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REVIEW
THE
VOL. LXXX. No. 8 Published Every SaUrday. Edward Lyman Bill, Inc., 383 Madison Ave., New York, N. Y., Feb. 21,1925
Sin8
Jf.ooTe r9 Y°ear entN
How Many Pianos Must Be Sold to
Sell 300 New Instruments
What Appears to Be a Question Without Importance for the Retail Piano Merchant Develops Unsuspected
Sides When Subjected to an Analysis—How One Retail Merchant Sold 548 Pianos in Order to Dis-
pose of 283 New Instruments Within the Term of Twelve Months
OW many pianos must a dealer sell in
the course of a year to finally move-
off his wareroom floors 300 new instru-
ments within that period? Sounds like a foolish
question that answers itself; yet the retailer
who gives it some serious thought and goes
over his records will be surprised at the amount
of work involved in the disposal of this or any
other number of new pianos.
A retailer in the Middle West bragged some
time ago to a manufacturer that he had sold
some 280-o"dd new pianos during the past twelve
months. He had the cost figures and the mark-
up all carefully listed in a general total and es-
timated with fair accuracy his overhead, giving
some consideration to the paper he had accu-
mulated, and then felt free to boast of a very
sizable profit.
The manufacturer had given some thought to
the matter, however, and surprised the dealer
with the question as to just how many sales
he had made. "Two hundred and eighty-odd,"
was the reply, "didn't I just tell you?" But
a little conversation served to throw light on
the situation and it developed that in selling
283 new pianos this particular dealer had really
sold or would have to sell eventually 548 in-
struments at least, viewing the matter from the
most optimistic standpoint.
Percentage of Trade-ins
In this particular case, for instance, the deal-
er admitted that of the 283 new pianos disposed
of 212 hinged upon the acceptance of an old
instrument as part payment. Some of these
allowances represented excellent deals from the
dealer's standpoint—others did not prove so
profitable. Hut that fact did not alter the situ-
ation regarding the number of sales actually
made.
In short, only seventy-one of the instruments,
and a recent survey showed that this is a fair
proportion, were sold on what is generally
termed a "clean" basis, that is, without any
exchange being involved. It meant that 212
pianos or players taken in trade must be dis-
posed of before the transactions covering the
year's supply of new instruments could be con-
sidered as completed with all liabilities liqui-
dated or satisfied.
On top of this the dealer admitted to four-
teen repossessions during the twelve months. He
also agreed that there was a possibility of more
repossessions, but fourteen were all that could
H
be accounted for in dealing with actualities at
the moment. This meant that these instruments
had been, or were to be, resold, thus making
at least fourteen additional sales to cover the
year's business with the possibility of more in
the event that the resales meant taking other
r T
l
HE analysis of a typical retail piano
merchant's sales during the course of
one year as given in this article gives an ade-
quate idea of the total sales of pianos of all
types which are made during the year by
the retail trade. The trade-in represents
what may be termed for want of a better
name a "rotating turnover" which must
always be considered in studying the num-
ber of units disposed of. In this case only
71 out of 283 sales made by the merchant
represented new piano owners; the rest were
replacements of old
instruments.—EDITOR.
instruments as part payment.
At least one
of the repossessed instruments had been re-
possessed and resold twice, thus adding ma-
terially to the sales average with the possibility
of the total being increased in a similar fash-
ion.
In this particular case the dealer enjoyed
what might be considered a very satisfactory
quality of business with no more than the av-
erage of sales made on an exchange basis and
with only about the average percentage of re-
possessions, his total on the year's business be-
ing about 5 per cent. The case cited, however,
serves to emphasize interestingly and strongly
the amount of sales effort that is required to
move a specified quantity of new pianos, this
term taken to include players, reproducers, etc.
Tremendous Turnover
On the basis of the figures offered in the
case of this one particular dealer, whose busi-
ness may be held as representative of that han-
dled by the great majority of the trade, there
is presented a tremendous gross total of sales
for the entire industry in the course of any
normal year. Taking the plate figures as offered
by the Music Industries Chamber of Commerce
as a basis for calculation, it would indicate that
some 254,000 pianos were made and presumably
disposed of by manufacturers during 1924,
though probably the actual number turned out,
or at least shipped, was higher. If the Western
dealer's experience may be regarded as typical,
and there is no reason to accept it as otherwise,
then the piano merchants of the United States
during 1924 were called upon to make at least
a half million complete sales of instruments
before achieving a complete turnover on the
year's output of new instruments. In mak-
ing this calculation, of course, no account is
taken of the fact that the paper involved in the
transactions will run for one or two years or
more. The fact that the paper has been ac-
cepted is considered to represent the definite
conclusion of the sale.
The Markup
There is considerable said in and out of the
trade regarding the substantial markup on
pianos and the difference between the whole-
sale cost and resale price is often referred
to as indicating great profits for the retail piano
merchant. There is no question but that these
references are more or less injurious, particu-
larly when they are presented before the public
through the medium of sensational advertising
that would seem to place the particular dealer
in the position of cutting his gross margin of
profit to a percentage comparable with that
realized by the grocer and the butcher.
Dealers themselves with the best of inten-
tions often hesitate about the markup on pianos
upon which national prices are not quoted. They
have fallen into the bad practice of regarding
the markup, whether it is 80, 90 or 100 per cent
of the cost price, as gross profit, a term that has
spelled the ruination of more than one prom-
ising business.
As a matter of fact, there is no such thing
as gross profit. It is simply the markup, from
which is to be deducted every item connected
with the cost of doing business. When all
these items are deducted and they include much
beyond rent, light, heat and salaries, as, for in-
stance, the cost of repairing and reselling ex-
changed instruments, the cost of handling re-
possessions, the cost of carrying or financing
paper, etc., then what remains may be described
(Continued on page 22)