7 replies to this topic

[KJS Vending]

I am planning on buying a few used snack machines and trying to place them in a promising office, but I know the manager is going to want to discuss kickbacks. Any help on where I should start or what is too high to give away?

Also does anyone know how different states handle placing machines at highway rest stops?

KjS

[rngrck]

I am planning on buying a few used snack machines and trying to place them in a promising office, but I know the manager is going to want to discuss kickbacks.  Any help on where I should start or what is too high to give away?

Also does anyone know how different states handle placing machines at highway rest stops?

KjS

<{POST_SNAPBACK}>

Generally anywhere between 5 and 10 percent is what I offer. You could also stipulate certain dollar amount of sales i n order to pay commission.

[mpitts0426]

I am planning on buying a few used snack machines and trying to place them in a promising office, but I know the manager is going to want to discuss kickbacks.  Any help on where I should start or what is too high to give away?

Also does anyone know how different states handle placing machines at highway rest stops?

KjS

<{POST_SNAPBACK}>

First of all, they're not called "kickbacks" they're called commissions. Take the monthly depreciation of your machines (your purchase price divided by the number of months you feel they can remain in service) and add to that the cost of your product, the cost of any sales taxes and refunds you have to issue, your labor costs and any other overhead. Finally add in in what you want as a profit margin. The percentage you have left of estimated gross sales through your machines shows you how much you have to offer in commissions. It's all a moving target based on your costs, your product mix, your prcing, etc.

Most states give first crack at their rest areas to the blind. The federal government, as well as most states, have what they call the Randolf Shepperd Act. That act guarantees the blind the right to operate vending in federal and state locations where the public has access. If there is not a blind vendor in the area that can cover a location, then you could cover it. (Keep in mind we're talking about legally blind here. The vendor does not have to be completely blind to take advantage of this program.) Rest areas typically have very high vandalism rates so be carefull whatever you do. Check with your state highway department for any possible opportunities.

[marks_vending]

I am planning on buying a few used snack machines and trying to place them in a promising office, but I know the manager is going to want to discuss kickbacks. Any help on where I should start or what is too high to give away?

Also does anyone know how different states handle placing machines at highway rest stops?

KjS

if you do 10%, remember to do 10% of profits, not of sales. If you sell something for $1.00, you don't give them 10 cents, you give them 10% of profit, so if you paid 50 cents for that item, you would give 5 cents commission

[kevin]

if you do 10%, remember to do 10% of profits, not of sales. If you sell something for $1.00, you don't give them 10 cents, you give them 10% of profit, so if you paid 50 cents for that item, you would give 5 cents commission

I have never heard of doing a commission percent based on profit. In fact I can think of a lot of accounts I would lose if I didn't offer a percentage based on gross sales. The way we do it is we try and mark everything up to were we make 30% on snacks and 40% on beverage. Sometimes you can make more sometimes less. I have one account that looks like this

Chips .75
Pastry 1.00
Cookies .75
Candy .85
Cracker .65
Big bag candy 1.25

We pay a 15% commission on all sales and we have a coffee machine and 2 frozen vendors at this location. Though we only take about 25% on this account, it is very high volume.This account is also a state organization, so we do not have to pay taxes on the product sold there based on our tax law in our state.

Then you have the other side, the account that wants very low prices and no commission. A very large one that we service looks like this

Soda(20 oz) .90
Energy Drinks 1.75
Chips .75
Pastry .90
Cookies .65
Candy .85
Cracker .65
Big bag candy 1.25

This account we do pay taxes on but we do not pay a commission so we are able to make closer to the 30% mark on all products except energy drinks.

As a whole I try not to pay commission unless its 5 machines or more, which isn't often. I also pay a lot of my commissions in coffee. I will do 2-5 boxes of coffee free on the first delivery day a month. By doing this the Accounting people feel like they are getting a $25+ box of coffee where it only costs me around $16. And in many cases the account buys enough coffee after the free boxes in that month to cover the coffee and then some.

The only problem with doing this, is that you can get in a bind if the "Big Boss" dosn't realize that you are giving this free and demands more. For some reason people don't always get the concept outside of the accounting department. They don't see that I'm saving them money on something that they would already be buying, instead some people just want a check thats worth less to them in the long run and puts more money in my pocket because of the markup on coffee when they end up buying it from my drivers anyway.

[marks_vending]

It must be different for canadians and americans. Here in Canada the going rate at any standard vending machine is

CAN POP= $1.00
ICED TEA and 5 ALIVE= $1.25
CHOCOLATE BARS= $1.25
CHIPS= $1.25

Here's what we pay in order to resell:

0.75 per chocolate bar
0.50 per bag of chips
0.25-0.33 per can of pop

Unfortunately chocolate bars, pop, chips are no longer cheaper in bulk quantities from wholesalers.
I have seen many machines in bigger Ontario cities like Toronto and Ottawa where the chocolate bars are $1.35 and pop can is $1.50.

If I sell 50 chocolate bars a week (buying at 75 cents and charging 1.25) that's 0.50 per bar / $25 profit I make. If I give 10% of sales, I owe $2.50. If I give 10% of actual profit, that's $1.25.

Over the course of 1 year and 1 machine, just with chocolate bar sales, I would make $1300 profit
If I paid 10% of sales that's $130 per year
If I pay 10% of actual profit, that's $65 per year.

You can also think of it this way....
If you pay 10% of the total sales, then you are paying 10% more to buy your items, because let's say you buy a chocolate bar for 50 cents, well you have allready agreed to pay 5 cents (10%) to the location owner, so that chocolate bar cost you .55 cents. Add up all the money you have spent on supplies filling the machine for the past year, and then ad an additional 10% on top of it, because that is what you have paid in total for the item.

When explained to the potential owner of the location, they understand 10% of profits. Why should a location owner get paid a commission on you actually going and buying the chocolate bar.

Hope this helps

Those crazy canadians eh?

[eagle90301]

I have been going at the buisness for a little more than 3 years I own one machine (just fine with me close to home)I bought the machine from a friend that i was partners with for several years. I pay 500.00 a year which is a little more than 10% of the profits, A lot less than 10% of my sales.

[marks_vending]

I have been going at the buisness for a little more than 3 years I own one machine (just fine with me close to home)I bought the machine from a friend that i was partners with for several years. I pay 500.00 a year which is a little more than 10% of the profits, A lot less than 10% of my sales.

Yeah, 10% of profits is big difference between 10% of sales.

DOllarama in Canada just increased the price of chocolate bars and gum to $0.69. a 0.04 cent increase, but as we know in the vending business, that 4 cents is better in our pockets