Steinway

[EricFrankson@AOL.COM]

Dear Terry:

Steinway has always has a yearly price increase (around 6% I think) to 
constantly inflate the value of past Steinways.  When I was selling Steinways 
in the late 80's, a B sold for about $40,000.  Currently they are running 
about $54,000.  That's quite an appreciation of 'price', not value.  

I give performance pianos a lifespan of 60 years to determine value (many 
have lives longer then that, but as rule of thumb, 60 years on average is 
realistic).  After sixty years, the instrument is worth less then 10% of a 
comparable new piano.  If the piano is 30 years old, half it's 'life' is 
over, so it is worth half of what one (or a comparable one) sells for new.  
An example would be a Bosendorfer Imperial that sold for $75,000 twenty years 
ago.  A third of it's life is over, so it's worth 2/3 of what one sells for 
new.  A new Bosendorfer Imperial sells for about $160,000, so the twenty year 
old Bosendorfer is worth about $101,000 retail, before you subtract 
reconditioning costs, over-all shape of the instrument, and shipping.  That 
Steinway that sold for $40,000 ten years ago has lost one-sixth of it's 
value, so is worth 5/6 of the price of a new one ($54,000), or $45,000 retail 
(before subtracting costs of repair, etc...).  The piano's retail sales value 
is inflated only because of the yearly 6% price increase.  

The crux of the problem as I see it is that the pricing of a Steinway is 
based on a guaranteed yearly increase.  In ten years, a Steinway B will sell 
for more then $60,000.  Those who invested in a Steinway will still see an 
'increase in their return', but the sheer numbers of Steinway B buyers will 
dwindle.  After selling expensive pianos for many years, I've found that the 
market will only supply so many big purchasers, and as the prices go into the 
stratosphere, sales of these treasures tend to happen less and less.  Then 
what?  Devalue Steinways to increase sales, or continue boosting prices to 
increase relative value?  As Shakespeare said "...ah, now there's the rub!".