post

Purchasing Advice

Location Considerations

I talk a lot about choosing the right products to fit the location you placed your machines in. I understand it’s hard to always have the perfect product on hand, but it’s worth noting product ideas and needs for placing future orders, because the great thing about this business is how easy it is to rotate out and switch products while running your route. Putting some thought into what you’re selling, and where, will pay off in the long run.

Cost to Profit Analysis

Always do a ‘Cost to Profit Analysis’ for every product before purchase. A basic formula is;

‘case cost + shipping = total product cost ÷ approx. vends = cost per vend + (tax*) + (commission*) = true cost per vend’.

Example: 1” gumballs 850ct. @ $24.00 a case with $10 shipping (24+10 = 34/850 = .04 + .01 + .05 = .10 my cost per vend) which means I make .15 per vend on a .25 cent machine.

The basic formula is great for giving you a granular look at your cost to profit, but bulk vending is all about bulk sales, and the big picture, so by adding a couple of steps you can get a better picture of your cost to profit. The advanced formula(s) is;

‘case cost + shipping = total product cost ÷ approx. vends = cost per vend + (tax*) – (commission*) = true cost per vend’

THEN USING YOUR TRUE COST TO VEND

‘sale price – true cost per vend = total profit × approx. vends = total profit per case’

Example: 1” gumballs 850ct. @ $24.00 a case with $10 shipping in a .25 cent per vend machine (24+10 = 34/850ct. = .04 + .01 + .05 = .10 my cost per vend) THEN (.25 – .10 = .15 x 850 = $127.50 profit per case)

*tax if applicable, not all states charge a sales tax on vending items but in these examples I use my own states tax of 4%. To simplify I break down my four percent into .04 cents per dollar in sales and break that down to .01 cent tax per .25 vend.
*Commission if applicable, if you use a commission structure to help you place your machines then you need to take this into account when figuring your costs. For these examples I am using a 20% gross commission structure. To simplify I break down my twenty percent in .20 per dollar in sales and break that down to .05 cents commission per .25 vend.

Speak Your Mind

*