Music Trade Review
Issue: 1913 Vol. 56 N. 3 - Page 5
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC TRADE
REVIEW
THE PROBLEM OF THE TRADE-INS,
(Continued from page 3.)
A piano live years old should be valued in such a class and so on up the line, decreasing the value of
the piano with each year of its service. Then there should be established a value on all pianos below a
certain age, based upon the rental earning power of the instrument.
To illustrate: A piano merchant sold a piano three years ago to a customer who wishes to trade in
the instrument for a player-piano.
Now, what valuation should be placed on a traded-in instrument, the original price of which was $350?
That instrument could not have been rented for less than $5 a month, so in three years' time the cus-
tomer has had $180 of actual value—goodness, if you will—out of that instrument.
If the purchaser had rented the piano from any local wareroom, he would have paid during the three
years $180, and he has actually taken that wear out of the instrument. Therefore, subtracting that value
which the customer had enjoyed—$180—from the original price—$350—would leave $170, which it would
be fair to allow in the purchase of a new player-piano.
The owner purchased a new instrument and enjoyed it for three years. Why is it not good business to
subtract that value from the piano instead of following the plan adopted by a number of piano merchants to
allow the full sales price of any new purchase which may be made within two or three years?
I affirm that this plan is not good merchandising and the adherence to it constitutes one of the reasons
why the piano merchants of the country have not grown richer than they have. That condition is due
largely to the fact that they never have fully understood the business principles involved in the trading-in
of old instruments.
They have been fooling themselves with the idea that they were doing business, when, as a matter of
fact, they were not doing it profitably.
This trading-in proposition to my mind is one of the great problems of the piano business, and it de-
mands intelligent treatment.
It has prevented piano merchants from enjoying the profits to which their work and energy should en-
title them. It is quite time that piano selling should be placed upon a profitable, businesslike basis.
The trading-in problem is going to grow greater as time rolls on—hence the greater necessity of estab-
lishing a standard by which to measure the value of the trade-ins.
The player-piano has made more progress in the past twelve months than in any previous year since it
became a factor in the music trade world, and it is going to be a larger factor in the year 1913. Hence, as
more of the old pianos are traded in for new player-pianos there will be a constant accumulation of the used
pianos in dealers' warerooms all over the land. How to dispose of them profitably is a question of the great-
est interest to all connected with the industry.
It interests manufacturers in the same way that it interests merchants, because if a retail business is
not profitable it means failure in the end; and, as I stated last week, there are a great many dealers who are
figuring that they are making more money simply because they are doing business; but in many cases they
are deluding themselves. The net profits are not in evidence, and it is the net profits which tell the unde-
niable facts of true business growth!
If we had a standard measure to apply to used pianos in estimating their
value as trade-ins and a national standard fixed by the manufacturers for
their instruments at retail, w r e should make a long step toward the real mil-
lennium! What do you say, brethren of the music trade?
'"I^HAT the standard of business, credit and banking, which
JL must ever go hand in hand, is on a higher plane to-day
than ever in the history of the commercial world, is the opinion
of Bernhard Benson, the well-known financial authority, who
discusses an interesting phase of the credit situation, which is
of interest to piano manufacturers and merchants in showing
the increased value and appreciation of commercial paper as
follows:
"The promissory note (commercial paper) of any sound,
legitimate business enterprise is to-day one of the strongest as
well as one of the most liquid assets that may be carried in
the resources of any financial institution. It is only a few years
ago comparatively when banks looked askance upon the single
name paper of a merchant. To-day it is the backbone of a bank's
'liquid assets.' This was demonstrated during the panicky
days of 1907. The function of a commercial bank is to cater to
mercantile enterprises, and why should not the bulk of its re-
sources be made up of short time notes issued by wholesale
general manufacturers and many other kindred lines whose com-
mercial standing is beyond question, having been tried by the test
of time? Year by year the number is increasing of financial insti-
tutions who find it profitable to invest their surplus funds in
obligations of sound and legitimate enterprises. Through the
close interchange of credits a bank at the present time has no
difficulty in checking up and satisfying itself as to the credit
standing of the maker. The credit departments of the large
financial institutions situated in New York, Boston, Chicago,
St. Louis, etc., are at the buyers' disposal and willing hands are
ready to convey the desired information.
"The market for commercial paper is becoming broader
and broader. Not many years ago it was confined to the larger
banks in the financial centers above mentioned, the broker de-
pending upon the flow of currency to and from those centers.
With the growth of the country the situation is changed. To-
day every little hamlet that has a bank is a possible purchaser of
commercial paper. When we stop to analyze the reason is ap-
parent. Stocks, bonds and other speculative investments are
subject to market conditions and changes. They either show
a decline or a profit. In other words, they are subject to fluctua-
tion. Commercial paper has its standard of value, never chang-
ing, but, like the gold dollar of the United States, worth its face
value."
THE
MUSIC TRADE
REVIEW
THE PROBLEM OF THE TRADE-INS,
(Continued from page 3.)
A piano live years old should be valued in such a class and so on up the line, decreasing the value of
the piano with each year of its service. Then there should be established a value on all pianos below a
certain age, based upon the rental earning power of the instrument.
To illustrate: A piano merchant sold a piano three years ago to a customer who wishes to trade in
the instrument for a player-piano.
Now, what valuation should be placed on a traded-in instrument, the original price of which was $350?
That instrument could not have been rented for less than $5 a month, so in three years' time the cus-
tomer has had $180 of actual value—goodness, if you will—out of that instrument.
If the purchaser had rented the piano from any local wareroom, he would have paid during the three
years $180, and he has actually taken that wear out of the instrument. Therefore, subtracting that value
which the customer had enjoyed—$180—from the original price—$350—would leave $170, which it would
be fair to allow in the purchase of a new player-piano.
The owner purchased a new instrument and enjoyed it for three years. Why is it not good business to
subtract that value from the piano instead of following the plan adopted by a number of piano merchants to
allow the full sales price of any new purchase which may be made within two or three years?
I affirm that this plan is not good merchandising and the adherence to it constitutes one of the reasons
why the piano merchants of the country have not grown richer than they have. That condition is due
largely to the fact that they never have fully understood the business principles involved in the trading-in
of old instruments.
They have been fooling themselves with the idea that they were doing business, when, as a matter of
fact, they were not doing it profitably.
This trading-in proposition to my mind is one of the great problems of the piano business, and it de-
mands intelligent treatment.
It has prevented piano merchants from enjoying the profits to which their work and energy should en-
title them. It is quite time that piano selling should be placed upon a profitable, businesslike basis.
The trading-in problem is going to grow greater as time rolls on—hence the greater necessity of estab-
lishing a standard by which to measure the value of the trade-ins.
The player-piano has made more progress in the past twelve months than in any previous year since it
became a factor in the music trade world, and it is going to be a larger factor in the year 1913. Hence, as
more of the old pianos are traded in for new player-pianos there will be a constant accumulation of the used
pianos in dealers' warerooms all over the land. How to dispose of them profitably is a question of the great-
est interest to all connected with the industry.
It interests manufacturers in the same way that it interests merchants, because if a retail business is
not profitable it means failure in the end; and, as I stated last week, there are a great many dealers who are
figuring that they are making more money simply because they are doing business; but in many cases they
are deluding themselves. The net profits are not in evidence, and it is the net profits which tell the unde-
niable facts of true business growth!
If we had a standard measure to apply to used pianos in estimating their
value as trade-ins and a national standard fixed by the manufacturers for
their instruments at retail, w r e should make a long step toward the real mil-
lennium! What do you say, brethren of the music trade?
'"I^HAT the standard of business, credit and banking, which
JL must ever go hand in hand, is on a higher plane to-day
than ever in the history of the commercial world, is the opinion
of Bernhard Benson, the well-known financial authority, who
discusses an interesting phase of the credit situation, which is
of interest to piano manufacturers and merchants in showing
the increased value and appreciation of commercial paper as
follows:
"The promissory note (commercial paper) of any sound,
legitimate business enterprise is to-day one of the strongest as
well as one of the most liquid assets that may be carried in
the resources of any financial institution. It is only a few years
ago comparatively when banks looked askance upon the single
name paper of a merchant. To-day it is the backbone of a bank's
'liquid assets.' This was demonstrated during the panicky
days of 1907. The function of a commercial bank is to cater to
mercantile enterprises, and why should not the bulk of its re-
sources be made up of short time notes issued by wholesale
general manufacturers and many other kindred lines whose com-
mercial standing is beyond question, having been tried by the test
of time? Year by year the number is increasing of financial insti-
tutions who find it profitable to invest their surplus funds in
obligations of sound and legitimate enterprises. Through the
close interchange of credits a bank at the present time has no
difficulty in checking up and satisfying itself as to the credit
standing of the maker. The credit departments of the large
financial institutions situated in New York, Boston, Chicago,
St. Louis, etc., are at the buyers' disposal and willing hands are
ready to convey the desired information.
"The market for commercial paper is becoming broader
and broader. Not many years ago it was confined to the larger
banks in the financial centers above mentioned, the broker de-
pending upon the flow of currency to and from those centers.
With the growth of the country the situation is changed. To-
day every little hamlet that has a bank is a possible purchaser of
commercial paper. When we stop to analyze the reason is ap-
parent. Stocks, bonds and other speculative investments are
subject to market conditions and changes. They either show
a decline or a profit. In other words, they are subject to fluctua-
tion. Commercial paper has its standard of value, never chang-
ing, but, like the gold dollar of the United States, worth its face
value."
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