Why Upgrade

Have you ever examined the inside of one of the “high end” preamplifiers or power amplifiers and wondered how it can possibly sell for $3000, $4000, $5000 or more? Surely somebody is making a killing. Well, the unfortunate truth is that the manufacturer is probably making less profit on his “flagship” preamp that if they were in some other “industrial” business. The long trail of failed high end audio manufacturers is testimony to the reality. 

Let’s Follow the Money 

How is that possible? It is very interesting to follow the money to see how this happens in the high end audio business. We’ll examine the plight of that $5000 preamplifier. Let’s say that you are so overwhelmed with its performance that you decide to write a check to the dealer for $5000. Let’s follow your $5000: 

Where the Money Goes




Retail Price =




Dealer profit =








Manufacturer Gets =




Warranty, Service & Support =




Sales, Marketing, & Overhead (Lights, Heat, Rent) =




R&D (Design, Testing, Refinement, Prototypes) =




Assembly Labor (@ $75 / hour typical) =




Non-Electronic Matls (Enclosure, connectors, pots) =




Elec Matls (Resistors, Caps, Tubes, Transformers) =




 The dealer takes 33% sometimes more. So the high end manufacturer has to run his business with the $3350 that’s left. When you have a question and need to know if it’s compatible with a certain power amp or cartridge, or can you try alternate tubes, or any other question or problem you may have, any reputable manufacturer should be there to support you. For this they easily deserve that 12% (typical support percentage). They have to pay their sales, marketing, and the rent and utilities – conservatively a 12% item. Then there’s the cost to support an engineering team that designed and built the prototypes. The design must be auditioned and continually refined with its associated rebuilds, auditions, re-design sequence. Engineering can easily consume 15% of sales. And we haven’t considered the day-to-day problems that surface with suppliers going out of business and manufacturing floor problems all needing engineering involvement.  

To build the chassis, boards, perform final assembly, test it in the lab and hopefully audition it to be certain that it meets the audible criteria can easily consume 18 hours – therefore at $75 / hour we need to set aside nearly $1400. So now we finally can start buying the parts. I’ll assume that if you are going to plunk down five grand, you don’t expect a thin hammertone gray metal case with plastic knobs. If you have ever completed a DIY project you can easily understand how the non electronic parts can quickly reach $300 (at least). OK – then what’s left for all of those super Teflon or poly caps, bulk metal foil resistors, premium low noise tubes, custom transformer, and high-speed diodes? Can you believe $268. It’s sobering to learn that only $608 of your $5000 went into the parts you actually carried home. 

What’s it Worth to You 

If you had to write a separate check for all of those pieces, how many checks would you write – in other words, what has value to you here? Certainly the engineering and hopefully the warranty service & support. And of course you expect to actually pay for the materials. But, what about the nearly $1400 of labor – can you assemble it yourself? And how important is it to purchase it through a local dealer? Are you willing to bypass your local dealer and purchase directly from the manufacturer? (Let me remind you – that question will cost you $1600 or more.) You begin to understand why the manufacturer direct kit suppliers are becoming so popular. 

So perhaps of that $5000, only the warranty ($402), Engineering ($503), and materials ($ 335 + $268 = $603) actually have value to you (for a grand total of about $1500 and your own labor).


OK – But Why Upgrade ? 

We’ve made a reasonably compelling case for buying direct and building it yourself, but let’s get back to the original question: “Why Upgrade? To answer this, let’s fast-forward five years from the day that you were about to write that $5000 check. Since that time at least 10 “new and improved” designs have appeared at your local high end dealer. And out of curiosity one day you happen to look into the current used market price of that preamp “you always wanted” and find that it’s selling regularly at e-bay for about $800.

Do all those “new and improved” preamps actually sound that much better than your treasured five year old? Actually they probably do. However, it is not because the designers have developed a radical and revolutionary new amplifier that completely rendered obsolete everything that has come before. In fact what had happened over that time has been the development and / or availability of better power supply technology, capacitor dielectrics, resistor materials, and other components. They have been either identified from other applications (for example spacecraft or military specifications) or have been specifically designed for audio use. 

This is an extremely important fact for those either unwilling or unable to write the $5000 check. Because today and now, you can find that original $5000 preamp for nearly the same price as it would cost to buy just the non-electronic parts (anodized enclosure, gold brushed faceplate, premium switches, knobs, and connectors, …..). And more importantly, should a competent designer choose to focus his / her efforts accordingly, they can apply their skills and improve the original with a series of changes ranging from upgrades to full modifications. The result will equal or surpass the most anything currently available. This is especially true with quality vintage tube equipment such as Dynaco, Marantz, and HK Citation and the proliferation of upgrades and modifications available are testimony to this fact. 


A Guarantee – Component Upgrades will Always Insure the Best Available Sound

Many used audio components (especially of tube heritage) can be made to equal and exceed the performance of current vogue “off the shelf” offerings. This is not an exaggeration but very attainable when used but well designed components benefit from a carefully well thought out application of the latest technology advances in resistors, capacitors, tubes, wiring, grounding topology and solid power supply design rules. Remembering the discussion on costs, the designer can capitalize on the bargain in non electronic components and therefore be less concerned with the cost of the electronic components making choices that directly impact the sound and none of the other non sound related costs. Costs can be further controlled by offering the upgrade in a “low cost” basic package (with a standard component set) and a collection of premium options that may be easily added at any time. The premium options can be structured to incorporate select tubes, capacitors, or other improvements. In this way you can purchase the basic package with selected options and incrementally add more options to meet your budget or needs. 

Perhaps the most significant benefit is that as the engineering team will continues to refine the design (with the continuous stream of technology), those advances will become available as incremental upgrades to you. You can therefore be assured of a clear and consistent path to always enjoying the best performance possible. 


And So… 

It is clear that the upgrade path offers the most performance for the dollar. Capitalizing on the elimination of dealer markups, deprecation of material costs, reduced overhead costs, and should you choose, elimination of labor, your dollars are focused at the most valuable elements – the engineering, materials, and support. With a models plus options structure, the end user can purchase only what is affordable with the knowledge that through the options path they will have the best performance available when their budget or temperament is willing. Additionally, as the design engineers further develop and advance the performance, the component can easily and incrementally benefit from each advance.