Hello Surinder,
Thanks for your thoughtful and articulate response. In a very general way, I'd estimate that beyond the $500 to $800 range (for a new turntable, not including the tonearm), you are into the region of rapidly diminishing sonic returns.
Cartridges can vary greatly in the smoothness of their frequency response (many moving-coil models--not all-- have a built-in high-frequency boost of 2dB to 3 dB around 12 kHz that gives them an alleged "transparency") and in their ability to track heavily modulated grooves without letting distortion rise to annoyingly high--and audible--levels. Certainly more expensive cartridges tend to track better at low tracking weights and have smoother frequency response than entry-level models. Beyond about $400, however, the improvements become largely inaudible.
Custom tonearms, properly aligned, will let you get significantly improved tracking of highly dynamic music (i.e. heavily modulated grooves) at lower tracking weights, and especially in inner grooves. That's partly a result of lower bearing friction than integrated tonearms typically exhibit, and less "mass". But, in my experience, spending more than $1,000 on a custom tonearm yields little if any sonic improvement. The one exception I would make is for a servo-controlled straight-line tracking tonearms. That design eliminates "tracking error" because the cartridge remains perfectly tangent to the groove across the entire record, which, incidentally, is the way all records are cut. The cutter head rides on a rail above the lacquer disc, traversing the disc in a straight line.
Any pivoted tonearm introduces inherent tracking error because it describes an arc as it swings across the disc. Actually, the physics of record cutting and tonearm/cartridge interaction are quite fascinating. And LP playback can sound remarkably fine--except on those torturous inner grooves, where cartridge distortion on complex material routinely rises to--brace yourself--levels of 5% to 7%! Only a few of the very best cartridges can track these inner grooves and keep distortion below 2%.
Regards,
