Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
JUNE 6,
1925
THE
MUSIC TRADE
REVIEW
The Trade-in and Its Effect on the
Net Profit of Piano Dealers
The Sixth 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
P
ERHAPS the best summing up of the entire
question of the trade-in, so far as its evils
and the remedies which will meet them are
concerned, is given in response to a request
from The Review by a prominent retail piano
merchant in the Southwest. This dealer, who,
according to his own statement, makes an an-
nual profit on the trade-in side of his business,
analyzes the chief evils of this question as fol-
lows:
"The chief evils of the trade-in in the retail
piano trade are excessive valuations prompted
primarily by competition, a condition which in
turn springs from distrust of competition. Com-
bined with this there exists an ignorance of the
facts that, after cost of conditioning, etc., resale
cost per cent is the same as a new sale cost.
Then there is the practice of inflating new sale
prices, with the intent of covering an excessive
valuation on trade-ins, and a lack of backbone
to maintain the inflated prices, allowing the
buyer to bear down the new sale price in spite
of the excessive trade-in allowance."
He goes on to point out what he considers
the remedies for these conditions, which he
gives briefly, as follows:
"The house, the sales manager and the sales-
men should be taught and required to think in
terms only of net profit, that which is left at the
end of the year for the stockholders, 5 or 10
per cent of the sale price, more or less, instead
of the apparent hundreds of dollars profit on
sales, this with a blithe disregard of overhead
expense. The salesman, too, frequently realizes
10 per cent or more for himself on a sale. When!
there is a lack of this attitude, then, alas, noth-
ing is left at the end of the year for the stock-
holders."
One of the most frequently given reasons by
the dealers for the present unsatisfactory con-
ditions existing in the trade-in question is a
lack on the part of many manufacturers of a
national one-price for their instruments. Around
60 per cent of the merchants replying to The
Review's questionnaire stated that this was at
the basis of the trade-in evil. Judging from
what they state, the practice of inflating prices
on new merchandise is prevalent to a larger de-
gree than is generally considered, which leads
in turn to the inflated allowance on the old in-
strument. The dealer, in the long run, they say,
gains nothing from this practice, which only
lends to cut down sales volume and to sap pub
lie confidence in the industry. This, from the
dealers' standpoint, as expressed to The Review,
is much more important than the compilation of
any set schedule of trade-in valuations.
It is perhaps surprising how few merchants
there were who considered the schedule of val-
uations as a remedy. Only about 20 per cent of
those replying mentioned it at all, and many of
these as a subsidiary remedy. Evidently the av-
erage retail piano merchant considers that he
is quite capable of judging the tangible value of
a used piano which is offered in trade without
any outside aid, and considers that the cause of
excessive valuations rests, not in ignorance of
used piano values, but in competition based on
greed for sales. It is apparent that he consid-
ers that any series of schedules would do little
to remedy a condition of which the causes lie
far more deeply.
The merchants' expressions of opinion on the
entire question were highly interesting. A mer-
chant in Arkansas wrote:
"We have no difficulty in disposing of our
trade-ins and make a fair profit on the majority
of them. We are never overstocked on trade-
ins but find a ready market for them. This is
partly due to the fact that we have a well-
equipped shop with capable workmen, who put
these instruments in good salable condition so
that they can easily be sold in competition with
lower priced instruments. We keep a cost card
on each instrument showing the time spent and
the cost of the material used which is taken
into consideration when the instrument is priced
for resale.
"We know that some of our competitors in
this field are badly overstocked at times with
trade-ins whereas we are usually short on this
class of goods. Of course, the chief evil of the
trade-in is the overallowance, which is very
hard to overcome in the small towns, owing to
the fact that it is practically impossible to get
the dealers to co-operate with each other."
A retail piano merchant in New England pre-
sents rather a unique plan to overcome the
trade-in evil. "You ask what are my sugges-
tions as to the best remedy to overcome the
trade-in evil. The real solution is this, in my
opinion. Let every dealer refuse to accept old
instruments in trade. Furniture dealers do not
accept old rugs and old furniture in trade for
new merchandise. Why should the piano dealer
do so? This is the remedy for the evil.
"Let all dealers organize an exchange with a
warerooms in their respective cities, to be
owned and operated on a co-operative plan, to
which the prospective buyer of a new instru-
ment with an old instrument to be traded-in
can be referred as an outlet for that piano. In
other words, have a sort of clearing house to
which folks can sell their old instruments for
cash. Then let them buy at the dealer's who
can best meet their requirements. If all deal-
ers would refuse to accept trade-ins and could
tell a prospect where he could sell his old in-
strument for cash, then they could clear their
floors of old 'junk' and make a reasonable profit
on the sale of new instruments. The dealers
themselves could own the 'piano exchange for
second-hands' and whatever profit was realized
each year would be divided proportionately
among the stockholders. In this manner old in-
struments would be bought right and sold right
and the cost for repairs would be offset by a
fair profit on the resale price. It is up to the
dealers in every city to get busy and carry out
such a plan. It can be done by the local co-
operation of every dealer and every town in
the country."
This plan, while radical in its departure from
the usual method of treating the trade-in ques-
tion, holds interesting possibilities, and provided
dealers in a city could obtain 100 per cent co-
operation in their locality, it would seem to hold
interesting possibilities.
In summary, the remedy proposed most
widely by the dealers for the trade-in evil rests
on a greater degree of standardization in the
price of new instruments, the wider adoption of
the one-price system by the retail merchant and
a stricter adherence to it where it is in existence
more in theory than in practice. Here, in their
idea, is the nub of the entire problem, a posi-
tion which is confirmed by every evidence.
Special Cable-Nelson Display Made by Platt
T OS ANGELES, CAL., May 29.—The Platt
Music Co. recently prepared a most elab-
orate window display as a suitable background
for the showing of the 150,000th Cable-Nelson
piano, which was recently received by the com-
pany from the Cable-Nelson factory, South Ha-
ven, Mich. The instrument, beautifully embel-
lished in gold, has attracted wide attention lo-
cally, and some attractive newspaper advertis-
ing concerning the piano was run.