Lowest volume is still too loud—how can I make it even lower?

Pressing ShiftOptionVolume Up/Volume Down allows you to adjust in quarter-box increments. You can also click the volume icon in the menu bar and fine-tune with the slider, or open the Sound panel in System Preferences and get a bigger slider there, which would allow for finer control.

RobMathers already covered many ways. For terminal geeks, here is another way:

You can use the command line to set exact levels:

$ osascript -e "set Volume 0"    # for mute
$ osascript -e "set Volume 7"    # for maximum volume

Just checked on my Mountain-Lion-running MacBook: the maximum is 7, not 10 as it was in Leopard. So, when you want the volume level to be 50%, use this:

$ osascript -e "set Volume 3.5"    # for 50% volume

and (of course) you can use

$ osascript -e "set Volume 0.1"    # for a really LOW volume… ;)

EDIT (june 4, 2014)

I'm surprised with the comments, about the fractional size precison. So, here are some technical details.

• audio properties e.g. volume control, are (roughly) managed "at system level". (because this is not a programmer refenece skipping the differences between "Audio Hardware Services" and "Audio Hardware Abstraction Layer")
• the system using an floating point value between 0 and 1. So, for any sound-device (e.g. internal apple speaker, or USB attached speaker) is possible define 0.000001 or 0.999999 or like. The precision is as for 32 bit floating point. (reference: https://developer.apple.com/library/mac/qa/qa1016/_index.html)
• each physical device has different audio properties, whats mean volume 0.5 for internal apple speaker will produce different "decibels" as for example "usb" attached speaker.

For the applescript

• Apple script currently converting the entered applescipt decimal value (now between 0 and 7) to system-level value between 0 and 1.
• The importat thing is than the 0-7 decimal values are deprecated now, and can disappear in future OS X releases. (click here for the reference - search for set volume)
• the prefered applescrip method for setting the volume now is:

osascript -e "set volume output volume VALUE"

• The VALUE is an integer between 0(mute) and 100(max volume), what is converted to 100 linear system-level volume-value as: 0(mute), 0.01, 0.02 .... 0.99, 1.0 (max).
• is possible to show the current volume by applescript to, e.g.:

osascript -e "get volume settings"

what prints something like:

output volume:10, input volume:92, alert volume:100, output muted:false

So, in the future (when the possibility to set the volume level with decimal values will be removed) will be possible only 101 exact volume levels - as integers between 0 and 100 (inclusive). Of course, this is for the applescript, programmers at system level of course can use any 32bit floating number between 0.0 and 1.0.

If someone want to know, the SHIFT+OPTION+VOLUME sets the next "output volume" (integer) levels: 0 1 3 5 6 8 9 11 13 14 15 17 19 20 22 24 25 26 28 30 31 33 34 36 37 39 40 43 44 45 47 48 50 52 53 55 56 57 60 61 63 64 65 67 68 70 71 74 76 77 79 80 82 83 85 87 88 90 91 93 95 97 98 100, what clearly shows: it using the floating point levels what are rounded to integer with applescript. (therefore mostly skips by 2 but sometimes only by 1)

As well as the ways covered in the other answers, there is another simple way to get a volume lower than one box full or one-quarter box full.

1. Lower the volume to one box full:

   

2. Lower the volume to muted by pressing Volume Down (not Mute):

   

3. Press Mute to un-mute:

   

This gives you a very quiet volume that is between mute and one box full.

This zero-box-full volume is even quieter than one-quarter box full, the minimum volume you can set with robmathers’s Shift-Option method. However, if sound is playing while you set the volume using this method, the sound is muted for the moment between steps 2 and 3, which can be a little annoying.

I’m in what may or may not be a similar situation, with highly-sensitive earpieces. (Shure SE 535s, in case you’re wondering.)

The problem in my case is that the Mac’s headphone output has a certain element of noise to it: for most head- and earphones, this simply isn’t an issue, but for mine, lowering the volume to an acceptable point means leaving me free to hear the background static that much more clearly.

The solution for me is hardware rather than software: a little attenuator that plugs in between the headphone jack and my earpieces. I then turn the volume on the Mac up to 12/16, and use the attenuator to lower the volume to an agreeable level. That combination gives me both fine-grained analog volume control and a conspicuous absence of static. (Shure’s model is the EA650, and sells for a pinch over $16 at the time of writing; there may be others that work just as well.)