2 replies to this topic

[rbelljr1]

new to the game and looking to see what I should expect to pay monthly for a contract or commission to the business where my machine is? what's the norm, high, too much? thanks

[AZVendor]

Ideally you will pay nothing and simply provide good quality service.  Never broach the subject of commission, but always be prepared to speak to the subject if it comes up.  Commissions are the parasites that eat away at the vending industry and its profits.  Any money you pay to a location comes off your bottom line and if you don't factor it into your business plan you could find your location making more money than you do.  Commissions are not required to be paid if you don't choose to pay them.  You might not get some accounts without paying something, but you call the shots on that. 

 

A realistic commission rate can be anywhere from 5% to 25% or more with the dishonest vendors quoting the high number and the bottler actually paying it on a sliding scale (they can pay more because they make the product).  The rate should factor in the anticipated sales, the product type, the prices you will charge and the local competition.  The account probably doesn't understand commissions and how they are calculated, they only understand the money they receive each month.  The easiest way to calculate it for your sake is to pay a percentage of your gross sales.  The rate is generally higher on soda and lower on low margin snacks.  You could complicate if for your account and say you will pay XX% of the net profit, or offer a sliding scale, pay on soda and not on snacks, or offer an outrageously high rate but not pay it all (obviously dishonest, but others will do this and you can't convince the customer that this is happening).  You see, there are far too many variables to simply explain commissions. 

 

If you choose to pay a commission you should have higher prices because of it and it must be a rate that you are comfortable with.  Know your cost of goods and your route expenses.  Know what your profit margins are so that you have an idea of what you can do when you approach an account.

[rbelljr1]

ok cool, thanks for the info, helps a lot!