Music Trade Review

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DECEMBER 1, 1923
THE
MUSIC
TRADE
REVIEW
11
What Is the Overhead Expense Limit
Overhead Problems in the Talking Machine Department of the General Music Store Much Less Complex Due
to the General Practice of This Branch of the Music Industries in Pricing Instruments on a National
Basis and Selling at a Discount From the Retail List to the Dealer
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Talkin g m ac hines an d records are sold as
widely in the general music store as are piano·s ;
in fact, the music merchant who handles th e
latter and not the former is a striking exception
in the trade. How ever, the problem of over­
head in the talking machine department differs
radically from that in most of th e other depart­
ments in the slor e, since national retail prices
prevail in that end of the t ra.de and the deal er
is sharply limited by the discount which he re­
ceives from the manufacturer and must adjust
his overhead within the limits of this margin.
A second fa cto r in this co ndition is that the
le ad in g lin es of talking nuchin es and records are
nationally advertised an d that a good proportion
of th e retail se llin g work, as a consequence, is
done by the manufacturer. ll ence th e overhead
expense in thi s (lepartment tends to range lower
than it doe s in most of the other departments
of the gen era l music stores.
The se facts were all clearly developed in the
investigation of overhead expense in retail music
stores recen tly conducted by The Review. The
rep lies of the dealers sho w ed lower overheads
here and developed clearly the difference in the
problems of this department. They showed that
the talking machine department manager is in
a fa vor ed position, since he has a definite pur­
chas.e price and a definite selling price, with
an exact percentage of mark-up between the
two. The problem here, therefore, is not to
mark th e goods to cover his o·verh ead and n et
profit, but rather to keep the overhead so far
within the mark-Up limits a s to allow for a
suitab le net pro fit in the final a naly sis.
T he qu estion for th e head of the ta lk ing
machine department is not so much whether
the di s count from the list price of the manu­
facturer is 40 or 40 and 10 or 50 pe r cent, as
it is how he ca n keep his distributing expense,
in cluding all overhead charges, wit h in a fi gure
th at will a llov,( him to retain at lea st 10 per cent
of the sellin g price, or perhaps more, as his own.
Average Figures Used
The fic:ures used in this table are, of course,
average ones. Th ere are talking machine de­
partments in general music stores the over­
head expense of which ran ge much higher than
those quoted h e re. Salaries were reported as
high as 16 per cent, delivery charges in some
cases went over 3 per cent, rent was r eported
as hi gh as 7 per cent and advertising as 9 per
cen t. But these were the except ional cases; in
fact, houses th at reported gen eral overheads of
ov e r 30 per cent were few an d far between.
Yct th ere was one of the larges t houses in the
country the average overhead expense of which
ran over this figure.
Althou g h th e he ad of the talkin,:; machine
department has th e advantage of fixed costs and
fixed selling prices in figuring his business ac­
co unt s, he is handicapped in a considerable
measure on that ve r y account, for, as pointed
o ut in this article al ready, he must keep his
JUNIUS HART OPENS NEW STORE
ADDS TWO STORIES TO BUILDING
Well-known New Orleans Music House Oc­
cupies New Four-story Building
KNOXVIL.LE, TE'IN., '\'ovemher 24.- -The J. V.
Led.'.;erwoocl 'lvIusic Co., of this cit y, ha s an­
nounced plans for the addition of two stories
[0 the building w hich the con cern now occupies.
This is the iourth ('xpansion of thi s firm.
)1,,\\. OR!.E.\,>,S, L.\., November 26.-The ne\\
Cjuartcc, of the Junius Hart Pi ano Co a t 123
('a rond e1c t str eet h ave just b een formally
op ened, and will afford the company spacioLl~
an d up-to-date showrooms befittin ;.~ their re pu­
t ~ltion
and prestige.
The Hart conce rn,
31 th o u ~ h a Lo ui siana corporati on , is the Soul h­
e rn representative of W. W . Kimball &. Co., of
Chicago, alld the Kimball piano is handled ('x
elusively. The house dates b ack to 1872, when
it was fir st established at (a nal and BUfl';llndy.
FrolTl there the firm moved to other points in
the Cana l street zone, being cO lJlpelled to seek
more co mlTlodious quarters for it s incrC:lsing
business .
.'\ conside rabl e part of the front of the new
store is devoted to large display window o
capablc: of g-iving- a com prehen sive idea of the
~ tor e 's co nt ents. Flanking th e entrance passage
are the departillents subleased to thr Conn New
Orleans Co., rer:ional ag ent s for Conn band
instrulllent<, and the sheet music shor> of Frank
& yIcNall1a ra, who ga ined their experience
w ith Leo Feist, Inc., in )lew York. The sound­
proof booths for phonograph records and pla yer
rolls are equipped with an apparatus fo r private
demonstration, and are supplied w ith purified
ai r by a special vt;ntilation device.
The store in its completed form is one o.f the
finest in the South.
With thi s article is published a table of av er­
age overhead expenses in tlie talkin g machin e
departments of a large number of general music
~to-res, compiled from the results of The Re-
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Overhead in the Talking Machine ~
Department
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i Salaries .... . ......... . l3perc en t I
~ Delivery ..............
2 per cent i
~ Repai r Department ... .
1 per cent ~
i Advertising ... .'....... 6 per cent i
~ Rent ........... ,. .... .
3percent ~
~ Depreciation ..... . ....
1 per cent ~
= Financing and carrying
i
trade-ins ............
.1 pe r cent
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Total overhead expense
27 per cent ;
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view's questionnaire, and which strikin g ly con­
firm this analysis of the situation:
AMES BUVS OUT S. J. SLOANE
CAMF.1{() N, Mo .. November 26.-F. H. Ames, of
Jamesport. has purcha sed the m usic and jewelry
business co sts within the prescribed limI ts and
must do this adjusting by shaving here a nd
th ere, rather than as in the case with other
products, not na ti onally priced, increasing his
mark-up to allow for the n et profit margin. In
other words, if a department manager finds
that it is co'Sting him 3S per cent of his retail
price to move the goods, leaving him only 5
per ce nt net profit, he cannot increase that sell­
ing price to protect th e n ex t margin, for the
list price is the maximum price. His only
course lies in effecting economies in hi~ bu~i­
ness al ong lines that ar e at lea st lik ely to cut
down this disproportio.nate percentage.
The importance of providin g suffici ent ne t
p rofits through the mediuTll of econ o lilies, in
businesses \\here an u pward revision of resale
prices is not possible, has been realized by th e
united States Go·vernment itself, which, through
th e D epartment of Commerce, ha s called con­
ferences of business men to consider the ques­
tion of eliminating waste in th e distribution of
\ arious products. The president of the Nat ional
Assoc iation of Mu si c Merchants, with which a
lar !;e number of talking machine dealers are
affi li ated , ha s likewise taken cognizance of the
import a nce of this work by app ointing- a com­
mittee of repre;; entative trade m embers to con­
sider a nd report on the same problem.
Economies Through Better Selling Plans
By putting economies into effect it is not
lil eant that savings shou ld be made on equip­
ment, on stock or by hiring sa les people of low
caliber. The way out is more likely to be found
in rearranging the sales plan and th e advertis­
ing plan, including the covering of the mailing
li cien cy an d, consequently, greater re su lts. In
short, th e problem is no t so nlu ch that of do­
ing- the same volume of business at le ~s exp e nse,
but ratht'r of d etermining ways and m ea ns for
handling a larger volume of business at the
same expe ns e.
business of S. J. Sloane, who has been es tab­
lished h ere since 1907. The new proprietor is
already in c harge of th e s tor e. Mr. Sloane will
rpmain in Cameron and will be an officer in the
Citizens' State Bank.
SIOUX FALLS CO. BANKRUPT
SIO UX FALLS, S. D., NO\'embe t 26.-The Sioux
Falls Piano Co., throu gh its owner, George L.
Fish, has filed a petition in bankruptcy with
liab iliti es of $46,164 and assets of $22.
Florey Bros. Grand Pianos Are Distinguished
THEY are distinguished from all other brands for several
important reasons. Among these we might mention
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Washington
Exceptional standard of mu sical tone, individual design and
unusual refinement in workmanship and finish. They are
manifestly superior in every detail, made by OLD SCHOOL
CRAFTSMEN, on a basis of Quality Standard rather than Quan­
tity Output.
Dealers whose customers discriminate
should write for our literature .
1J11orry 1!lr05.
New] ersey