[CAUT] 1098; My faulty math?

[David Love]

One thing to consider is that Yamaha often offers negotiated deals on
supplying new pianos periodically to universities and then auctions them off
after a few years and the pianos are replaced.  Since the pianos tend to get
played fairly hard, it may be advantageous to look for opportunities to
replace the pianos frequently at minimal (if any) additional cost rather
than factor in heavy maintenance as a cost as the pianos age.  There are
many roads to pursue in these considerations and they are not all as obvious
as which piano is better out of the box (varied opinions on that
notwithstanding).  

David Love
www.davidlovepianos.com

-----Original Message-----
From: caut-bounces at ptg.org [mailto:caut-bounces at ptg.org] On Behalf Of Jeff
Tanner
Sent: Saturday, December 06, 2008 11:53 AM
To: caut at ptg.org
Subject: Re: [CAUT] 1098; My faulty math?

A couple more thoughts:

Jim Busby wrote:
"20 years ago we bought P22s for about $2,000.00 and sold them this year for

$1,600.00 in fairly good condition, people happy to buy them. Do the math. 
Net cost, not counting inflation, etc. is $400.00 over 20 years, or $20.00 
per year!!!! How can that be??"

It can be because actually, that DOES include inflation because the sale 
price is directly tied to the relative cost of purchasing a new piano.  And 
you don't have a piano anymore, so you've got to pay to replace it, and you 
haven't factored that in.  The most recent list price I have seen for a P22 
is $6000 (and I know that isn't updated for the mid-year 10% increase and it

might actually be for the last of the Thomaston models, I don't know), so 
assuming you replace your original ones with Yamahas at, say, 70% of retail,

or $4,200 each, you're selling perfectly useful pianos off for 38% of what 
it will cost to replace them, or the inflation adjusted value.  So far, you 
have bought two Yamahas at a cost of $6,200 in 20 years (That's more in line

with what a Steinway would have cost you 20 years ago, and the Steinway 
would be just getting broken in good.), but you've sold one of them to pay 
for the new one so your net cost is more like $4,600 or $230 per year, so 
far, not $20, although that figure will decrease over the next 20 years 
until you replace them again.

"If we buy a 1098 today for say $15,000.00 (???, I don't know the current 
price) and 20 years from now sell it, we certainly won't get top dollar for 
it! Maybe $5,000.00? Then we'd have to buy a new piano. Maybe $20,000.00?"

Be fair, now.  You didn't get top dollar for the Yamahas either.  And you're

not comparing purchase prices and selling prices as apples to apples.  With 
the Steinway numbers, you're comparing what you think might be the purchase 
price today and the selling price of a 20 year old one today versus what you

know the purchase value of the Yamaha was 20 years ago and the known sales 
value today.  You've factored in inflation with the Yamaha but not for the 
Steinway.  You can't project what they will sell for in 20 years because we 
don't know what inflation will be.  You can only project based on past 
performance, which is tied directly to inflation.  While the value of the 
verticals doesn't seem to increase as much as it does for the grands, it 
does seem that they hold at least their original purchase value over the 
long term.  As I wrote earlier, the true investment value of the Steinway 
vertical is seen after longer periods of use when you can sell them for more

than you paid for them, where your cost per year goes to 0 or negative 
values, or have them rebuilt after 35-40 years for a fraction of the cost of

a new one.  That is where the extra initial cost is justified - in not 
having to replace pianos every 20 years.

If you'd had Steinways and Yamahas side by side the past 40 years and sold 
them at the end of the period, I would wager that your net cost to date 
would be negative on the Steinways and positive on the Yamahas.

Tanner