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Jacob

Trade-ins

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Let's say a shop offers an entry-level range of instruments with the violin outfits retailing at $300. If a customer buys a 1/4 size, and then wants to trade that in for a 1/2 size of the same range, what is the normal procedure? I can understand that, in the case of an upgrade to a more expensive instrument, the full value of the first instrument is knocked off the price of the upgrade, but what if there is no upgrade, and the customer wants to trade in a $300 instrument on another $300 instrument?

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My local shop's rule roughly like this: you get back about 50% of its value without too

much trouble. If you buy a greater value instrument, say $600, you pay $300 additional (plus

your old purchase, sometime subtract a $100) In short, it is almost like no deal.

If you can sell your old $300 instrument on your own, you can just buy a new 1/2 with new money $500.

For adults, it better of buy a good instrument , the most you

can afford at time, and stick with it as long as possible. The more time you trade it up, the more you lose. (my experience the sum is considerable)

For example, if you see a $5000 violin and you like it very much. You can offer $4000 and

ask the shop to contact the owner (consignee) if the deal is okay. Most time the owner's interest

is to get rid of it.(funny isn't it?) why bother a trade in (the math. is more complicated for the shop).

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At the shop I usually go to, they always give 100% on trade-ins. I once bought a cello bow (US$2500) after about a month and a half of using it, my teacher and I decided that it was too light and was forcing my right arm to work too hard (althought it got a very nice tone out of my cello), so I took it back and the luthier brought out the same case of bows with a few new bows and I picked out a different one. He didn't charge me anything for it, just switched the pricetag off my new bow to the old one.

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One of Maestronet's sponsors, Johnson Strings, has their rental equity program concisely described on thier web site. I know you are talking about purchase/trade-ins; not rental equity, but it is a further data point. Trade-ins in this area are on a case by case basis, but I have to say I have never been made aware of a trade in of more than 50%.

Marilyn Wallin

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Thanks for the responses.

Somehow I had the impression that some shops offer a 100% trade-in. The specific example Wilhelm mentioned I would classify as an "exchange" rather than a trade-in.

If it were true that some shops offer a 100% trade-in which does not involve an upgrade, I can't figure out the economic viability of that: if a customer starts off on a 1/4 size violin outfit of $300, trades it in for a 1/2 size outfit of the same price at 100% after 18 months, a 3/4 after another 18 months and a 4/4 after two years, this customer would have had four new violins over five-year period for a total outlay of $300 - and he would still have the last one, which he could possibly sell for $300. So, four violins in five years, for free if he sells the last one. Does that make sense?

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I know what you are all going to say............"How does he make any money?!?!?!?!?" ...............

but the policy at the shop I currently work for is 100% trade in value minus a $50 trade in fee for violin/viola and $100 trade in fee for cello/ bass. This covers the cost of strings and bow rehair. Can't beat that deal eh? I worked for another shop in Indiana and they offered the same kinda deal. Of course, this is only on instruments purchased from us.

We would deduct any needed repairs if there were any, but we also offer a protection plan on instruments under $1700, so if they have the protection plan, they could bring in a bag 'o cello bits and get full trade credit (as long as it wasn't intentional damage.)

and yes, he still makes money and business is booming and growing.

Dorian

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Thanks Dorian, your post is very helpful indeed.

If you run a business, 100% trade-in makes no sense. !00% trade-in minus $50 and tax makes buckets full of sense compared to that - the proverbial light was switched on in my befuddled brain.

Thanks again!

Any "Testores" about to see the light of day again soon, or are you going for an even darker side of lutherie these days

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It makes sense if it is a small transaction. For example, if a shop wants to close a $5,000

transaction, why they care about the $50 ? (I would not just because it is a lot of paper work)

PS. If you bought a $2,500 and walk in the same shop to trade-in a $5,000 instrumnent, (new money $2,500 ) then the $50 is basically irrelevent.

If you bought the violin from other shop, you are lucky if you can get $1000 allowance.

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The shops here in Atlanta work the same way. Most shops will offer 100% of the purchase price toward an upgrade (minus repairs or a small trading fee.) It's just good business and a way to keep a loyal customer. Why would you shop elsewhere if your current fiddle is nice "coupon?"

Of course, the selection can start to dwindle in shops that offer many beginner level instruments. At some point, you have may have to explore - especially when entertaining the purchase of a professional quality instrument.

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"So, four violins in five years, for free if he sells the last one. Does that make sense?"

We do a 100% trade-in as well. The other thing to remember is that you (the shop) have the trade-in to rent out or sell. It works out in the end.

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When my kids were young we (and all the other parents we knew) used a shop/luthier who did 100% trade-ins. It generally works like this:

1. Kid buys first violin for 300 USD 1/4 size

2. Kid trades that in for 300 USD 1/2 size

3. Kids trades for 300 USD 3/4 size

4. Kid (and parents) so happy with the shop, trade 300 USD 3/4 size in and pay 2700USD more for a good full-size outfit.

Shops that charged 100 restocking fees or whatnot through the fractional sizes missed out on the larger sale at the end of the growing process.

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Our shop offers 100% trade-in on upgrades on 4/4 violins. We recommend renting fractional size instruments, and exchange them for free whenever a larger size is needed, and give substantial credit of rental paid toward purchase. They're also pretty liberal about exchanging instruments of equal value. We've had customers that have been with us from the beginning through professional grade instruments. Being a maker helps a bit with the economics.

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quote:


Originally posted by: barnesviolins

I know what you are all going to say............"How does he make any money?!?!?!?!?" ...............

but..etc.

and yes, he still makes money and business is booming and growing.

Dorian[/q+++++++++++ (quoted)

As a consumer, I would say it is only fair if you make money. No one can stay in business

for very long if they don't. We need violin shops around to do repairs and show cases to admire.

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How did this 100% trade in policy become common in the violin business to the point where some customers expect it? I would like to try doing business like this at the appliance store, or perhaps at the auto dealership. I do not as a rule garuntee 100% trade in for customers, but rather stress to customers the exceptional service and initial value of the products and services that I sell. I also stress to purchasers that in instrument is a tool, not an investment, and that they should never assume that they are going to get something for nothing. This type of policy tries to lock the customer in for the long term, and can lead to resentment by some customers when they feel trapped by a particular dealer.

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Friz,

Using your example, part of the reason may stem from the fact that both appliances and cars are items which, because of their moving parts, suffer from "wear and tear" and depreciate in value. There is no reason to think that a violin that has been played for 1-2 years by a student will not be worth at least as much as the price originally paid. If there is "wear and tear", the shop would deduct this from the trade in value. I also think it safe to assume that in most cases there is an increase in instrument price when moving up in size. I do agree that trust and service are the main reasons to do business with a shop and a "trade in guarantee" is not enough to bring me back to a shop that did not exhibit these qualities.

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quote:


Originally posted by:
4fiddlinkids

Using your example, part of the reason may stem from the fact that both appliances and cars are items which, because of their moving parts, suffer from "wear and tear" and depreciate in value. There is no reason to think that a violin that has been played for 1-2 years by a student will not be worth at least as much as the price originally paid. If there is "wear and tear", the shop would deduct this from the trade in value. I also think it safe to assume that in most cases there is an increase in instrument price when moving up in size. I do agree that trust and service are the main reasons to do business with a shop and a "trade in guarantee" is not enough to bring me back to a shop that did not exhibit these qualities.


Actually, I tend to agree with Friz. In almost all cases, cheap student violins do not appreciate... they depreciate. While maintenance for a $300 violin can be found at a reasonable rate, any more severe restorative work (even careful touchup beyond simple dings) is well beyond the scope of cost/benefit. These items are not "built to last". They have a limited average service life (attrition rate if you like). If that average is 10 years or 50, it's still limited. Add to this the competition from developing markets (was Japan, then Korea, then China, Bulgaria, now India, etc.) and the prices that result... Heck, you can find student instruments for $100 retail that "function" (on some level at least), if that's what's desired.

I don't deal with student fiddles, but I worked for a rather large firm that did. Trade policies there were set to a blend that reflected what customers expected (based on competition) and what made sense economically... not just one or the other. In great part, the long term "profit" expected reflected careful market analysis which examined the initial profit margin, the average number of instruments that could be expected in trade, what the costs of accepting those trades were, and what some of these customers went on to purchase when upgrading. The statistics were periodically reviewed. Trades were resold or entered into the fleet of rentals. I 'm sure exceptions existed, but I believe they were considered a "cost item", not a "profit item" at that point.

Did I mention I don't deal with student fiddles?

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I agree that student instruments do not appreciate. Since we're currently re-thinking our rental policy, this thread is particularly interesting to me. Given the growth of e-bay and other internet instruments, rental life is changing. Some people assume that since they can get a violin on the internet for $100, all violins are really worth $100, and we're cheating them with our 'so-called' $300 violins. Also, I'm tired a tracking down dead-beats, and am ready to let the local music shops have the rental market. My active rental pool is the lowest it's been in many years, and I'm not pushing that end of the business right now.

Still, there's the mortgage due every month, and many times we're scrambling to scrape it together.

So here's how we do it. Our rentals are all rent-to-own. We charge an interest rate. Given that many start out as fractionals, we allow them to trade up to the next size, provided the instrument is in decent shape.

If it is in decent shape, the instrument goes back into the rental pool. Minor nicks and scrapes are left as-is, unless some day I have time on my hands and feel like trying a touch-up experiment. These instruments earn their keep over their lifetime, which is indeed limited.

If it's not in decent shape, the customer is charged. If the repair exceeds some amount, usually in the ballpark of $150-$200, we throw it out. And hope that it paid for itself.

On the other hand, most instruments we rent out are not ultimately purchased. I haven't counted, but my guess is that 50% or more of the students quit before they purchase their instruments, many in the first year. The fiddles come back in, and go back out as rentals. They are worn, but usually not terribly mis-used.

On full-size instruments, we offer the 100% trade-in for purchase on a more expensive instrument. Again, this happens in only a fraction of the purchases. It's hard to know whether the adult players loose interest, or are satisfied with the one they own, at least enough to put their money into other things, like appliances, cars, or mortgages.

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Is this what they mean by the term` loss leader?`  So three

hundred dollars gets you a kids fiddle for (10?) years!

 And your only cost is strings and shoulder rests? Wow, that

is quite the deal, to say the least. A nd all this for a possible

sale of a real instrument years and years down the road.

 Sounds like a big fish only game, but how do us small guppies

compete with this?

 I wish I could get a deal on hamburger meat. After all, I

shop at  the same grocery store over and over. At least they

could throw in a bag of milk every once in a while. I think I'll

ask next time I'm shopping. Just seems like good business,

no?

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Hi Darren,

"I wish I could get a deal on hamburger meat."

Well, you'd have to bring back the hamburger meat in such a shape that someone else could buy/rent it.

I don't know if it's the best deal for my shop or not. As I said, it was under review just before this thread started. And there are big fish in the area; I'm certainly guppy-sized.

There is the interest or finance charge. There is the profit margin on the instrument. A sale of a more expensive instrument is gravy, not the meat. When people take care of the instruments, make payments, return them, everything does work out.

The trouble is when people don't take care of the instruments or don't return them. I've had to go to elementary schools in search of instruments. It's really no fun contacting the orchestra teacher to see how to get a violin from a grade-schooler because the parents don't respect their contract.

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Hi Ken, hope I didn't offend, that wasn't my intention. I haven't

tried to do the rental thing so I have no valid opinion, anyway. I

was considering it,up until recently, but it just seems

for me that it's in the category of a "nice" service, but not

something that would help me with the mortgage to any meaning full

amount. I give away too much as it is. I'm also in a very small

market, also.

Yeah, the burger analogy didn't quite work, But my

point is that it seems  we are expected to give all these

"deals"  because we are a small niche market. but,

 for the businesses who appeal to large markets on day to

day stuff, its not even a question. And they are the ones who could

eat it, easily.

 

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We do a lot of rental, and it's a very profitable part of our business. The instruments we rent sound good and are very durable. Annual maintenance is mainly strings and bow replacement (cheaper than re-hair). Most of the rental instruments don't need touchup, and those that do only take about 15 minutes, if you know what you are doing. I don't have precise records (installing better tracking systems presently) but I'd say we get easily ten years our of a rental instrument, and it might be rented by ten different people during that time. The teachers like the instruments very well (no kickbacks, ever). By the time they've been rented for ten years or more, they've produced a lot of profit, and coincidentally, sold a lot of better instruments.

The same instruments, regraduated and rebarred, and with a little varnish work, make an instrument that is surprisingly good. We often sell them to accomplished amateur players who are on a budget, along with advancing students and fiddlers.

As far as payment goes, we usually charge four months at a time for a substantial discount over our single monthly rate, or else do an annual rental with automatic monthly billing to a charge card. If the charge doesn't go through, we pick up the instrument. Collections aren't much of a problem, since one way or another we get a fair amount of money up front.

Ken, if you want to know more, PM me. Darren - you too, if you're a dealer. We were guppies, too, in 1992.

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No offense at all. It is a strange business. A family that thinks little of buying 2 or 3 off-road 4-wheelers for family fun has to agonize over a $20/month rental. Yet there it is.

The little violins are fairly sturdy, though they scar easily. If you can rent a 1/4-size violin 3 or 4 times for a year each, you make money. Provided the customer meets their obligation.

And it can turn into something magical, to see these kids making music. We have to pay the mortgage, feed the family, but we're in it because we like fiddles and music.

I can tend my garden in the morning, see the sun come up, watch how much the grapes grew overnight, then get to work on violins. Not so bad.

But when I have to repossess a violin from a family in a nice house, with a big screen TV, cell phones, iPods and plenty of other material goods, I have to wonder if that's one vine I should prune.

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Sounds like a big fish only game, but how do us small guppies

compete with this?


Several music stores and violins shops in my area rent instruments

at incredibly low rates and give 100% on trade ins. The general

music stores generally charge very high prices for poor quality

stringed instruments. The violin shops charge top dollar for

reasonable quality instruments.

My niche is selling very good quality full size instruments for

reasonable prices. I can do this because I do not rent instruments

and therefore do not have rental costs/losses to cover. I make sure

that every instrument I sell is in top condition. I spend several

hours setting up each instrument , which is quite evident to

my customers and their teachers. I have narrowed my market to those

who can appreciate quality, a professional setup and are

willing to pay for it.  As for repairs, I am quite sure I

charge more than anybody in my area but I make sure the final

product is worth the cost. I always make sure that I do a little

more than is required with each repair.

I also make sure every visitor to my shop has a pleasant

experience. Since I am not messing with rentals or poor quality

instruments I have more time to talk to each customer. I enjoy

seeing my customers and it shows.

I also advertise. I send out ad packets containing 5 to 10

 very professional looking business cards and a nice letter

describing my work to every string teacher, professional

player and general music store in the area several times

a year. Most general music stores do not have a luthier  so it

they are happy to hand out my cards when a customer comes in with a

violin repair. Remember advertising doesn't cost, it pays. I also

maintain an web site and use Google's AdWords advertising which is

surprisingly cheap.

My point is that you don't have to corner the whole market in an

area to be successful. Don't compete with others for small amounts

of money (example - rental profits/cheap instrument repairs, etc).

Target your market, be selective in what you do, and then do that

well.

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