Thiel Hiking Price on CS2.4 Speakers by 17 Percent

Thiel Audio’s announcement to dealers last week that it was raising the price of its CS2.4 speakers by 17 percent April 1 is testament to several industry issues plaguing the high-end speaker market, dealers told us Friday. Costs are going up on everything from raw materials to shipping, forcing manufacturers including Klipsch and Thiel to raise prices, and market demand has dwindled for traditional floorstanding speakers.

Thiel notified dealers last week it will raise the price of its CS2.4 speakers by $1,000 on April 1 to $6,900 a pair. Although Thiel President Kathy Gornik spoke to us last summer about concerns over the skyrocketing cost of neodymium used in tweeter magnets (CED Aug 31 p1), neodymium wasn’t much of a factor in the price jump on the CS2.4s, said Dawn Cloyd, Thiel director-international sales. Instead, the increase is due to spiking copper and aluminum prices and a jump in freight costs, Cloyd said.

The 17 percent Thiel hike was “hefty” and “a surprise” to dealer Bill Gibson, owner of House of Stereo in Jacksonville, Fla., who has been selling the speaker since its launch in 2003 when they cost $3,900 a pair. “We're seeing price increases from a number of companies with inflation creeping up,” Gibson said. Swelling freight and supply costs are also realities “manufacturers have to absorb,” he said. “Some of it is justified,” he added, “but the degree of the increase is questionable.” Gibson used to sell about five pairs of the CS2.4s a year -- “now it’s less than that” -- but sales of floorstanding speakers in general “have really slowed with the economic turndown,” he said. Customers aren’t likely to take well to the $1,000 premium, he said. “Unfortunately, the timing isn’t great,” he said. Gibson will stick with the well-reviewed speakers, though. “It’s a great product,” he said. “If it weren’t, we'd say forget it and move on.”

A salesman at Audio Advisor told us the price hike won’t have much of an impact on sales because the e-commerce site doesn’t “do a lot with Thiel. It’s not one of our bigger brands,” he said. Audio Advisor lists the CS2.4s at $2,950-$3,200 each. Only other Thiel models are priced higher at Audio Advisor, with most floorstanding speakers selling below $1,000, we found.

Discounting used to be rare in the specialty world. At one time spending full price for super-high-end loudspeakers was a badge of honor for an audiophile but that has changed, and “everybody wants a deal,” said one dealer who asked not to be identified. He’s still listed as a Thiel dealer but last sold a pair of Thiels “in 1947,” he joked. Speakers priced at the top of the pyramid in the $20,000-$40,000 range no longer command those tags when it comes to the bottom line, he said. “That seems like a big chunk but what’s the point?” if the margin’s not there, he said.

Price moves by speaker manufacturers aren’t as damaging to dealers as those in the video world where consumers can easily compare prices for LED TVs within the same market, said David Wexler, president of The Good Guys outside of Chicago. Wexler no longer stocks Thiel because demand isn’t there, though he still sells “a couple a year,” he said. Price increases like those Thiel and Klipsch have put in place recently aren’t as noticeable to consumers as a price move on a TV would be because manufacturers are more selective about distribution. “There’s no benchmark to compare against,” he said. The “hot brands” today for The Good Guys are Golden Ear and PSB, whose prices are more in line with consumer expectations with margins that have held up, he said. “We needed to replace Velodyne when they went direct to the consumer,” Wexler said. “There are too many alternatives that offer 50-60 points,” he said. In light of TV discounting, he said, “if we can’t make money in speakers and receivers, we're in big trouble.”