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Buying a vending machine is easy (Financing, leasing, reman/used, etc.)

Buying a vending machine is easier than ever before.

Everybody must have experienced the fun of buying something from a vending machine to just see it spit out the product you chose to buy. Owning a vending machine can be even more fun and rewarding. Nobody will mind an alternate source of revenue from vending machines. There are several stories where what started as a side hustle became a thriving vending business.

Investing in a vending machine can improve the experience of the customers or visitors of your establishment. Customers will find it convenient to wait with a beverage until it is their turn to be served. Businesses can also use vending machines as another channel for the sales of products relevant to their business.

Investing in a vending machine is simple when considering the following five aspects before making the purchase.

Finding the right location

One of the most important factors to consider for your vending machine is the location. If a machine is purchased for your own business, customer accessibility is a critical consideration. If a machine is difficult to access, it will have a difficult time generating cash. Additionally, if you are looking at an outdoor location, it is important that your machine has the correct specs to accommodate customers. 

If you place the machine at a location owned by someone else, then you will need to consider things like partnership expectations, such as commissions, rental fees or custom branding on the machine. Vending is a numbers game. The more people looking at your machine will result in more revenue for you.

Selecting the right products to sell

The numbers for 2019 point to packaged snacks and food items as the most sold products in vending machines. Beverages come in at a close second, leaving everything else eating their dust, but this is still a generic classification. You need to be more specific as to what you want to sell. Some products give you razor-thin margins, while others are more rewarding.

A good example would be a chocolate bar. The average gross markup on a bar of chocolate would be 46% over the list price. Considering you must still cover your logistics, energy, location fees, insurance, and other costs, this is not much. On the other hand, the humble bottle of water might give you a tidy 85% markup. The logic is simple when you need water, you need water. A chocolate bar can always wait.

It is not just the markup. It is also about the demand. Pick products that move fast. The cost of products staying in the machine is often unnoticed, but can be very costly. M&Ms might fly off the machines at a waterpark, while a yogurt cup may not. The product to location ratio is everything in the vending business.

Investing in a machine

If you know what to sell and where to sell it, all you need to do is pay for it, but this is where most operators are stuck. While some operators can dig into their operating income or personal savings to buy a machine, others cannot. However, the good news is that reputed vending machine manufacturers have made it easier for such operators to buy their machines. They offer several options like the ones listed below.

  • Cash purchase: If you have the cash and you are willing to use it to buy a vending machine, then it is straightforward. All you need to do is find the proper manufacturer or seller who will give you a machine that costs you less to buy and to own.
  • Financing: Buyers can also obtain financing support to buy their machines. Depending on the business case, the manufacturer of the machine might offer attractive interest rates or other benefits to encourage the purchase. Individual operators trying to create an alternative source of income often find this appealing, as they can invest in the latest technology without large upfront costs.
  • Used: Beginners can also try used machines. They come at a much lower upfront cost, however, the cost of maintenance and upkeep of these machines will depend on the quality of the machine. If the machine is already old, over-used, or faulty, the cost of owning the machine might become high. It is essential to buy used machines from businesses of good reputation to avoid future surprises.

Installation and Setup

The machine’s installation and setup are often covered by the manufacturer when you buy a new machine. If you buy a used machine, however, ensure that you calculate the setup cost. Other than costs, installation and setup also require skills. Configuring your machine for the products you sell, providing proper payment interfaces, connecting to software inventory management systems if there is one, and other aspects of installation might need professional support. Buying new or used machines from reliable businesses can help you address these needs. They often provide the necessary support.

And you can rest assured knowing that our dedicated service entity covers all installation, setup, and setup requirements. Vendnet also supplies all spare parts and hardware along with easy-to-use manuals for all our models that help in DIY troubleshooting.  

Stocking

Once you have the machine up and running, all you need to do is stock your machine. If you have already decided on your product, make sure you buy fresh stock. Ensure that the products are worth the price your consumers are paying. It is vital to have quality products as it impacts consumer experience. Only a happy consumer will buy again from the same machine. Also, ensure that you have the necessary mechanism to keep your machine stocked. An empty machine continues to cost you without generating revenue.

A vending machine can be your steady stream of additional income. The past two years have taught us that even a strong market or economy can be fragile. Investing in vending machines can reduce risks to your income. Operators who carefully consider the above mentioned aspects and buy from reputed sellers are wise. They minimize the upfront capital expense and optimize the cost of owning the machine while also reducing risks. Our specialists at Vending.com can assist you through your purchase of a new or used vending machine.  Our offers are simply icing on the cake that you simply cannot resist. Talk to us at 1-855-929-1042 to know more.

VC Blog

The True Cost of Owning a Vending Machine

 

Total Cost of Ownership – The iceberg below the water level

Owning and operating a vending machine is good business. More than 2/3rds of vending machine owners and operators are micro businesses and individuals. They do not have the “big-four” accounting companies keeping their books. Suppose you are a small business or individual owner-operator of vending machines. There is a high chance that you will have to keep a tab of your collections and earnings yourselves. Most of us do it, too, but what we often tend to lose focus on is the cost. While buying the vending machine is a clear capital investment, there are other costs during the life of the vending machine that will define your profitability. As an owner-operator, let us see how you can understand these costs of owning a vending machine and ensure maximum profitability from your devices.

The costs across the lifecycle

Vending machines typically have a long cashable life. This means that adequately maintained vending machines can generate revenue for several years. Depending on the type of goods, location, maintenance and technology, machines can last anywhere between 5 and 15 years. The cost of owning these vending machines is also incurred over the product’s life. As the age of the machine increases, so does the cost of owning it. That is why used vending machines are cheaper to buy, but more expensive to own. It is also easy to forget that a non-functional machine means a loss of revenue. So, the decision to invest in a new machine or buy a used one should be made after carefully considering the following costs.

Cost of Buying – The cost of new vending machines for sale can be a few thousand dollars. The cost of buying a used one might be much less. This is a one-time expense and is considered a capital spend.

Cost of Installation – If you buy a machine, you will also incur charges to transport the machine to the location. Then comes the cost of setting these machines up and getting them up and running. You may have to pay for such services if you are not an expert.

Cost of Owning – Operating the machine includes the cost of the goods sold, energy cost, the cost involved in stocking or replacing goods, and other operational costs.

Cost of Upgrading – Depending on the age of your machine and the advancements in technology, you will incur expenses to upgrade your machines. Cashless payment systems are a good example. While many machines have card readers, modern cashless systems, like NFC and mobile wallets, may need upgrades.

Cost of Retiring – If your machines reach end-of-life, you will need to remove them. Malfunctioning machines or ones with obsolete technology will continue to cost you while generating no revenue. There will also be a cost of disconnecting, dismantling and disposing of such machines. 

Understanding all the costs incurred during the entire life of the vending machine will help you decide several aspects. You can choose to buy a new or a used machine. You can also calculate the returns from your machines better.

Cost Types

In each stage of the life cycle, several factors contribute to the cost of owning a vending machine. Calculating these costs meticulously can help you estimate the profitability of each machine you own and operate. Let us discuss these cost components.

  • Machine Cost – This is the initial investment that forms a big part of your upfront cash, but this is not the most significant component of your total cost.
  • Installation and Commissioning Cost – The size of this spend depends on your expertise, availability of professional support, and your deal with the machine supplier. Some manufacturers bundle this as a part of their machines to make it easy for buyers.
  • Cost of Accessories and Peripherals – The performance of your vending machines can be improved by adding peripherals. Accessories can also help upgrade old machines and extend their life.
  • Energy Cost – Machines need lighting, refrigeration, heating, handling payment transactions, or connection with back-end platforms.
  • Location or Real Estate Cost – This cost depends on your agreement with the owner of the location. Machine operators pay fixed fees, a commission on the sales made, branding on the machine, or a combination of these options.
  • Maintenance Costs – The maintenance cost includes servicing outages or repairs and preventive maintenance scheduled at regular intervals.
  • Merchandise Cost – This is the highest cost of owning any vending machine. This can be a few hundred dollars or thousands of dollars per stock replenishment, depending on what merchandise you sell.
  • Insurance Cost – General liability insurance costs are also a component that runs into a few hundred dollars per year.
  • Warehousing Cost – You will incur this cost to store your inventory before stocking your machine.
  • Consumables, Parts & Supplies Cost – Your machine will consume resources to operate. Some of them are your coolant in your refrigeration unit and lubricant in your mechanical unit. These will need periodic replacement or replenishment.
  • Taxes on Earnings – Taxes on your income from the vending machines are based on what and how you report in your earnings statement.
  • Cost of Downtime – All the above costs are direct costs that can be measured. The cost that cannot be measured is the cost of downtime of your machines. This is the revenue lost when your machine is not usable. If your stock includes perishables like fruits or packaged meat, downtime will also cost you the spoiled inventory.

 

Recovering Total Cost of Ownership

It is now clear that the cost of owning a vending machine is just the tip of the iceberg, but do not let that scare you. Vending machines are a very lucrative investment with a low barrier to entry. The returns from this investment are fast and help you recover your total cost of ownership quickly. Every transaction your machine makes can give you a decent markup on the product sold. Depending on the location and merchandise, operators markup merchandise prices by anywhere between 50% to 200%. This is the fee that the consumer pays for convenience and accessibility.

Further, reputed machinery manufacturers also support their customers in the buying process to make investing in a vending machine even more attractive. They also have tools that help you estimate your returns from investing in a vending machine. You can call the experts from Vending.com at 1-855-929-1042 to learn more about the costs and benefits of investing in your next vending machine.

Cost-Benefit Comparison for Vending Machines

  • Per Machine Profitability
  • Aggregate Revenue and Profitability
  • Maximizing Profits

Selecting the Right Machine

  • Help you understand TCO
  • Partner, not vendor
  • One-Stop-Shop (Machine, parts, consumables, software)
  • Financing
  • Accessibility.