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THE
MUSIC TRADE
REVIEW
H O W ABOUT THE NET PROFIT?
(Continued from page 3.)
I have been intimately connected with the talking machine trade for a long period of years and I
know how price fixity has worked out to the advantage of all engaged in making and selling talking
machines.
My observation and experience teach me that one price in one section of the country and one in another
and any old price anywhere is a wrong policy and does not work out for business success.
And that gets me back to what 1 stated at the beginning of this article: that many a man fools himself
with the idea that he is doing business profitably and is not watching the net results as carefully as he
should.
The dealer who is trying to conduct his business on high standards will be encouraged by an atmos-
phere of sincerity. The separation of bartering andslipshod methods from regular business should inure
to the advantage of legitimate trade.
With a product fairly priced, the questions of getting the dealer to work on the one-price-to-all
system—that is the list price—becomes one simply of education.
The courts have decided that the manufacturer cannot force the dealer to sell at the list price, so that
it becomes rather a question of education and discipline.
Many dealers are wise enough to see for themselves the necessity of a one one price system—many
more are not.
I have talked with a good many and I find that they figure on the volume of business—they do not
seem to have an eye to the net profit.
This impresses me as a very short-sighted policy because business success hinges on the success of the
dealer and the dealer's success depends entirely upon the net profits.
Now, if he is permitted to go his own way and pursue wrong policies there cannot be the substantial
advance made which the generally prosperous conditions would seem to warrant.
Of course, in the conduct of any business there are times when various trade flotsam and jetsam—
in other words, the odds and ends—must be occasionally cleaned up in the piano business as in any other.
It is claimed, too, by some that the piano business is to-day being forced abnormally.
I do not believe it. I affirm that this country has an absorptive power for half a million pianos
annually.
True, some methods of selling, both by the manufacturers and the merchants, are not in accordance
with sound business principles as to time and payments; and forced selling has little, if any, profit.
I cannot accept the theory of over-production, but T do believe in the theory of under-production
of sound business principles on which various enterprises are conducted. T repeat that our selling prob-
lems are not those of over-production.
Another of the great problems of piano selling is the taking care of traded-in or used pianos; and with
the advent of the player-piano there is an ever-increasing percentage of piano sales which invariably in-
clude traded-in instruments.
Now, this means usually the making of two sales in order to earn one profit, and unless a dealer
exercises exceeding care it is apt to mean two sales without any profit.
This trading-in proposition is a very important one—more important
now than ever before; but the matter of trading in instruments and how
they affect the industry as a whole should be the subject of a separate
article and treated in its varied relations to the music trade, and in such a
manner I shall handle it in a subsequent issue.
An Excellent Field of Operation.
N last week's Review some interesting figures appeared re-
garding the trade of Argentina in pianos and other musical
instruments. This is a prosperous country with a large popula-
tion of musical people, whose wants are now supplied very
largely by Germany. It opens up an excellent field of operation
—one that should be prolific of satisfactory results for the piano
manufacturers of the United States.
The matter comes to mind more particularly now, owing
to the approaching completion of the Panama Canal, which is
drawing the attention of the commercial world forcibly to South
American trade. A study of our exports shows that the United
States is now enjoying a much smaller proportion of this trade
than it might obtain with comparatively little effort on the part
of exporters.
South America is buying $600,000,000 worth of goods from
Europe, and it is asserted by Charles L. Chandler, of the United
States Consular Service, that five-sixths of this amount might
easily be supplied by the United States.
There has been a great gain in recent years in trade between
this country and Argentina, but the fact remains that less than
I
one-fifth of Argentina's imports come from the United States.
Columbia and Venezuela are the only South American republics
that buy more from the United States than from any other
country.
This country stands second in Ecuador and Peru, third in
Chili, Argentina and Brazil, and far down on the list in Uruguay,
Paraguay and the Guianas.
There are many lines of Argentina imports in which this
country might occupy a more favorable position than it now
holds. In order to obtain this increase, the field must be culti-
vated with some care and attention. The most direct means of
reaching South American purchasers is through the employ-
ment of well-trained salesmen with a good knowledge of
Spanish.
Such a man," a graduate of Princeton, has made $50,000 in
commissions on sales of automobiles in Argentina and Uruguay
since May 1.
It has been estimated that the United States could sell
$25,000,000 worth more products in Argentina than it is now
selling.