Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
JUNE 16,
1923
THE
MUSIC
TRADE
REVIEW
5
One-Price System and Two Prices
System of Price for Cash and Price tor Credit, Advocated by F. B. T. Hollenberg at the Convention of the
Merchants, Opens an Interesting Subject ior Discussion—Cost of Carrying the Instalment
Paper Should Be Embodied in the Gross Price of Instruments Sold on Time
The question of charging one price to cash cus-
tomers and another price to those who purchase
pianos and player-pianos on time, which has
been discussed for a good many years in the
trade, has taken a fresh interest from the strong
advocacy which it received from F. B. T. Hol-
lenberg at the recent convention of the National
Association of Music Merchants in Chicago.
The one-price system has definitely estab-
lished itself as the only way of selling pianos
and player-pianos properly. Whatever distinc-
tion there has been between the customer who
buys for cash and the customer who buys on
time has been in the fact that the latter has
been asked to pay interest on the unpaid bal-
ances due on his contract. The piano retail
lease in form provides for this charge, but the
salesman too often has neglected to make that
clear to the customer. The dealer does not col-
lect the interest currently with the payments,
with the result that, when the lease is finally
paid out, the customer is confronted with an
interest charge that amounts to quite a large
sum. This, it has been found, is almost im-
possible of collection in many cases, with the
result that the dealer is often compelled to
bear all the expense of carrying the time sale.
One Price, But Two Prices
Col. Hollenberg's proposal is to sell on the
one-price basis; that is, one price to the cash
customer and one to the instalment customer,
the latter being charged more in order to cov-
er the expense of carrying the credit extended
to him. This is a method which is already
widely in use in the retail furniture field, where
it has proven successful and, while it differs
radically from that traditionally used in retail
piano selling, it opens interesting fields of spec-
ulation.
The idea that pianos are sold for cash and
credit at the same price is widely held among
the buying public. This, in turn, has led to
people well able to afford to pay cash buying
almost invariably on time and the dealers and
the salesmen making apparently no effort to
obtain cash payments on such sales. In fact,
the way in which pianos are usually sold gives
no incentive to the average buyer to pay cash,
with the result that the percentage of time sales
in the trade is much higher than it really should
be.
This condition would be largely ameliorated
if the dealer or salesman would say to the cus-
tomer: "The price of this instrument is $400
cash and $450 on thirty months' time." (Of
course, the differential is purely arbitrary here.)
The customer, then, could at once see the ad-
vantage of making a cash payment if it were
within his power, for he could visualize a di-
rect saving of $50. He could also see an ad-
vantage in paying within a shorter time than
the thirty months, for the differential could be
so arranged that it worked on a sliding scale,
according to the amount of time involved in
the lease. Interest on the unpaid balances, as
is the custom at the present time, conveys no
such idea as this and largely fails in its purpose
to create a larger proportion of cash payments
and a shorter average in the time of the leases.
Figuring the Differential
The dealer can arrive at the differential be-
tween the cash price and the time price by fig-
uring what it costs him to carry time paper
plus the cost of collections—in other words, the
total added expense created by the credit which
he extends the intending purchaser. An ex-
amination of his books will give him an aver-
age of expense on each time sale, which, in
turn, will give him the differential.
Another advantage this system would seem
to possess is that the additional expense in-
volved in the time sale is paid concurrently
with the monthly payments. There can be no
accumulation of interest here, as is so often
the case with the average sale, for the gross
price which the customer pays, and which is
stated on the face of his lease, includes the en-
tire amount he must pay. In this way he knows
the amount he has bound himself to meet and
the dealer, in turn, knows that the expense of
carrying the sale is being met as it is created.
In this way current collections not only cover
the outstanding paper, but also cover the cost
of carrying that paper.
The system is in no way a deviation from the
one-price plan, which is purely and simply a
method of doing away with the bargaining and
chaffering methods that stained the retail side
of the piano industry for so many years. Un-
der it every instrument would be plainly marked
with its cost, so much on a cash basis, so much
on a time basis. It would be all to the cus-
tomer's advantage to pay cash or as nearly
cash as he could, and that would be accom-
plished without in any way limiting the pos-
sible field of sales which the instalment method
of selling has created.
Expects to Pay for Credit
The buying public to-day expects to pay for
credit accommodation. In other fields of in-
stalment selling the two prices—that is, the
cash price and the credit price—are used almost
universally. They are also used in the retail
piano trade. But there they are concealed, to
a certain degree, by the system of interest on
unpaid balances, which is so intricate and hard
to understand that not one prospect in a thou-
sand ever gets a real grasp of it and many piano
men, themselves, are unable to figure the inter-
est on an ordinary retail lease. This complexity
gives rise to a good deal of discussion between
the house and the customer, which results,
eventually, in a loss of good-will, which, in
turn, is reflected in a lower volume of sales.
Of course, this system of two marked prices
is a departure from the traditional in the trade
and as such must for some time remain largely
an experiment. But it is one that would seem
well worth trying, for, as outlined above, it has
many manifest advantages. On the face of it
it would seem to eliminate much of the discord
which exists between house and customer at
the present time and, almost with certainty, it
would increase the percentage of cash payments
and lower the average duration of the retail
sales contract.
Let it be emphasized again that its adoption
would be no departure from the one-price sys-
tem.
Proper Financing Real Problem
The big problem before the average retail
dealer to-day is that of financing his business
properly. Retail piano selling is a complicated
operation, complicated through its banking
sides. For every hundred dealers who can sell
pianos at the present time there are probably
but ten who have a clear conception of how
to finance the sales they make in a proper fash-
ion. Any method that will simplify this prob-
lem, without curtailing the possible market, is
worthy of trial and, if successful, worthy of uni-
versal adoption.
Pianos must be sold on time. To eliminate
the instalment side of the business would cur-
tail the possible market to a great extent. It
is the instalment system which has made it
possible for the average American family to
own a piano or a player-piano. But there is no
reason why these families should not be told
plainly that it costs money to extend credit to
them and that this additional expense is some-
thing for which they must pay. The clearer
this is made to them and the more plainly it is
said the better it will be for both the buyer and
the seller.
That the idea has made considerable progress
in the industry already is shown by the fact
that one of the best-known manufacturers of
player-pianos at the present day stamps on the
back of each instrument both the cash price for
it and the price on instalment terms.
WDT OPENS ATPREMIER PLANT
AMPICO FOR CHILEAN EMBASSY
New Broadcasting Station Presents Interesting
Program the First Night
Instrument Sent From New York to London
for Use of Chilean Consul
The radio broadcasting station WDT, located
at the factory of the Premier Grand Piano
Corp., New York, opened on Friday evening,
June 8, at 11 p. m. The broadcasting was done
under the direction of Miss Vaughn de Leath,
manager of the studio, who made a very appro-
priate address to the listeners-in before an-
nouncing the musical program. A great many
guests attended this initial broadcasting, which
lasted for one hour.
The program included a wide variety of vocal
and instrumental music and was run off in a
very efficient manner as follows: Lew Thomas'
Royal Orchestra, under direction of Harry
Baum ; Vivienne Segal, prima donna, "Adrienne,"
from George M. Cohan Theatre; Nick Lange,
tenor, in popular songs; Miss Susanne Sokvis,
concert pianiste; Ted Barron, American com-
poser; Maren Berdine, prima donna, of Green-
wich Village Follies; Olive Wright, concert so-
prano; Harry Hanbury and Conrad, composers,
in popular songs; Lyric Four, ladies' quartet,
from "Adrienne," now appearing at the George
M. Cohan Theatre; Bide Dudley, in smart say-
ings; Vaughn de Leath, the Original Radio Girl,
in original songs, and James D. Kemper, of the
Greenwich Village Theatre Co.
The Knabe Warerooms, New York, made last
week shipment of an Ampico grand in the
Franklin to His Excellency A. Edwards, of the
Chilean Legation, 22 Grosvenor square, Lon-
don. Mr. Edwards called at the Knabe Ware-
rooms and made the selection of the instru-
ment just before sailing, directing that it, with
a suitable library of music, be immediately for-
warded to the Legation's London address.
SEATTLE, WASH., FIRMS MERGE
SEATTLE, WASH., June 9.—The Hopper-Kelly
Co., well-known music house, of this city, which
features the Chickering and Packard pianos and
a complete line of talking machines, has pur-
chased the business of the Rose Music Co., lo-
cated in the Montelius Building here. C. H.
Rose, proprietor of the latter concern, is now
with the Hopper-Kelly Co.
TWO NEW MUSIC STORES OPEN
CONCORD, N. H., June 12.—Two new music stores
have just been opened in Newport and Lebanon,
according to announcement by the proprietor,
William H. Avery, of Concord.