The talking machine world (Jan-June 1928)

Carrying Charge Method of Financing Instalment Sales Adding to Dealers' Profits THE carrying charge as a means of financing instalment sales on a profitable basis was introduced to the music trade several years ago but it was not until a year or so ago that the system was adopted by dealers generally. There are many dealers who oppose this method of having the customer pay a definite fixed charge for the privilege of buying on time, but it is significant that the dealers who have adopted the plan are enthusiastic over the results secured. The following statements from music dealers situated in leading cities in different parts of the country, can be taken as typical of the manner in which the carrying charge is operated and of the results which followed the adoption of the plan. Association's Carrying Charge Schedule The talking machine and radio trade in San Francisco and Northern California generally is using the carrying charge, following a recommendation by the Music Trades Association of Northern California. The schedule drawn up by the Association reads: Five per cent to be added to the balance of account after first payment is deducted if the contract is to run ten months or less. Six per cent to be added to the balance of account after first payment is deducted if the contract is to run eleven or twelve months. Seven per cent to be added to the balance of account after first payment is deducted if the contract is to run thirteen or fourteen months. Eight per cent to be added to the balance if account after first payment is deducted if the contract is to run fifteen months. Carrying charge to be canceled if account is paid up in full within sixty days from date of sale. Interest at 8 per cent per annum to be charged from date of maturity of contract on any balance remaining unpaid at that time. How the Plan Is Used James J. Black, treasurer of the Wiley B. Allen Co., San Francisco, in speaking of how this company regards the success of the carrying charge said: "We have discovered it works very satisfac torily, and the old argument which the salesmen were obliged to overcome when the word interest was mentioned has now become a thing of the past. The attitude of the public as a whole is now entirely different toward a small carrying charge when the instrument is bought The accompanying article tells how dealers throughout the country utilize the carrying charge on instalment sales. The practice is rapidly becoming more popular with the retailers for the reason that this plan of charging for the privilege of making a purchase of an expensive instrument on the time-payment basis is giving the dealer the profit he should make on each sale. on time from the public's attitude toward the salesman's statement, 'Yes, we charge interest at the rate of 8 per cent per annum.' "People expect to pay more when they buy on time and have no objection whatever to a carrying charge. In fact, it seems to be understood and expected on the part of the purchaser. It simplifies the keeping of the instalment account and is more easily understood by the customers, who know exactly the amount each must pay, whereas the computing of the interest was something that many people did not understand. "All houses selling household appliances on time add a carrying charge and the Music Trades Association of Northern California in adopting the carrying charge on talking ma chines and small goods has merely joined the rank and file of the progressive interests, handling and selling their merchandise on monthly instalments. "The talking machine departments of northern California dealers who are using this method have the carrying charge computed and added to the balance of the account after a first payment is made, as a part of the contract. The monthly instalments are then divided into the number of months required to complete the contract. Should the contract not be completed within the specified number of months, interest at 8 per cent' per annum is charged on any balance remaining." The H. C. Hanson Music House has adopted the carrying charge method and gives it wholehearted endorsement. W. M. Ringen, general manager of the H. C. Hanson Music House, said: "We have been operating the carrying charge system since February, 1927. We are more than pleased with the results. Our office force likes it as it eliminates figuring interest. Our customers like it. Salesmen at first objected, particularly the men who had been in the business for many years. "We charge 5 per cent x>l the full amount on band and string instruments for nine months and 1 per. cent per month thereafter. For instance, a customer buys a saxophone for cash priced at $100. The term price is: $105 for nine months, $106 for ten months, $107 for eleven months, $108 for twelve months, and so on to $114 for eighteen months, plus one-half of 1 per cent on payments not made when due. We now mark our band and string instruments with the term price for nine months. "In talking to the customer we say: 'That instrument will cost you $105; no interest or extra charges, providing you make the payments as agreed.' It makes selling easier. For instance, one has a saxophone customer. First a salesman gives him the price of the saxophone, then sells him a case, and after that adds an interest charge, which means selling the same instrument over again to the customer and very often loses the deal. Carrying charge plan does not lose a customer. On radios, phonographs and pianos we charge one-half of 1 per cent per month after deducting the first payment and any trade-in. "We have found that the carrying charge eliminates the old argument, which is that the customer (on the old plan), after he has received the first month's statement, calls at the store and says he was not informed that there was interest to be charged, that the salesman told him he had not to pay any interest. Then it becomes necessary for the salesman to explain the whole transaction." Sh erman, Clay & Co. also have found the carrying charge to be successful. George W. Bates, comptroller of the company, explained that a carrying charge was always made on instalment sales of band and orchestra instruments and that two years ago, a similar charge was made on instalment sales of radio and talking machines. He said: "We find that it works very well and we have practically no trouble." Ohio Dealers Adopt Carrying Charge The Ohio Music Merchants' Association some lime ago recommended the adoption of a carrying charge by its members and scores of dealers throughout the State are using the method. (Continued on page 34) You Take Pride in Your Quality But— What About That Shipping Case ? You have spared no expense or effort to make your goods the finest of their kind that the market affords. You do this from pride and for the business reason of making them so attractive to your customers that they will buy and continue to buy. liUT — what about that important first impression on the buyer when he opens your shipping case? 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