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Pricing and margins


nvb

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I've got a question for all you pros..

I recently landed a partially subsidized account. Electronics factory with an even split between white and blue collar.

Company covers my wholesale costs.

At what point do low prices cease to drive sales?

For example, Will I be better off charging .50 or .75 for a soda?

I think this demographic will be somewhat frugal, and obviously I want to create every day customers

Nvb

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I don't understand how you're doing this.  Are they giving you .25-30 per can and then you charge regular price or the difference between what you want and what they pay you?  If they pay you your cost then I'd only charge the difference, like .50 if you wanted to charge .75 and they pay you .25.  Whatever prices you have that are .25 less than normal will drive your sales.

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I have never done a subsidy account, but I would use the same type of math to set prices that I use elsewhere, then subtract the subsidy.  So if I had an item that normally sold for .75 and the company was subsidizing .35 the sell price there would be .40.  Your overhead will be the same as anywhere else so you have to recapture that plus profit.

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I've got a question for all you pros..

I recently landed a partially subsidized account. Electronics factory with an even split between white and blue collar.

Company covers my wholesale costs.

At what point do low prices cease to drive sales?

For example, Will I be better off charging .50 or .75 for a soda?

I think this demographic will be somewhat frugal, and obviously I want to create every day customers

Nvb

You need to clear 35 cents on each soda.  Given that your wholesale price will fluctuate (especially on sodas) I'd figure 35 cents as my wholesale cost including CRV. Plus you;ll probably have to pay sales tax.  35 cents plus sales tax should round out to 40 cents but this is an awkward vend price as you'll be forever short on dimes so 50 cents would be a good sales point.  This will be substantially lower than any other soda machine in the area and people that use vending machines are well aware of what the typical pricing should be.

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