11 replies to this topic

[HooseFoose]

Is it worth giving a big location a commission? It always seems like such a huge pain, in addition to losing some of your profits for the site. I am loathe to do it, but Scottgtg was saying on another thread that if you don't give them a commission, then you are much more likely to lose the account. Is it worth it to "secure" the account?

Please add your thoughts on subject. I talking about locations over 100 employees.

Sincerely,

~HooseFoose~

[BVI]

Is it worth giving a big location a commission? It always seems like such a huge pain, in addition to losing some of your profits for the site. I am loathe to do it, but Scottgtg was saying on another thread that if you don't give them a commission, then you are much more likely to lose the account. Is it worth it to "secure" the account?

Please add your thoughts on subject. I talking about locations over 100 employees.

Sincerely,

~HooseFoose~

Bottom line it's service, not commissions. If you provide great service and keep prices reasonable, commissions are irrelevant. It's all based on building a relationship with the account, and making sure the account is taken care of. That's what keeps your accounts intact. I have found that good accounts care more about great service than anything they might gain from receiving a commission.

I have had so many accounts tell me that they don't want a commission, just reasonable prices and good service for their employees.

Nowadays, I turn down any business that insists on a commission. I just won't do it. It's a pain and time waster, and if you don't provide good service anyway, the commission won't make any difference.

[coinvestor]

Bottom line it's service, not commissions. If you provide great service and keep prices reasonable, commissions are irrelevant. It's all based on building a relationship with the account, and making sure the account is taken care of. That's what keeps your accounts intact. I have found that good accounts care more about great service than anything they might gain from receiving a commission.

I have had so many accounts tell me that they don't want a commission, just reasonable prices and good service for their employees.

Nowadays, I turn down any business that insists on a commission. I just won't do it. It's a pain and time waster, and if you don't provide good service anyway, the commission won't make any difference.

I have been struggling with this topic alot over the last two weeks. Three times this week I have ran into good size accounts that were getting commissions. The bad thing is the pricing in these accounts are still cheaper than my prices without commissions.

I have always felt that commission free was the way to go. The only exception to that being were the authorizing party has no real benifit to you being there like tourist type locations, apartment complexes, student areas in schools, or other areas where the machines are for public use only. These types of locations don't need vending, they don't have a workforce that they are trying to maintain, they just want to rent the space.

In January I bought an account from a guy going out of business. It was a car dealership that the guy had for about five years. I showed them great service and took there weekly sales from $55 to $200. I raised there prices last month and volentarily upgraded there equipment since they were refurb'ed when they went in five years ago. The owner of the dealership called and wanted a custom front on the drink machine (which I was expecting since the one I took out had one). The conversation went great, but then he asked how much he was getting off these machines. I explained to him that we were providing a service and that because we were not paying a commision we were able to offer the better equipment and the custom fronts and that this was some of the benefits of a sevice that is not strapped with paying commissions. The guy stopped just short of cursing me out. He thought that the previous vendor and myself were paying commission and could not believe that he was bringing in people from all over the county to sit in front of my machines and that he was footing the bill for the power and did not recieve any monetary benifit.

This conversation bothered me for days. I'm thinking maybe I should just add commission into my pricing and pay it for all good accounts. I just don't know!!!!

The downsides I can see to a commission is writing a check and mailing it and that the increased prices may reduce sales slightly. The upsides I see are account retention, less service scrutiny, less pricing pushback (higher pricing=higher commsions) from managment anyway.

What do you guys think?

Has anyone ever taken over an account that was recieving commission without offering one?

JD

[For The Kids Vending]

I'm just starting so I have an opinion but no experience. A larger site where the machine is for employees or a service they need I would shy away from it. I would certainly discuss it with them openly and do it if they want it, but I would offer to donate a few cases of pop for their summer picnic and winter holiday parties as an alternate or keep the prices a little lower than they would otherwise need. If you don't discuss commission with a large site somebody else might.

Small locations will never get a commission from me because they are - well small. Mechanics, etc. need to have something there in their waiting rooms to make their customers comfortable.

A site such as an apartment complex or a building where the manager leases the space to others (common space) I will always offer a commission because they have no incentive to let you use their power otherwise. I will explain it may only be $20 to $30 per month and see if they care.

One question: Those with experience in this what rate do you use? 10% is common, but is that gross sales or net (after product costs) sales? I'm guessing its net, but I would like to see what you have to say.

[BVI]

I'm just starting so I have an opinion but no experience. A larger site where the machine is for employees or a service they need I would shy away from it. I would certainly discuss it with them openly and do it if they want it, but I would offer to donate a few cases of pop for their summer picnic and winter holiday parties as an alternate or keep the prices a little lower than they would otherwise need. If you don't discuss commission with a large site somebody else might.

Small locations will never get a commission from me because they are - well small. Mechanics, etc. need to have something there in their waiting rooms to make their customers comfortable.

A site such as an apartment complex or a building where the manager leases the space to others (common space) I will always offer a commission because they have no incentive to let you use their power otherwise. I will explain it may only be $20 to $30 per month and see if they care.

One question: Those with experience in this what rate do you use? 10% is common, but is that gross sales or net (after product costs) sales? I'm guessing its net, but I would like to see what you have to say.

Don't ever be the one to bring up commission in a negotiation. If you bring it up, they will expect it. If you bring it up, you will lose.

If the prospect brings it up, explain the rationale for not paying a commission (keeping prices low, providing better equipment, more frequent service, etc...). Then stick to your guns. If they insist on a commission, I would kindly tell them you are not interested and then leave. Believe me when I tell you I have no problem telling any prospect I am not interested. Don't be so desperate to get a new account that you make a commitment that you later wish you had not entered into.

The misunderstanding here is that paying commissions will get you accounts and help you keep accounts. This is pure bunk. This is a relationship business. Providing great service is what will get you accounts and when others come knocking on their doors, it is what will keep your accounts. No amount of commission will keep an account for you if your service is mediocre or poor. You must understand this or you will create more work and expense for yourself than is necessary.

[coinvestor]

Don't ever be the one to bring up commission in a negotiation. If you bring it up, they will expect it. If you bring it up, you will lose.

If the prospect brings it up, explain the rationale for not paying a commission (keeping prices low, providing better equipment, more frequent service, etc...). Then stick to your guns. If they insist on a commission, I would kindly tell them you are not interested and then leave. Believe me when I tell you I have no problem telling any prospect I am not interested. Don't be so desperate to get a new account that you make a commitment that you later wish you had not entered into.

The misunderstanding here is that paying commissions will get you accounts and help you keep accounts. This is pure bunk. This is a relationship business. Providing great service is what will get you accounts and when others come knocking on their doors, it is what will keep your accounts. No amount of commission will keep an account for you if your service is mediocre or poor. You must understand this or you will create more work and expense for yourself than is necessary.

BVI,
Have you ever taken an account that was getting a commission, but they decided to not take a commission and go with you?

I'm just getting frustrated with my area. So many prospective locations here have prices that are way too low. Some still have candy and pastry at .60 and this is a fairly large vendor with 4-5 people working for him!!!! Then I find accounts that have halfway reasonable prices that I could take over without too many price increases only to find that they are getting commissions (which is the only reason the prices are reasonable).

I only have one account right now that gets a commission (10% of gross sales).


JD

[DJ-Sound]

Commission is fine IF they sign a contract.

I would say in the contract the location is liable for ALL damages to the machine. I would also not agree to a % until the machine has been placed for at least a month so you know how much that location is capable, then enter talks with the location on a percentage.

[djpvending]

Commissions actually can be a negative thing. As has already been stated, the business is based on strong relationships,good service and competitive pricing. Look at it this way. If you make a sales call and commissions is brought up by the customer as a priorty issue, you probably should walk away. Why? Because it means that income is their issue, and if you take the account, usually anyone who comes along offering as little as 1 percent more than you,will take the account away.

if your customer on the other hand, prioritzes service as #1 , but is only looking for a small commission for things like a flower fund, xmas party, etc. then that is reasonable, as long as the sales arre good enough to share with them.

[blue]

I have talked to many people and 10% seems to be the standard rate from GROSS sales.

I'm just starting so I have an opinion but no experience. A larger site where the machine is for employees or a service they need I would shy away from it. I would certainly discuss it with them openly and do it if they want it, but I would offer to donate a few cases of pop for their summer picnic and winter holiday parties as an alternate or keep the prices a little lower than they would otherwise need. If you don't discuss commission with a large site somebody else might.

Small locations will never get a commission from me because they are - well small. Mechanics, etc. need to have something there in their waiting rooms to make their customers comfortable.

A site such as an apartment complex or a building where the manager leases the space to others (common space) I will always offer a commission because they have no incentive to let you use their power otherwise. I will explain it may only be $20 to $30 per month and see if they care.

One question: Those with experience in this what rate do you use? 10% is common, but is that gross sales or net (after product costs) sales? I'm guessing its net, but I would like to see what you have to say.

[BVI]

BVI,
Have you ever taken an account that was getting a commission, but they decided to not take a commission and go with you?

I'm just getting frustrated with my area. So many prospective locations here have prices that are way too low. Some still have candy and pastry at .60 and this is a fairly large vendor with 4-5 people working for him!!!! Then I find accounts that have halfway reasonable prices that I could take over without too many price increases only to find that they are getting commissions (which is the only reason the prices are reasonable).

I only have one account right now that gets a commission (10% of gross sales).
JD

My largest account (you know which one) was getting a commission from their previous vendor, and the conversation started out that they were going to expect a commission from me. But they were having to send the commission to their main office - which is something he didn't want to do - so he decided to scrap the whole idea of receiving commission and wanted me to simply go a good job for them since the other company was so bad.

There are some good points to be made about paying commission, but the bottom line for me is that this is not the kind of business I want. If an account is stuck on the commission issue, they are interested in how much money they can get, and if another company comes along who is willing to offer them a higher percentage, then you are at risk of losing the account even if your service is good, and that's just not the kind of account I'm after, regardless of the size.

[kevin]

My largest account (you know which one) was getting a commission from their previous vendor, and the conversation started out that they were going to expect a commission from me. But they were having to send the commission to their main office - which is something he didn't want to do - so he decided to scrap the whole idea of receiving commission and wanted me to simply go a good job for them since the other company was so bad.

There are some good points to be made about paying commission, but the bottom line for me is that this is not the kind of business I want. If an account is stuck on the commission issue, they are interested in how much money they can get, and if another company comes along who is willing to offer them a higher percentage, then you are at risk of losing the account even if your service is good, and that's just not the kind of account I'm after, regardless of the size.

commissions are necessary in alot of places. One reason that my customers bring up is that they supply the electricity. Pretty much all I pay is 2-5% and alot of times I just offer energy efficient machines or put timers on them so they are not consuming energy at night.

I have some accounts that are very high traffic and the company keeps my machines clean for me along with the whole lobby. I only pay then 5% and only on the drink and snack, not on the food machines.

Schools are impossible to get without very high commissions. We bidded one out at 20% commission recently and if we get it we will not make a ton off of it, but over time, with the 12 machines needed, we should turn a very high profit.

Then I have accounts that are ruff on the machines, attempt to shake for free product constantly, and never tend to take care of the machines. For these accounts I would never offer a commission. Its hard to pay out this money unnecessarily, but if you are not willing to do it you cannot secure big accounts because other operators are willing too. Also we do not do contracts ever, and we pride ourselves in that, but at the same time our area is a bit different in thinking with contracts.

[HooseFoose]

For those who pay commissions:

Do you pay your percentage based upon the gross earnings?
Or only upon the profits?
What is the industry standard?

Sincerely,

~HooseFoose~