Classic Mode

Music Trade Review

Issue: 1925 Vol. 80 N. 19

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
MAY
9, 1925
THE MUSIC TRADE
REVIEW
The Trade-in and Its Effect on the
Net Profit of Piano Dealers
The Third of a Series of Articles Based on an Exhaustive Survey Recently Concluded by The Music Trade
Review of the Part Which the Trade-in Plays on the Net Profit of the Retail Piano Merchant
Together With a Study of the Methods Which Will Remedy Its Evil Effects
HE most important element in the en-
tire trade-in problem is the method which
is used by the retail piano merchant in
making the allowance on the second-hand in-
strument. As has been pointed out earlier in
this series of articles, the same attention should
be given this factor as is given the entire buy-
ing problem in the retail piano warerooms.
This manner of approaching a trade-in solution
can not be too often emphasized, for it is there
that most of the evils which lead to eventual
losses take their origin. Too often those who
make the allowance assume the attitude of
buying in a short market, bidding against each
other, neglecting intrinsic values and, of course,
ultimate resale prices.
Bases of Allowances
The leases on which allowance figures are
compiled vary widely with the individual retail
piano merchant, according to the survey con-
ducted by The Review. No analysis of the
questionnaires returned can establish any uni-
formity of procedure in this direction. In fact,
judging from the replies, even within many or-
ganizations this uniformity does not exist. It
would appear that with such piano merchants
each case is considered individually, with the
result that there is a constant tendency to ex-
pand the allowance figure. The replies show
beyond the shadow of a doubt that such a pol-
icy needs reformation and that a greater meas-
ure of control is essential. They show that
some definite policy must be developed at this
point before any measurable progress can be
made in making the trade-in a profit-maker in-
stead of a source of loss as it too often is at
the present time.
Nine General Classifications
A rough classification of the replies to The
Review's questionnaires shows that, broadly
speaking, the bases upon which allowance fig-
ures are made are nine. Each one of these
classifications has variations, but largely in mat-
ters of detail. A close examination shows that
a majority of them are defective in bringing the
merchant a net profit in the resale of his trade-
ins.
An Effective Plan
1. The most effective plan reported came
from a dealer in the Southwest, most effective
in the fact that every element in the situation
had evidently been given careful consideration
in formulating it. The plan follows: (a) resale
price of the used instrument, minus 40 per cent,
and minus estimate of cost for putting in good
playing order without case refinishing; (b) re-
sale price minus 40 per- cent, representing cost
of putting in playing order and cost of refinish-
ing case; (c) the two costs arrived at above
are averaged as the trade-in allowance.
This plan protects the merchant from every
angle, and, in the case where refinishing is re-
quired, which, of course, is an expensive opera-
tion and which raises the cost of the instrument,
the averaging brings it within a good resale
price. It is the most effective plan which was
presented. A number of other merchants re-
ported that they based the allowance figure by
giving 60 per cent of the estimated resale value,
thus covering overhead and net profit, but a
number of them did not specify whether or not
they included the cost of repairs in this 40 per
cent. If they did this, unquestionably they
would make no profit on the resale, as the ayer-
T
age cost of putting the instrument in resale con-
dition would more than eliminate the net mar-
gin. To charge repair cost to overhead is a
basic fallacy, since this is essentially a cost and
should be charged to the merchandise account.
Different Margin
2. A number reported that the allowance with
them was set at resale price less 50 per cent.
This is a variation of the above plan, the only
objection that can be found to it being that the
cost system evidently takes merchandise at
its invoice cost and does not allow for addi-
tional cost involved in handling merchandise.
The General Estimate
3. The third plan, and which was reported in
a majority of returns, was a general statement
that allowances were based on age, condition
and name. Of course these are all basic ele-
ments in setting the price and naturally over-
head and profit should be added to set the re-
sale price. A number of dealers reported that,
in making these estimates, the style and finish
of the case exercised an important influence,
which is continually increasing. Both these
factors should be given more attention than is
usually the case to-day, since they are playing
a more and more important part in the purchase
of pianos.
Here the element of name value is also an
important one. A well-known name on a used
instrument, which through reputation consti-
tutes itself a guarantee of quality, makes the
ultimate resale a much easier proposition and
consequently should be influential in setting the
allowance. A good proportion of dealers re-
ported that this fact was always given, careful
consideration and that the allowances made on
name value pianos were proportionately higher
than those carrying stencil names, even though
the grades of both instruments were approxi-
mately identical.
Stock Costs
4. Several dealers reported that their basis
for the allowance was the price at which they
would have purchased similar instruments for
stock and resale. This system is good provid-
ed the proper margin is added to the. cost in
order to take care of repair work, overhead and
net profit.
Short-Time Turnover
5. A number reported that the allowance was
set at a figure which would permit the dealer
to set a resale price that would permit a short-
time turnover. They evidently make no at-
tempt to show a profit on the resale of. trade-
ins, but simply aim to clear their warerooms of
used pianos as soon as possible. This plan,
provided it is rigidly adhered to, can find no
objection, but unfortunately there is always a
possibility of going wrong and sustaining a loss
on the resale.
The Guess System
6. Several dealers reported that they guessed
at the allowance. Nothing can be said here ex-
cept to quote the old proverb, "An open confes-
sion is good for the soul." All guessing in
business means eventual loss.
The Worst System
. .
7. One dealer reported that the allowance was
what the customer asked for or else there was
no sale. Again the same proverb applies, but
with greater force.
25 Per Cent Margin
8. Several dealers; reported that .they . based
their allowances on a figure 25- per cent less
than a fair resale price. This is not sufficient
to cover cost of repairs, overhead and net profit.
As a matter of fact, judging by previous inves-
tigations, it is not sufficient to cover the over-
head alone. Under this classification also come
a number who reported that they based allow-
ances on a figure a little lower than the resale
price. The same may be said of these.
Loss Through Overhead
9. Another group reported that in their pol-
icy the maximum allowance made was the re-
sale price without the cost of repairs. Here
again no allowance appears to be made for the
overhead and the margin of profit, and conse-
quently every sale of a used piano means an
ultimate loss.
Worthy of Study
These various plans are all worthy of a close
study. What appears from this is that a good
many dealers, in setting allowances, consider
only the physical values of the instruments and
neglect the questions of both overhead and net
profit. Now overhead is as much a physical
cost as is the actual price of any merchan-
dise and must be constantly taken care of. It
costs as much to sell a used piano as it does
a new instrument, and, in many cases, where
trade-ins have been permitted to accumulate,
a greater percentage of overhead since extra
exploitation, which costs extra money, must be
put behind them to move them. The dealer
who habitually neglects these elements habitu-
ally loses money on his trade-ins, a loss which
makes its appearance, on his annual statements,
not in the red ink of losses, but in a lower net
profit on his year's business. It is one of those
hidden losses which in business are hard to dis-
cover, for they are not apparent until the books
are carefully audited and the policy of the house
in its operations as carefully scrutinized.
Costing Systems
The whole problem of setting the allowance
on the trade-in is simply a matter of setting
proper costs on the merchandise which the
trade-ins represent. As has been pointed out
previously, if the entire problem is approached
from this angle, its solution is a matter of com-
parative simplicity. But until it is visualized
in this manner little progress may be made in
its Solution. Setting an allowance is buying an
instrument for eventual resale; it is not making
a concession in price to a prospective customer
in order to make a present sale. That is the
nub of the problem.
To Use Hardman in Recital
Mine. Thalia Sabanieeva, Metropolitan Opera
Co. soprano, will appear in a song recital in
Aeolian Hall, New York, Saturday evening,
May 9, using a Hardman concert grand. Mme.
Sabanieeva has created a sensation in the past
two seasons in New York in her singing of the
part of the Princess in Rimsky-Korsakoff's "Le
Coq d'Or," as well as her interpretations in
"Madame Butterfly," "Boheme" and other popu-
lar, operas.
Paul Burling, who some time ago severed his
connection with the Bush & Gerts Piano Co.,
of Dallas, Tex., as vice-president and manager
of the piano department, has returned to the
firm in his .old.capacity.
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
8
THE MUSIC TRADE
REVIEW
Mason & Hamlin Piano to Be Handled
in Philadelphia by John Wanamaker
New Retail Branch Store of Charles M. Stieff, Inc., Opened at 1717 Chestnut Street With Elab-
orate Concert—April Business Reported on Parity With That of Last Year
MAY
9, 1925
Julia K. Longsdorf accompanying on the violin;
Beatrice Such at the piano with Henry Such as
violinist, and other vocal and instrumental en-
tertainers, including Marcella North, at the
piano with Mme. Anette Keyser, soprano,
Arthur Seymour, baritone, and others. Out-
standing in the musical selections of the after-
noon's program was that given by Miss Eliza-
beth Spencer, soprano, the young daughter of
Manager Spencer, whose songs, "I Chant My
Lay" and "Songs My Mother Taught Me," re-
ceived the hearty applause of the audience.
The present modern store quarters are the
culmination of a very successful undertaking
which the Stieff Company began in the Quaker
City three years ago under the direction of
Manager Spencer. During that time the busi-
ness has grown to such proportions that it has
been found expedient to increase the space from
a single store floor to the present commodious
structure with its four large floors devoted to
the various departments. The first floor will
be used as display rooms for the Stieff grands,
the second for the Reproducers, the third for
players and uprights, while the fourth and base-
ment will be devoted to the mechanical, repair
and used departments respectively.
PHILADELPHIA, PA., May 4.—A survey of visitors and patrons of the company. In the
the April business as it pertains to the piano spacious and modern four-story reconstructed
distribution division of the trade and made by home, the head of the firm, President George
the prominent dealers who are centered in the W. Stieff, and Secretary and General Manager
heart of the Philadelphia shopping district, re- C. J. Roberts, assisted Philadelphia Manager
veals the fact that there is a parity of condi- James A. Spencer in the duties of host to the
tions of the same period of last year. In most throngs of visitors who joined in the exchange
of the stores the totals of the April sales were of congratulations over the new enterprise.
on a par with that of the same month of 1924, The officials of the company with Manager A.
the only difference being the demand for the B. Lank, of the Harrisburg Store, journeyed
types of instruments. While last year's sales from the Baltimore headquarters especially for
were chiefly for high-grade grands and repro- the occasion. Among the talent of prominence
ducers, this year there has been a marked in- in the musical world who took part in the open-
crease in the sales of used instruments in the ing ceremonies beginning at 10 a. m. and ex-
straight piano group and for the grands with tending until 8 p. m. were such artists as Jud-
the reproducer ranking next in favor. High- son Eldridge, pianist; Herschel Levenoff, violin-
grade reproducers are the most salable of the ist; Robert L. Stewart and Florence Haenle in
player group, the low-priced instruments of this a Welte-Mignon concert as accompanists on
type being very little in demand. The dealers the piano and violin; Josep Wissow, pianist, and
believe that the factor which has been respon-
sible for the falling off in the sales of the cheap-
er instruments of the player types are the bait
ads used by some houses in conjunction with
bargain advertisements, the gratuities of ac-
cessories such as lamps, covers, cabinets and
other inducements, and the dissatisfaction of the Entries From Both Companies Rapidly Rounding Into Shape—Work Progressing Rapidly on New
Store of Lee S. Roberts, Inc.—Music Roll Demand Is Good
purchasers with their players because of defec-
tive operation. Most of the instruments in the
player group which just now are stagnant are CAN FRANCISCO, CAL., April 30.—Many struction of a $31,500 building, at 2273 Berkeley,
of the leaders in the music trades here are Cal., in the trans-bay region, to be used for a
the $5'00 types and those priced under this sum.
Much gratification has been expressed by the golfers, which accounts for the sporting inter- music store and studio building. Tupper &
trade over the successful drive which has been est which attaches to the coming third annual Reed, music dealers of Berkeley, are to occupy
made by the Victor Co. in co-operation with the match between the teams of Sherman, Clay & the building, which is to be erected for them.
Found Music Roll Demand Quite Good
dealers and distributors in the Philadelphia Co. and the Wiley B. Allen Co. The trophy, a
A long tour of the Pacific Northwest from
territory during the month. The special sales plaque, after hanging for the first year over the
campaign terminates on May 10. Music desk of Harald Pracht, sales manager of the which L. F. "Lou" Goelzlin, proprietor of the
stores and those handling talking machines Wiley B. Allen Co., was transferred, last year, Pacific Music Co., has just returned, led him
only have been convinced that there is business to the office of Shirley Walker, of Sherman, to the belief that many of the dealers through-
to be had by the go-getter as evidenced in this Clay & Co. Pracht has been training on the out the territory are planning to attend the
concentrated sales effort of the Victor. Some links with Tito Schipa and can now shoot the Western Music Trades Convention in June in
of the dealers found that where one machine course in high C. but Mr. Pracht denies the Los Angeles. Business, he found, was some-
was sold last April, five were disposed of the rumor that Schipa said, as a golfer, Pracht is what spotted, but people were optimistic for the
past month in the same period of time. Crews a good baritone. It is rumored that Mr. Walk- Fall business.
were set to work with expert guidance and the er is practicing, but those who see him in his
Calling on the California Dealers
Victrolas were placed in homes for free trial, office, in the Sherman, Clay & Co.'s building,
Andrew G. McCarthy, head of the phono-
in almost every case there being a sale made say, if so, he must get out on the links when graph and radio departments of Sherman, Clay
where such trials were given. The campaign the day is very young. The rivalry for the & Co., is calling on the California dealers. Mr.
was conducted under the direction of Phila- possession of the plaque this year is keen McCarthy is the foremost representative of
delphia Sales Manager Robert Bartley, who was enough even for this.
the music trades on the Executive Committee
G. W. Bates and Lawrence Lindsey, comp- of the San Francisco Down-Town Association.
placed in charge of the special Victor campaign
trollers respectively of Sherman, Clay & Co.
service.
Mason & Hamlin With Wanamaker, Phila- and the Wiley B. Allen Co., are reported to be
about evenly matched. Arthur Duclos, manager
delphia
Of paramount importance to the Philadelphia of the retail roll department, Sherman Clay &
trade was the announcement made during the Co., is a quiet but earnest player; James J.
week by the Wanamaker Store that the local Black, treasurer of the Wiley B. Allen Co., will, Attractive Series of Advertisements Prepared
for Use of Retailers in Their Local Publicity
distribution of the Mason & Hamlin pianos it is understood, go to bed at 8 p. m. every
—New Ideas Offered
had been taken over by that nationally prom- night during the week preceding the match.
inent department store. Simultaneous with the He has a reputation to sustain and means to
C. Kurtzmann & Co., Buffalo, N. Y., continue
announcement of the Wanamaker Store the sustain it. Ed. Little, of sheet music fame, is
statement was made by C. J. Heppe & Son, expected as usual to be a tower of strength to supply their dealers with prepared adver-
1117 Chestnut street, that it had discontinued to the Sherman, Clay & Co. team, and W. R. tising of an interesting and worthwhile nature,
the sale of the Mason & Hamlin instruments Lawrence, manager of the Wiley B. Allen Co. mats and electros of which are available to the
after eight years as exclusive Philadelphia rep- branch in San Jose, is putting in a lot of work retailer for use in his local newspapers.
A particularly interesting series of advertise-,
in the peaceful Santa Clara Valley, without
resentatives.
The Wanamaker Store will have the exclu- anyone here knowing just what amount of pro- ments was issued by the company recently,
sive sales rights for both the Ampico combina- ficiency he has attained. The place, and all the copy setting forth the many materials in
tion and the straight instruments of the Mason other preliminaries for the match, will be de- widely separated parts of the world that enter
into the making of the Kurtzmann piano, rang-
cided within the next few days.
& Hamlin line.
ing from African ivory for the keys, to Adi-
Work Progressing on Chickering Store
New Stieff Quarters Formally Opened
rondack spruce for the sounding-board. That
No
definite
date
has
yet
been
set
for
the
With appropriate dedicatory ceremonies the
handsome new home of Charles M. Stieff, opening of Lee S. Roberts, Inc., but it will be the advertising service is appreciated is evi-
Inc., at 1717 Chestnut street, was formally soon. The store, on Post street near Grant denced from the fact that dealers generally arc
opened to the public last Wednesday. It was avenue, is still in the throes of being thoroughly making wide use of it.
quite in keeping with the high standing of this reconstructed with carpenters, decorators,
company in the piano industry of the country plasterers, etc., working on every hand. Lee
that there should have been provided a musical S. Roberts himself is generally to be found at
WASHINGTON, D. C, May 2.—The Central Com-
program whith would bring out the best in the the store during the day, for there are many
Stieff instruments and so an entire day was details to which he is giving his personal super- mittee on lumber standards meeting in annual
conference at the Department of Commerce
given over to an elaborate musical entertain- vision.
this week, adopted a number of important
Fine New Building for Berkeley
ment by prominent artists in the way of con-
amendment?.
A contract ha<; been awarded for the con
certs and open house hospitality to the many
Annual Golf Competition With Allen &
Go. and Sherman, Clay Stirs Frisco
Kurtzmann & Co.'s Live
Advertising Aid to Dealers
New Inspection Regulations

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