Do you base your commission percentages off GROSS SALES or PROFIT ?

[antoniocinisi]

Lets say you offer 25% commission. You collect a total of $100. You take 25% directly off for COG then slplit the remaining $75  between yourself and the loc owner?

So really they're only getting 75% of their original 25% (being every quarter that goes into the machine)?

yes.

lets remember that cog is not the only expense involved in operating a vending biz..the differance every  $100 is $7.25 more 4 the operator

[mizugori]

How about those locations that make anywhere from 15 to 20 a month if your going by net what do you tell the owner ,ok here is your dollar for the month of June.LOL.

If the location is that slow it's not going to make hardly any difference whether you're doing gross or profit. Here's an example:

Supposed a 2" toy capsule machine brings in $30 GROSS monthly. You're vending at 50 cents so that means 60 sales. Your cost per unit for the toys is 13 cents. 60 x .13 = $7.80 which is your cost of goods. So you subtract 7.80 from 30 and get 22.20 profit. So if you were doing 25% off PROFITS, you would pay the business owner $5.55. If you had been paying them off GROSS, you would be giving them $7.50.

So we're only talking about 2 bucks difference. Not a hell of a big difference to the business owner.

But to you, it adds up because suppose you have 20 machines placed, well that's $40 difference to you.

[JPVendCo.]

locations that bring in less then 30 a month are better off as charity locations.

[matt-attack]

Makes sense. Business owners should realize that you have to make money too. So when you give them a receipt, would you want to bring attention to this. (ex: steve's commission receipt) or would you want to keep it on the low down?

[havending]

There are many ways to spin this idea.  But when dealing with locations you want to make it as simple as you can.  Most locations dont really want you there in the first place they just do it for the few extra bucks.  If we start to say things like were dudcting the cost of product where does it end.  next you will hve some one saying well i deduct gas and so on.  When servicing you want to walk in fill count and clean then pay.  not give math lessons on how im paying.  I service 10 to 18 locations a day four to five days a week  I want to keep it as simple as i can.  I only know of one operator that pays this way and his locations dont know that hes doing it. 

Why should the location owner pay for your cost of doing  business. 

[Profits]

Here's the system that everyone was so doubtful about:

Bring a scale, weigh the quarters.  Each $.25 = 1 product, for $.25 coin mechanisms.  Each $.50 = 1 product, for $.50 coin mechanisms.

Each head has a single product price.  That makes this process easy.

Here's our 4 product pricing examples:

MONKCV 250 Monkyin' Around Fig  $18.50   (7.4 cents cost per vend, 17.6 cents profit per vend)

SSMICV 250 Sticky Mix           $12.95   (5.18 cents cost per vend, 19.82 cents profit per vend)

GLCRC 250 Glow Cross Necklaces  $32.50  (13 cents cost per vend, 37 cents profit per vend)

Dubble Bubble Seedling Fruit Gumballs - 850 ct.  $40.54  (4.7 cents cost per vend, 20.3 cents profit per vend)

Your prices are:  Monkyin' Around for .25, Sticky Mix for .25, Glow Cross Necklaces for .50, and Gumballs for .25

1.  How many quarters do you have?  Throw them on the scale.  You've got 83 quarters for Monkyin' Around, 98 quarters for Sticky Mix, 140 quarters for Glow Cross Necklaces, and 41 quarters for Gumballs.

2.  You already know your profit per vend.  Total it up.  

Net after product:

Monkyin' Around: $14.60

Sticky Mix: $19.42

Glow Cross Necklaces: $25.90

Gumballs: $8.23

After 50% Split:

$34.07

Write your location a check for $34.07.  This will take MAYBE a minute to calculate.  And all you needed was a scale, a calculator, and a checkbook

[sherlock]

Here's the system that everyone was so doubtful about:

Bring a scale, weigh the quarters.  Each $.25 = 1 product, for $.25 coin mechanisms.  Each $.50 = 1 product, for $.50 coin mechanisms.

Each head has a single product price.  That makes this process easy.

Here's our 4 product pricing examples:

MONKCV 250 Monkyin' Around Fig  $18.50   (7.4 cents cost per vend, 17.6 cents profit per vend)

SSMICV 250 Sticky Mix           $12.95   (5.18 cents cost per vend, 19.82 cents profit per vend)

GLCRC 250 Glow Cross Necklaces  $32.50  (13 cents cost per vend, 37 cents profit per vend)

Dubble Bubble Seedling Fruit Gumballs - 850 ct.  $40.54  (4.7 cents cost per vend, 20.3 cents profit per vend)

Your prices are:  Monkyin' Around for .25, Sticky Mix for .25, Glow Cross Necklaces for .50, and Gumballs for .25

1.  How many quarters do you have?  Throw them on the scale.  You've got 83 quarters for Monkyin' Around, 98 quarters for Sticky Mix, 140 quarters for Glow Cross Necklaces, and 41 quarters for Gumballs.

2.  You already know your profit per vend.  Total it up.  

Net after product:

Monkyin' Around: $14.60

Sticky Mix: $19.42

Glow Cross Necklaces: $25.90

Gumballs: $8.23

After 50% Split:

$34.07

Write your location a check for $34.07.  This will take MAYBE a minute to calculate.  And all you needed was a scale, a calculator, and a checkbook

Please don't take this the wrong way, but....

Maybe you should get a few racks in place, spend a few months servicing them, THEN call the majority of us "nuts" for paying off gross when you find that your way actually works.

Right now, the reason " that everyone was doubtful about" your "system" is that right now your "system" is all theoretical.

Put it in practice and let us know how it goes.

And don't forget to keep updating your profit-per-vend-price-list as the fluctuation of shipping charges will change your cost per vend...

Your numbers above don't take shipping into account, but you will want to add that to get an accurate profit-per-vend.

Antonio is following a different system than most of us, and it's working for him.

Who knows, you may be on to something.

Paying off gross is working for me so far.

But, I don't mind being shown a better way to do things when it makes my life or business better...please keep us updated on the progress of your system.

For now, havending's quote below pretty much put it all in a nutshell nicely (pun intended "nut"shell):

Why should the location owner pay for your cost of doing business? 

Best of luck to you.

[Quarter Master]

Whew.......I guess that's why they call you Profits. Based on your procedure you are paying about 37-38% of gross sales in commission. I have never paid over 25% of gross sales. I guess I just like to keep my money in my pocket.

[Profits]

Whew.......I guess that's why they call you Profits. Based on your procedure you are paying about 37-38% of gross sales in commission. I have never paid over 25% of gross sales. I guess I just like to keep my money in my pocket.

It was just an example.  

[Hillbilly]

This is just the way I think so don't jump all over me if I'm wrong.  If you are paying off the net and you end up buying product cheaper then you will  be giving your profit to the location in commissions. That profit should stay in your pocket.

Profit is made in this business when you buy.

Again, just my opinion.

[Jax Snacks]

I like to keep things simple and pay off the gross.  If you throw a crazy formula at the owner, he may think you are trying to pull a fast one on him.  For those owners that demand a 50-50 split, I simply tell them that 1/3 of the gross is a fair and realistic 50-50 split after product cost.  I position that a breakdown of 1/3 product cost, 1/3 vendor cut, 1/3 owner cut is a 50-50 split.  Most reasonable owners will buy into that.  I had only 2 owners so far that did not agreed to the "1/3, 1/3, 1/3" model, but was able to talk them down to a 40% of gross.  However they are super spots and I don't worry about the extra 7% that the owner gets but doesn't really "deserve".

Not necessarily a right or wrong here.  Each vendor will have to decide what's best for them and their locations.  I just like to gravitate towards simplicity when ever possible.

[caserri]

Not necessarily a right or wrong here.  Each vendor will have to decide what's best for them and their locations.  I just like to gravitate towards simplicity when ever possible.

This is probably the best quote in this thread.

Ultimately it is up to the vendor on how he would like to operate. I have been paying off net from the get go and would never even consider paying commission on the money I use to buy the product to make us (the location and myself) money.

I've never had an issue presenting this to a location and I've never been kicked out of a location due to a commission dispute. If the location wants me to provide him with a revenue generating program, free of charge, he is damn well going to split the cost of the product with me. I'm the one with all of the expenses, I'm the one who does all the work, I'm sure not going to do all of that and let him collect a check for nothing.

As for simplicity,  I've explained how simple this is in various threads. I'm not sure where all the algebra equations are coming from but it's not that difficult.

Sorry for the rant. Judging by the poll at the top, there won't be anyone who will have my back on this so let the crucifixion begin.

++EDIT++ - I just re-read this and I apologize. Not the type of post "I" should be making. Had a long, frustrating day.

[antoniocinisi]

This is probably the best quote in this thread.

Ultimately it is up to the vendor on how he would like to operate. I have been paying off net from the get go and would never even consider paying commission on the money I use to buy the product to make us (the location and myself) money.

I've never had an issue presenting this to a location and I've never been kicked out of a location due to a commission dispute. If the location wants me to provide him with a revenue generating program, free of charge, he is damn well going to split the cost of the product with me. I'm the one with all of the expenses, I'm the one who does all the work, I'm sure not going to do all of that and let him collect a check for nothing.

As for simplicity,  I've explained how simple this is in various threads. I'm not sure where all the algebra equations are coming from but it's not that difficult.

Sorry for the rant. Judging by the poll at the top, there won't be anyone who will have my back on this so let the crucifixion begin.

++EDIT++ - I just re-read this and I apologize. Not the type of post "I" should be making. Had a long, frustrating day.

I agree with you steve

[Rick Falcon]

I have to agree with havevending.

[sherlock]

If the location wants me to provide him with a revenue generating program, free of charge, he is damn well going to split the cost of the product with me. I'm the one with all of the expenses, I'm the one who does all the work, I'm sure not going to do all of that and let him collect a check for nothing.

Collecting a check for nothing, Steve?

WE are the ones doing all the work and WE are the only ones with expenses?

You MUST have had a REALLY rough day.

I'm surprised to read this from you.

That way of thinking is so far off target.

Our customers are first and foremost THEIR customers and employees.

The location owners you describe as providing "nothing" provide the most important piece: customers!

MOST of our customers are there for something the BUSINESS OWNER is providing, not what we are putting in our machines.

Who pays for the rent/lease to keep the roof & walls surrounding our machines?

Who pays the electric bill to keep the lights and air-conditioning/heat on?

Who is paying to produce/provide the product or service driving people into the building in the first place?

Anyone thinking we can do without the things the business owners provide should set a rack up in the middle of an empty field and see how well you do.

I assure you that we need them more than they need us.

That doesn't mean we give our profits away without care or that we let our business fail for the sake of keeping them happy.

But there's no denying the location owners are in the driver's seat in this business.

Think about this:

- How many times a year does a business approach you asking you to put machines in their location?

- How many times a year does a business get approached by a vendor asking for an opportunity to vend in their location?

No! We are definitely not in the driver's seat.

Hell, we're just lucky to be in the car sometimes.

We need our portion of the money generated from our machines or our business fails.

They need their portion of the money from our machines to pay for golf this weekend.

Let's keep things in perspective here.

[caserri]

As I said, I apologize for the post. Bad day. But I will not apologize for the message.

It is how I do things. Each vendor should decide for themselves what works best for their business.

There is no way I am going to change anyones mind and no one is going to change mine so it would be pointless to continue debating this topic.

[The Mage]

While I currently only have 2 commission locations, the only real difference I see is that you are giving the business owner, or manager the idea they are getting a higher percentage. 

If the idea is that you don't want to pay commission on the product you are putting into the machine, and other costs, then figure the average of all of those costs.  It really isn't hard to do the math and figure out what gross percentage matches what net percentage.  Maybe it won't be an exact match, due to fluctuations in sales, but the difference will be negligible. 

For me the point is to get in and out as fast as possible. 

[Rick Falcon]

Amen to that Sherlock couldn't have phrased it better!

[West Coast Vend LLC]

This is a very touchy subject and should only be posted by those who really want to share their personal information. To me this is like asking someone how much they make for a living. Some people will share everything with you, and others will say it's none of your business. The great thing about owning your own business is running it the way you want to run it. If you make mistakes, it's okay, you correct it and continue. That's why we all wanted to be our own boss.

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[BigRedvender]

To me it doesn't matter we control our vend cost and a commission is part of the vend cost whether it is gross or after the toy cost. It might mean going up to 50-75 cents rather then 25-50 etc.. If you make a decent amount of cash and the owners will make a decent amount off there commission for doing nothing other than giving up a little floorspace aren't you a winner. Commissions are like any other expense just the cost of doing business

[dougdad65]

Anyone thinking we can do without the things the business owners provide should set a rack up in the middle of an empty field and see how well you do.

Agree. That vending in a empty field would be tuff!

[West Coast Vend LLC]

Let's not forget that it's a two way street. My vending machines keep; babies from crying, men, women and children from losing their patients, keep kids quiet, keep kids in yogurt shops longer, make kids ask to go to yogurt shops and give parents more time to talk for only 25¢.

[rogersmith]

The way I see it, we contribute the machine and our expertise, they contribute the location to the equation. After that, expenses should be paid and then profits split 50%-50%. Products can range as high as 35% of gross, there are sales taxes, gasoline expenses attendant on servicing, maintenance and repairs, employee time and compensation if you have employees, insurance expenses, and G&A, among other things. You are providing every bit as much value as the location owner (not that they are not providing a crucial value) and should not be out on these other expenses in addition to product. Because my location owners are often plain folks, I keep it simple and in the paperwork, we both just stipulate that profits shall be deemed to be 50% of gross with expenses the other 50%, and that the owner's commission is 50% of profits. In my opinion, this is the fair way to do it and the way it would be done in any other industry. Just because you are doing all the work and the owner is not aware of what goes into it does not mean that you should bear all the costs alone.

[Pitstopped]

I guess I am glad I have no commission locations. I am very new to bulk vending and this post may not mean anything to you guys, but here is my experience so far.

I started months ago with new Northwestern 60 doubles vending GB and Skittles. I located myself. I took the machine ready to place with me and pitched a location in person. I never offered a commission or mentioned a charity. I told them I was offering a new, clean well serviced machine to provide his customers something they might enjoy, free to the business owner.

Twice in those early months I was asked about commissions because there were other machines in the restaurant and they gave him commissions. I told them "the average machine will make $12.00 a month. So your commission will be about $7.20 for these 2 machines per month if they do average. A little more or less depending on sales. I don't think the $7.20 a month will help your bottom line hardly at all. But it will add up for me if I can get enough machines out, will you please help me and your customers by letting me keep it?" When they said "ok." I asked where we should put it.

I don't have a rack or any huge grossing monthly accounts yet. My biggest is around $100 per month at a pizza place. He is dealing with a budget of $10,000's of thousands a month, and $30 to him wouldn't mean a thing. There is a charity triple in there and a gas pump gumball on commission. I have a double with no commission or charity and if he is there when I service he is friendly and says "I hope the quarters are adding up."

I now have 10 charity locations because I hired locators and they strongly recommended it. I placed all 10 last month and will be servicing them this week for the first time.

I don't plan on doing any commission locations, but I might just be naive and have just been lucky so far.

But if I owned or managed a restaurant I wouldn't care at all about $7.00 - $30.00 an month from a bulk vendor. What I really would care about is the bulk vendor nice, responsible, are the machines new looking, clean, well maintained and providing a good service to my ALL IMPORTANT customers !

Maybe you can put too much emphasis on commissions and not enough on other things? Just a thought.

[dkochan]

You can get away with charity machines with single or double-head machines but, not with rack locations. I have found that most locations only care about getting paid commission based on a percentage of gross sales (usually 25 - 40%).

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