Huffington Post shows you exactly what's up with one of the most popular brands of headphones in the music business.
Originally, I typed "music industry" in the last line of the previous paragraph... Then it hit me that "industry" people probably don't give a shit about Beats by Dre.
The results of the breakdown really aren't all that surprising, to me at least. I remember the rumor going around that Nike's Air Jordan shoes only cost them like $11 to make and they sold for over $100. Production cost never equals retail, and it shouldn't. If you sold your products for what it cost to make them, you would always lose money.
Just about everything you purchase at a retailer has significant profit margins, but most people don't really think about how the process works. The article deduces that Beats cost less than $20 to make, which leads us all to immediately do the math and deduce that they profit $180 on every pair of headphones.
That simple math doesn't take into account more than just the cost of the materials in the headphones themselves. There's marketing, engineers, information technology, quality control, manufacturers, accounting, legal, and customer service costs... just to name a few.
Now, don't get me wrong. They're still making a ridiculous profit margin that is based more on brand name than the actual quality of the product itself. I'm just saying that when you only look at cost, versus retail price, you're not getting the whole picture and you're left with a sense of "wow, we're getting ripped off."
Which is true, but it's not just on fucking headphones. It's on EVERYTHING you buy.
Deep down, I'd like to think we all know this...we just don't want to have to think about it.