High End Home Theaters And The Law Of Diminishing Returns
December 2nd, 2008

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Are you familiar with the idea of the law of diminishing returns? Basically, it states that at some point along a continuum, the amount of effort required to produce a noticeable improvement becomes so great as to render it unjustifiable. This is certainly the case with home theater systems, particularly high-end options.

Is there an appreciable difference between a bargain basement system that retails for under $200 and an entry level set of components that will cost $500? Yes. There is a distinguishable difference in quality and function. One may or may not think the difference in price warrants the purchase based on their assessment of the differences, but there is a pronounced difference.

There is a probably an even more pronounced difference between a $500 system and a $1,000 system. The sound will be better; the number of features will be greater. One will be able to tell what that extra $500 is buying.

Now, however, we may begin to see the law of diminishing returns really take hold. How much of a difference is there between a $1,000 unit and a $2,000 unit? Well, there are differences, undoubtedly, and they may even be somewhat noticeable. However, the more expensive system is unlikely to set itself apart from the cheaper version to the same extent we have noticed in previous comparisons.Once we enter the realm of very expensive high end, technology this becomes increasingly apparent. There is, in all reality, very little if any discernible difference for most people between a $8,000 and $12,000 system. They may have different specifications and the more expensive rig may offer more, but the actual apparent difference for most of us will be negligible.

On higher end products, only those obsessed with video or true audiophiles will be able to discern any truly important difference in quality. In essence, the cost for better technology becomes greater even though the edge that technology has over the next cheapest alternative is minimal.

This study of the law of diminishing returns has some real utility for those considering the purchase of a home theater system. It teaches us, in essence, that investment in very high-end equipment is probably a very poor idea for most of us. We simply will not get a real bang for our buck on higher end goods unless we are sufficiently expert to recognize and appreciate very fine nuances.

For most of us, a good middle-of-the-road system will suffice. We will be able to sense the improved quality of our viewing and listening experience, but will not feel as if we overspent in order to create a good home theater.

There are, certainly, those who want the very best regardless of cost. This crowd includes those whose life, in large measure, revolves around the home theater industry and those for whom money simply is not an object. The rest of us fall somewhere between the bargain hunter looking for anything he can hook up for a few hundred bucks and the millionaire who is seeking an audio/visual toy simply to own the very best that exists.

When you are buying home theater components, consider the law of diminishing returns when selecting equipment. As you work your way up the quality and price ladder, check carefully to see if you can sense the kind of quality difference necessary to justify the more expensive purchase. At the point the prices are growing faster than the quality increases, it may be time to consider stopping right there.

Home theater purchases come in a variety of sizes. From cheap throwaway boxed sets to awesome reproductions of the full cinema experience that may cost tens of thousands of dollars. Most of us fall somewhere in the middle, seeking a system that will provide us with impressive entertainment but that will not become our largest investment. By thinking about the law of diminishing returns as it applies to home theater equipment, we can meet our needs without significantly overspending or settling for less than what we need to be happy

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