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When I started out on my vending machine business here in Vancouver, BC Canada in 2012, as I have mentioned before it was a vendor who is about to retire and was going to enjoy the large vending route that he sold in parts. During that time he has vending locations from Fraser Valley to Richmond, BC and I believe he handles around 30 locations with around 60 machines and he split into different buyers. He sold the Vancouver and Richmond locations to me.
On the year of 2012 the cost of the chips, chocolates and pop on his machines are only :
- Chip = 1 ( mostly Frito Lays )
- Chocolate = 1.25 ( mostly Nestle, Hershey and Cadbury )
- Pop = 1.25 ( mostly coke and Pepsi products )
the cost during that time for the products as far as I can remember are : chips=0.47, chocolates=.66, pop=.45
There are some locations that the prices are around :
- Chip = 1.25
- Chocolate = 1.50
- Pop = 1.25
I actually wanted to have a uniform pricing on all the products but the former vendor told me that if you are offering commissions to the location the prices will be on the higher side and if they simply wanted your good service at their location then it will be the lower prices.
Right now it is already Year 2017 and generally my costs are : chips=0.57, chocolates=.82, pop=.52
My locations since 2012 are still on the old prices and it’s very hard for me to increase the prices because the people in the location tend to react and will get annoyed and say that even if the selling price is $1 for a bag of chips, the vendor’s profit will still be significant.
Yes it true that even if I sell it at $1 for a bag of chips at today’s cost I will still be earning at a decent profit margin, the problem is that the 90% of the other vendors out has already successfully had a new pricing :
- Chip = 1.50 or 1.75
- Chocolate = 1.75 or 2.00
- Pop = 1.25 or 1.50
I have locations currently selling the new prices and both me and my customers are very happy since I make decent profit and I serve their location with good timing intervals.
The problem right now is that im left with a lot of old locations since 2012 which I have not increased prices and felt that my time and gasoline is wasted since my costs are higher now. I did try to increase some locations to :
- Chips = 1.25
- Chocolate = 1.50
- Pop = 1.25
But the sales dropped for about a month and then it will gradually pick up again when the customers get used to the new prices. In this business no customer likes to pay price increases when they are used to the old price for a long time already. When you are doing business, it is but natural that you stay competitive and at the same time not offer a price too low that you don’t have enough money on the table to provide yourself some good quality time and some expenditure for personal passionate activities e.g. online courses, movies or whatever one’s desire.
Sometimes I was thinking that there should be a uniform price for all the vendors where both the customer and vendor have a mutually beneficial relationship.
The best prices that a vendor can earn is usually in Hotels, Community Centers, Public places where is a lot of foot traffic and where a lot of people congregate like in Malls, Outlet Stores, Movie Centre and Airport where the prices on all the products are at maximum prices :
- Chips = 1.75 to 2.00
- Chocolate = 2
- Pop = 1.50
Well if you are going to be in business for a long time and if it’s worth your time, it would be best to price your products appropriately. With good prices on your vending business machines it would also be easier to sell your location in case you wanted to get rid of it.
In the business of pop and snack vending machines as compared to the coffee business industry the profit margin is nothing, since the coffee business normal margins would be around 200 to 300%
I have a suggestion, if you are very contented with your present vending machine business with say 20 to 30 locations then it would be wise to diversify into some coffee business. I mentioned earlier on my previous post that the coffee business here in Vancouver, BC Canada is very lucrative and there are tons of cargo vans going around downtown every day and servicing their coffee accounts, and you do not need a large cargo van to carry so much inventory.
With coffee business it will be much simpler I presume because I used to have 3 coffee machines at 3 locations and they are bringing me good income but I have taken the 3 machines out on the 3 locations because at was when I was starting the vending machine business way back in 2012 and my capital resources is limited and I cannot spend too much on the repairs on the coffee machines.
The coffee machines are very sensitive and it easily gets broken and you must have basic knowledge on how to repair the coffee machine before you venture into this kind of business. When visiting coffee locations which I had 3 locations before, it takes a lot of my time just to clean the machine and there is always a problem it’s either the hot chocolate or hazel nut or french vanilla that is not working properly, there are simply to many parts inside the machine that can go wrong at any given point in time. I wonder why they still keep on building coffee vending machines if they don’t last as long as pop or snack vending machines.
Since it is a challenge for me to delve into the coffee vending machine business, im trying to study it again in case it is wise to have a portfolio of coffee accounts.
I will post articles here at my website if my entry into the coffee vending business will be successful, I might be willing to try my hand again in the near future.