Originally Posted by Hi-TecDesigns

And an iPod is nothing more than some plastic and some melted sand, but many don't blink at paying $400 for one.

Remove R&D time/money from the picture and you're left with materials and know-how. Most anyone can get the materials for a car project, but the know-how to put it together isn't rattling around in everyone's head, nor is the experience in doing so. You have to weigh the cost of an item/service against what's valuable to you. With a Helm's manual, I could take apart an engine and replace a ring... but it's worth significantly more to me to pay someone $2k to do it than spend the next 2 weeks solid in the driveway taking the time to do it myself. I can figure out how, and the materials/tools are easy enough to get, but my lack of experience in taking apart more than one or two engines in my lifetime means I'm going to be sloooow at it.

Sure, an exhaust is just a few bent/welded pipes, but it took time/money for someone to measure everything, test it, go through several prototypes, etc. They have to be a good welder if you want it to last (particularly stainless/titanium)... this comes from experience and not overnight. They have to have the right tools to bend it and weld it... this is usually money spent over many years to put together a full workshop.

Companies manufacture items to make a profit, not just enough so they can pay their employees an hourly wage. Figure two people working full-time on an exhaust, and let's say it takes two weeks for them to get something they're happy with (probably quite short, in reality). That's 160 hours worth of work and even at a paltry $10/hr that's $1,600 in the hole right there. Add in cost of only two prototypes worth of material... say $400. You're ready to start producing, but you're $2k down. Let's say hand production costs 6 hours (@ $10/hr) and $200 in materials... that catback exhaust you just bought for $320 shipped cost $260 to produce and $30 to ship. The owner sits back and enjoys his high-end profit of $30/exhaust. Woo hoo! He can now afford to purchase a couple six-packs of Corona and sit in his hammock for another hour.

But what about automation, you say? Fine, they automate it and cut the production time per exhaust down to 1 hour. Who paid for the multi-million $ robot welder that put it together? As the company owner, now you're hoping you can sell in quantity to make those small per-exhaust profits add up to pay for the capital equipment you're now leasing to lower the production times and raise your profit margin. And so on, ad infinitum...

I've been a business owner for over 7 years now and everything above is the [/u]simplified[/u] version. A while back I purchased a $30k laser engraving/cutting system with the knowledge it was not going to pay itself back immediately. Clients who knew I had it now expected me to work for less profit because they assumed I would make it up in quantity. Its a viscous cycle. One guy asked me to give him one of my LED lighting designs because "It's only a bunch of LEDs and those are dirt cheap." I replied with "Fine... if it's just a bunch of dirt cheap LEDs with nothing spent on R&D, then go design it yourself! don't forget to le me know how that turned out for you..."

But don't think that all items are cheap to manufacture simply because the components are inexpensive. Yes, charging $10k for a Lamborghini's exhaust may seem hugely expensive, but how much time/energy/money went into its development for a market that may sell 100 total? Sure, the profit margin is still higher for that exhaust than for a Neon's exhaust, but the risk was greater, too... what if only 50 people decided to buy instead of the projected 100? You're out some serious cash, particularly if you haven't paid off the R&D or capitol equipment yet.