NOVEMBER
17, 1923
. THE
MUSIC TRADE
REVIEW
11
What Is the Overhead Expense Limit
-
The Confusion That Exists in Too Many Retail Music Stores Regarding the Proper Methods of Charging the
Expense Entailed in the Tuning and the Repair Departments--When Properly Credited With the
Work They Do, Both of These Show a Profit and Not a Loss
In the a ve rage r e tail piano warerooms, so far
as th e overhead e x pen se is concerned, there
vrobably exist s no greater conf usion than in the
m et hod by which the ex penditure involved ill
the main tenanc e of the tunin g and repair de ·
partment is handl ed. Too many music mer
cha nts are prOne to co nsi der thi s department
Gue of those thin gs whi ch mu st b e maintained
for t h e service of th eir clls tomer s but whi ch is a
co ntinu a l source of lo ss. Suc h is not th e case.
Thi s idea arises largely fr o m th e fa~ t that the ac
co unting involved, AS us ua ll y not pro pe rly sys
tem al!.i!z ed and ' th at th e d epa rtment itself is not
g ivenf1\ a ir cJ:edft for what it con tributes to other
depart ments · o r ~th e,j jbu s iness .
Work 0& the D/:partment
The work of the tuning and rep a ir department
m ay be broadly di vi ded into tw o class es. The
fi r s t of these is the ac tu a l work which it pe r
for ms an d which hrin gs revenue-tha t is, outside
tu ning a nd repair jobs fo r whic h t he hou se is
paid. T hese are credited to the income derived
fro m the department, as they s hould be. I n
eve ry ins tan ce where tunin gs are properly priced
and the time of the m e n employed, as well as
the material u sed, properly cha rged for, the
revenue which th e department b ri ngs in is suffi
cen t to sh ow a profit ove r a nd above its direct
expe nse in this direction. V/hen it does not do
this the fault is la r ge ly in the fact tha t m any
mu s ic merchants have thus far not seen thei r
way cl ea r to se t a price on tu nin g an d r epa ir
wor k in proper relation to the expense invo lve d
in eac h job wit h th e result that the re is not
>u ffi cient margi n belwee n act ual cost a nd the
price r eceive d t o pro vi de a profit.
Every tuning a nd repair job handled in this
dt'partmcnt sh ould be pro v id ed with a cost
ti cket, a simple form w ith space provided for
entries covering th e labor cos t and mat<:rial
cost of the work in vo lved . When a job is
taken wi thout a preliminary es ti mat e th e cos t
s hown on th is ti cket shou ld be fhe basi, of th e
final pri ce. 'When pre liminary estimates arc
g iv en, a study of th ese tickets an d avera ges
com pil ed with them wi ll give a reasonable bas is
cos t to the ma n who sets th e figure, thus ma k
in g it a surety that th e job will yie ld a profit.
It is utterly imposs ible to conduct a tuning and
repair departm ent properly unless som e system
of cost finding is available, for the man w ho
g uesses at such work almost witho ut e xc eption
guesses too lo w.
Work Done for the House
B u t thi s is no t th c place where most of th e
co nfu sio n take s p la ce in the relation of th i,
department to the re s t of th e busin(·ss. It ;s
th e second class of wo rk th e department ta ke s
ca r e of that causes th e g reater part of th e
troub le. Thi s is th e tunin g and rep air work
that is done for the house it se lf, fi rst, on instru
lIlents while they are on the wareroom floor in
stoc k, or in s tora ge, and, second, upon instru
m e. nts in owners' h omes w hic h h ave be en sold
und e r ag reement s to do a certain amount of
ma in t enance work o ver a given period .
Th e cost of do in g bo th of th es e classes o f
\\ork · s urely sho uld never be charged to th e
runing d epa r t m e nt an d ye t th cre are m an y r e
tai l m usic mer c ha nts w ho , either th rou g h
Ilegkc t or care less n ess, persist in fo llo wing thi s
met hod . When this takes p lace it is ut te rl y
impossibk for the dep art menl to show a profit
up on the expen s e invol ved or even to brin g bac k
the amount of mon ey which it co s ts to run it.
No bu siness, wh a tev er it s sco pe may be o r
whateve r its character, can be conducted on it
basis of all debits a nd no cre dit s. This is so
~lc ll1ent a ry th at it might be con sidered eve ry
business man wo uld realize it without it being
pointed o ut , ye t there a r c music d ea ler s who
persist in regardi ng the tuning and r epai r de
vartlllent as a con ti nu o us source of expense
s impl y beca use they h ave fa il ed to appreciate
thi, basi c fact.
Continuing Costs
\,\fo rk dUlle On instruments in s tock or III
s to rage s hould b~ credited to th e tu ning a nd
repair departllle nt on at least th e basi s of cost.
It is p~rhaps better ev~n to a ll ow the depart
IIl <:nt a slilall Illargin of profit on thi s work
as it is s ur e ly ent itled to it. The bi g problem
in conn ec tion with this qu es tion, however, is to
"hat part of th e business to debit this expens e.
I II most cases w here ther e is any a llowance
l!lade for it, it is c ha rged to the ge ne ral o ve r
h ea d, but it is dubious if it r eall y b elo ngs
th e l·c. The piano mer chant migh t h ere take a
lesson from th e furniture dealer who se prob
lem ill th is direction is ve ry similar to hi s own.
In a g r eat many retail furniture stores the cost
of maintenance of slock, which involve s re
poli s hing, set ting up knocked-down go ods, a nd
the numb~r of sma ll repair jobs, is r ega rded
as whilt i", term ed a co ntinuing cost-that is, a
l, a rt of th e origina l cost of th e goods. Under
t his systelll, the cost of this work is ave ra ged
a nd a dd ed to the invoice cost, and th e res ult
used as th e basis of p ri cin g. I t would seem
tha t thi s is m uch t h e more p rop er bas is of deb it
in g th e c har ge~ o f the t unin g and repair depart
m e nts in co nn ec ti on wi th this work. · F o r the y
t ruly cannot b e co n sidered a se llin g co st ill
[h e gene ral se nse of the term and a pa rt o f th e
ge ne ra l overhead.
Service Agreements
Th e w o rk which the tunin g a nd r epair de
pa rtm ent does in co nncction with service agree
men ts , which are part of the ori g inal se lling
co ntra cts made by th e sa le sman of the hou se, is
un q ues tion a bly a part of the sal es expe nse and
,hould be char ge d a s su c h. A n ag reement to
tun c a piano free of c har ge for s ix months '
time, whi c h is t he us ual time for whic h free
~(' r vicc is promised, is an indu ce ment for the
pr ospect to buy. When the re is an endeavor
in a ny r e tail music house to abolish the system
of free tuning it is the sale sma n who raises
t h e c hief difficulty, somet hin g which he would
not do unless he considered tunin g a selling
fa cto r of so me va lue at least . If that be the
<:as<:, why expe ct th e tun ing an d repa ir depart
ll l<:nt to ca rr y the expe n se of part o f the seIl
in g cost? It can not do thi s and s how a profit
an d the dealer who follows th e pract ice of per
mittin g it to do so in va riably is de ce iving him
self upon hi s sellin g cos t and as a res ult mi s
pr icing the instru!l1ent~ w hi c h he offers, if th ey
are not na tionally pric ed, or if they ar e, cllttin g
Ili, net mar gi n of profit.
Service Contracts
Of co ur se, there are retail warerooms wh ere
this question does not arise, due to th e fact that
free tunin g is not a sys tem which is foll owe d
t herein. H e re the sale sman llsually sells a se rv
ice co ntr ac t a t the sa ltlc time he closes the sale
o f the instr um ent and thi s is paid for in instal
ll1 eTlts a long wi th the other payments due. Such
a sys tem brings in con s id erab le revenue in the
course of the yea r. These receipts are in
l aria bly c r edi t ed to the inc ome of th e tuning
a nd rep ai r department, as they should be, and
in s uch warerooms no complaint is ever h eard
regarding th e loss involved in maintaining thi s
department.
These a spects of th e overhead question may
be regar ded as uni mportant by som e r etail mer
c hants, but if they will think for a moment &f
the ent ire problem they will s ee that su ch is
not th e case. No man can ).;:now too much
about the bu s ine ss of which he is the h ead, and
ltO man can know a nythin g at all a bout it unle ss
hi s acco untin g sys tem is so planned that it will
give him the prope r information. If, in this
ins ta nce, th e system pays justice to t h e tunin g
a nd repair d epar tment, and that de partment st ill
co ntinues to s how a loss, it may be cheap er
for the dea ler to co ntract to have hi s wo rk d one
by outside and indep e ndent tun e rs. If thi s be
Ilot fea s ible he may be ab le to develop a dem a nd
for tunin !Z~ whi ch ·w ill keep his men occupi ed
at a profit durin g t he tim e they a re not workin g
for the hou se. Buth o f the se condit ion s are to
be found in the tra d e. But if through faulty
ac counting methods he does not know whether
or not the d epartment warrants the expense
involved in condu ctin g it, he simply goes a lon ~
lo sin g mo ney, dimini sh in g th e number of men
employed or else emp loying incompetent h elp
bec au~e of lo w salaries, with the re s ult th at th e
work h e has p romis ed will be don e for hi s c us
tomers is eit her inefficiently perform ed or not
performed at all, wit h a consequent lo ss in good
will that is soon reA ec ted upon th e g ro ss vo l
ume of sa les.
A s th e o ld sa yin g h as it, " Knowledge is
IJOWer," and in no place is it of greater power
t han in its appli ca tion to the overhead in any
re tail busi n ess.
WM. H. DANIELS NOW BANK TRUSTEE
BUFFA LO, N. Y., November 12.-Will iam H .
Dani els, head of the p rom ine nt music house of
De nton, Co tti er & Daniels, was recently elec ted
trustee o f th e E ri e County Savings Bank to fill
a vacancy ca u sed by death. Mr. Daniels also is
a director of the Marine Trust Co. and of th e
HuHalo In surance Co., and is active in other
affairs out sid <: o f the mu sic bu siness in Ruffalo
a nd v icinity.
CHARACTER
"Admirable Quali ty; Acknowledged _ReputatioD ••
-(Stanaara Dictionary)
.8
PIANOS
Manufactured by
Smith, Barnes
===========and===========
Strohber Co.
have for 33 years
justified their right
to be caned
Pianos of Character
FACTORIES
North Milwaukee, Wis.
Chicago, Ill,
OFFICE
1812 Clyboum Avenue
Chicago,
m.