]

What about facilities, insurance, testing and design, etc.?

To fulfill the needs of the employees and consumer there is a lot of places where money needs to be spent other than on materials.

[PoorboyMike]

What about facilities, insurance, testing and design, etc.?

To fulfill the needs of the employees and consumer there is a lot of places where money needs to be spent other than on materials.

True. But as DIYers, do we also add in the cost of our tools, electricity and time?

[JonMarsh]

Probably should, if you want to understand the true cost. Sweat equity is one thing- but the tools needed for even a basic construction aren't trivial, and for more complex projects, can become substantial. A one of build becomes pretty expensive if you don't have other things you do with those tools. :W

[LuncHwagon]

not to mention the 1.21 gigawatts required for some of those tools.

[Curly Woods]

maybe a 20% discount if they are lucky, the internet has reduce the cost and wholesale is available to the public so how about we say the MSRP will be 3x more?

5X is pretty much the gold standard in most any manufacturer to consumer level business models. As has been stated, insurance, taxes, equipment, materials, profit!, etc make it unrealistic to work on a much lower level than the 5X rule. There maybe a little play here, but no long term success story is working at a much lower rate of return in my opinion. Too many people with their hands out to try and make it for less.

[BigguyZ]

Probably should, if you want to understand the true cost. Sweat equity is one thing- but the tools needed for even a basic construction aren't trivial, and for more complex projects, can become substantial. A one of build becomes pretty expensive if you don't have other things you do with those tools. :W

That's why after making my first set of speakers, I decided to get into woodworking. I had a lot of tools (though not nearly as many as I have now- holy cow), and I liked working with my hands, so it seemed to fit... Little did I know I was about to start my most expensive hobby yet!

Also, keep in mind that we got the design for free. People are generous enough to provide their time to deisgn and test the speakers. Otherwise, you'd have to pay an engineer to design and test the speaker. Even if you can fire them once you have your design, that's still not cheap....

[Hdale85]

I think it's silly to buy all those tools if you are going to use them for one set of speakers and that's about it. I plan on purchasing lots of tools but I also plan on using them for LOTS of things speakers being one of them

[fjhuerta]

You have simply married the wrong woman! My wife has never given me grief about my audio hobby or the equipment, as long as it sounds good, she has been cool with it all. I have had 7' tall ribbons in the living room without issue. 25 years and she is still the greatest :-)

That's what I mean. My wife doesn't care about what's on the living room, as long as it sounds good.

[Curly Woods]

That's what I mean. My wife doesn't care about what's on the living room, as long as it sounds good.

That was not meant to be to you Javier :-)

[cjd]

I can't speak for all the designers that share their work openly, but this is my take on it.

I have no interest in trying run, and more specifically, market and build and make successful, a business building speakers.

I have learned a ton from folks who have given freely of their knowledge - in return I share what I can, including the designs.

If someone were to approach me about mass-marketing a design, I would have to think about it. Terms become interesting, complex - what do I get out of it, what does that do to add to the pain of filing taxes, and does that diminish the satisfaction I get when I see another happy builder? How much is a design worth in the whole vs retaining rights? How little am I willing to accept (if they sell 3 speakers and give up, I might have only a few dollars to show and a design I can't use any more, unless the contract is really carefully set up).

Even Jed's model doesn't appeal to me, though I think it's a great alternative. The logistics aren't appealing to me.

I would probably be quite happy to do a design for a kit from someone like PE or Madisound as long as there is an understanding that after, say, 3 years, or 5 years, the design be made freely available (if not up front). But even that isn't something I'm really fretting about. It would be nice to get a little discount now and again on parts from the folks we're sending business to though. But, I take it as it is, also. Something fun, something I enjoy.

C

[Jed]

I would probably be quite happy to do a design for a kit from someone like PE or Madisound as long as there is an understanding that after, say, 3 years, or 5 years, the design be made freely available (if not up front).

C

For the record the design I'm working on with Madisound will be Zaph style. Fully documented with public viewing of crossover etc. Gotta stick to my roots. I think it was Ryan aka --k-- who asked me if I would contribute at least one publicly available design a year, and so far I'm meeting my word on that one.

What will next year bring? Who knows, but so far I'm having a lot of fun still even if it is a bit more work come tax season. To each his own and that's what makes this board great.

[---k---]

Jed, it was only a gentle nudge. Glad to hear that you got something public in the works. I just wish I had an excuse to build more right now.

[cjd]

I got parts for part of my next project. Make some baffles and then time to measure...

[CupCak3]

details????

[bluewizard]

I think Jed touch on it, you can't commercialize these designs because you don't own them. If you built a few for your friends, or built them as an experiment, then sold them to recoup you costs and efforts, I don't think many designers would mind.

But they release their design, much like software designers, to the public for personal use. You can't commercialize on them.

Second, many top rated commercial speakers, do just as you suggest. They buy off the shelf components, plug them into their own designs, and sell them commercial. Not all speaker manufacturers design and custom build their own drivers.

XTZ from Sweden uses Seas drivers, and the end result is some very impressive speakers that is some cases out shine the big boys. Their speakers, are not cheap, but they are very reasonably priced, and they will deliver free to the UK.

So, this basic idea is not that far fetched. The only problem is, if you indent to commercialize, you need to have your own designs, not stuff you copied form the Internet. Plus, you need manufacturing facilities, working out of your garage or basement just won't do. You have to hire staff, you have inventory and accounting, you have distribution costs, etc....

For most people who don't have a rich uncle to finance them, DIY can never be more than a small scale operation.

Steve/bluewizard

[TheD]

What is all this about a 5x rule?

I know for a fact that some speaker makers work on a lot less than that, the KRIX (australian speaker maker) Neuphonix has about half the local cost of the speaker just made up of the drivers, yet I also know that the RRP for DALI Concept speakers sits at about 2x (in Aus) the price to the retailer (which would mean that it is not the maker that is getting most of the profit).

It is not like they need to charge 5x the cost to make it, it is just that it is what most can get away with.

[penngray]

Thanks for all the replies....lots of great opinion for any future debates that always happen

[Curly Woods]

What is all this about a 5x rule?

I know for a fact that some speaker makers work on a lot less than that, the KRIX (australian speaker maker) Neuphonix has about half the local cost of the speaker just made up of the drivers, yet I also know that the RRP for DALI Concept speakers sits at about 2x (in Aus) the price to the retailer (which would mean that it is not the maker that is getting most of the profit).

It is not like they need to charge 5x the cost to make it, it is just that it is what most can get away with.

And car dealers sell autos at $100 over listed invoice too :-)

[Jed]

What is all this about a 5x rule?

I know for a fact that some speaker makers work on a lot less than that, the KRIX (australian speaker maker) Neuphonix has about half the local cost of the speaker just made up of the drivers, yet I also know that the RRP for DALI Concept speakers sits at about 2x (in Aus) the price to the retailer (which would mean that it is not the maker that is getting most of the profit).

It is not like they need to charge 5x the cost to make it, it is just that it is what most can get away with.

Did you account for the fact that most larger speaker manufactures get the drivers that DIYers can get for 1/3 the cost because they buy in bulk?

I'd sat the 5X markup is not that far fetched in that model, then. In some cases it's way more for some of the high end companies that buy in quantities of 200 versus 10,000.

As a rule of thumb, the more you can buy up front lowers the retail on the consumer's end.

[brianpowers27]

I think the crux of the matter is this... Know the market. Who is going to buy a $1200 speaker? How many are you going to have to produce to get the economy of scale that allows you to honestly sell for $1200 after spending $400 to make it?

Running a business requires someone to be the jack of all trades, unless they are willing to seek out an investor and go for the big time. Most people who fail, fail because they can't make the transition from doing it all themselves to hiring employees.

Time is money. I am sure that I could take a pile of parts worth $400, work on them and sell them for $1200. How many hours would it take? If I work part time, I don't have to pay myself, so all is well. I might even be able to pay someone to do the finishing work for ($200). This model is really quite simple, when you use word of mouth as your sole form of advertising. Oh wait, then you need to file the appropriate documents to form a legitimate business (LLC/S-corp/etc. (lawyers fees? Accounting fees?)). You will then need product liability insurance.

It is doable. Truth is... I have never heard the statements. My guess, they are overengineered for the target market, unless the target market is 5-10k.

[cjd]

The target market is the DIYer trying to extract more performance for their hard-earned dollar and willing to put in some sweat equity to balance the difference.

They are superbly engineered for this market (and also very well marketed)

C

[A9X]

What is all this about a 5x rule?

I know for a fact that some speaker makers work on a lot less than that, the KRIX (australian speaker maker) Neuphonix has about half the local cost of the speaker just made up of the drivers

If you are basing this on the retail price of the drivers I think you'd be incorrect. I used to buy from Krix at wholesale and the prices were considerably less than retail even with GST. I presume they still made a profit on those drivers. For their own designs I know they buy by the container load which would also reduce the unit driver price.

Factoring in all the other production costs, the 5x rule is pretty good.

[A9X]

I can't speak for all the designers that share their work openly, but this is my take on it.

I have no interest in trying run, and more specifically, market and build and make successful, a business building speakers.

I agree with this (including the bits edited for brevity).

I have a good day job and can earn more from that more easily than trying to build speakers. I would assume that most of the other DIY designers are in the same boat. Running a commercial operation takes a lot of time and money before you really recoup costs and show a profit. The market (audiophiles) is fickle at best and a PITA at worst.

I have a speaker design that I might post sometime in the future that I think is pretty good. However after publishing a couple of tube amp designs some years ago, the amount of support required was more than I was willing to commit, and this one might be the same as it uses some less common components. Kudos to those who publish and support DIY designs.

[cjd]

I have a speaker design that I might post sometime in the future that I think is pretty good. However after publishing a couple of tube amp designs some years ago, the amount of support required was more than I was willing to commit, and this one might be the same as it uses some less common components. Kudos to those who publish and support DIY designs.

That's one of the reasons I like posting stuff here - there is a great support network of people that actually know what they're talking about, and the limits of their sure answers. So if you're on vacation or just plain miss seeing a post, someone else often gets it for you.

[Jonasz]

Someone mentioned XTZ earlier in the thread and they are some very nicely built and good priced speakers. All drivers they use, except the Fountek tweeters oc, are shipped to the assembly factory in Asia and then back to Sweden again. Still they can offer this floorstander for about $1000. The mids in these speakers are Seas Excel W18 and one of these costs just over $200 locally here in Sweden (and a whopping $300 in Norway 8O ). They don't seem to use extremely cheap crossoverparts either according to this tiny pic.

Of course XTZ doesn't pay anything near the same amount of money for drivers/parts than I would have to...



I don't think I could build these speakers for the same money... but I wouldn't buy these anyway, what would be the fun in BUYING speakers... :B

[Hdale85]

Those look incredibly nice for that cost as far as commercial speakers go.