13. Take this percent and deduct it from the price of any article sold, then subtract from the remainder what it cost (invoice price and freight), and the result will show the net profit or loss on the article.
14. Go over the selling prices of the various articles and see what are profits; then get busy in putting your selling figures on a profitable basis and talk it over with your competitor as well.
A Credit Policy for Retailers
While the minor factors governing a credit policy for retailers vary with local conditions, the fundamental principles are alike everywhere, and should have the thoughtful consideration of all retail distributers of coffee. After a retail grocery store experience of twenty-five years, a past president of the National Association of Retail Grocers of the United States[344] found that a grocer should insist upon references and a thorough investigation of every new applicant for credit, refusing the privilege when the prospective customer hesitates to give the needed information; that he should arrange a date for periodical payments, explaining that this is necessary so that the storekeeper can arrange to meet his own bills, which will enable him to discount his invoices and to sell his goods cheaper; that statements of accounts should be sent out promptly and never a few days late; that he should insist on payment in full when due, requesting the customer to call if an extension of time is asked; that he should not let the customers decide when they will pay bills, bearing in mind that the possible loss of a few customers who do not pay promptly is offset by the advantages of cash when promised; that he should never abandon the hope of collecting an old account, but should try the method of sending statements only to the surest customers, sending a clerk for the collection of all other accounts; that he should personally examine all uncollected accounts every month, insisting on a reason for failure to pay; that he should study his customers and not trust those who give a bad impression; that he should have the courage to say "No" when necessary; not to be satisfied with merely a financial rating on a credit applicant, but to ascertain his general reputation and character; and to help to eliminate the "dead beats" by giving careful attention to all requests received from other retailers for credit information.
Premiums for Retailers
House-to-house dealers are the largest users of premiums among coffee distributers. Most of them operate under what is known as the advance-premium method.
The plan followed by house-to-house dealers until about 1910 was to issue checks redeemable in premiums after a certain amount of tea, coffee, or other products had been purchased. This practise has not been entirely abandoned; but in most instances, the premium is now handed to the consumer in advance of the initial purchase, in consideration of the buyer's promise to use a stipulated quantity of tea, coffee, or other merchandise. The driver of the wagon generally carries a portfolio illustrating numerous premium items redeemable through the purchase of varying amounts of merchandise.
Many retail coffee stores also employ premiums, using both the old-style and "advance" methods. This type of store, however, is being supplanted by the chain grocery store.
Some independent retail grocers use premiums to a limited extent. These usually carry a small line of premiums, featuring a piece of kitchenware, or other inexpensive item, with bulk coffee.
It is significant that one of the largest chain-store organizations in the United States—the Great Atlantic & Pacific Tea Company—uses few premiums today, although its business was founded on the premium idea.