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

[El Shoshonee]

My take is that I would rather pay a % of gross sales. It's easy and it's transparent. $10 in sales times the commission split, and boom done. Quick, easy, in and out.

% of net, you would have to disclose your costs (even if net after cost of product, before other expenses) and the owner might think you are trying to steal from him if he thinks you are inflating your expenses.

[PowerVendor]

For what it's worth, i prefer to pay off gross for my non-charity locations. That keeps it simple. I tried to once explain paying commission off of net instead of gross. The owner didn't have a clue what i was talking about and thought i was trying to who-do him. 25% to 30% off gross sales seems to be the standard. I have one location that i pay 40% of gross and i slam that place. It's quarter city and i landed two of the best places in town.

[West Coast Vend LLC]

So if you pay off gross sales in this example, your customer is making twice as much as you are.

$800 gross sales

$400 commission @ 50%

$200 product cost

You get $200 and the store owner gets $400!

If this isn't worth paying off net, than you have to be doing vending for fun! It is easier to just pay off gross or explaining net to a store owner but if he or she is any kind of business person, they should understand that you don't include your cost of goods in with commission calculations.

I know this will not make some vendors happy but I had to say it again!

Gary

[treadmill]

Who pays 50% commission. I sure don't. I don't know where 50% comes into the equation. Never have paid out at 50% commission and NEVER will I even consider it.

[West Coast Vend LLC]

I used 50% as an example. Calm down! It doesn't matter what percent I write down in my equation. Paying ANY percentage off GROSS is insane! If it is easier to pay off gross than have to explain commission off NET sales than this type of business may not be for you. Yes, it may seem a little FUZZY to some people but its your business to take the FUZZY out of it and collect what you are entitled to for all your hard work.

[havending]

The industry standard is off gross. I have 3 close friends each with over 4000 heads none of them pay off net. But there are good points on both sides. I think the reason there is more talk about net now is because cost are rising as well as comm rates. There is also a growing number of operators who skim on the locations a little.

Sent from my Desire HD using Tapatalk 2

[dogcow]

I used 50% as an example. Calm down! It doesn't matter what percent I write down in my equation. Paying ANY percentage off GROSS is insane! If it is easier to pay off gross than have to explain commission off NET sales than this type of business may not be for you. Yes, it may seem a little FUZZY to some people but its your business to take the FUZZY out of it and collect what you are entitled to for all your hard work.

net sales is a function of gross sales. it works out to the same amount of money either way. the way i run my cranes it works out to roughly 30% for product, 30% for commission, and 30% for me, with the last 10% to various taxes. some accts i pay off net some i pay off gross, but the actual dollar-of-commission-per-dollar-of-gross sales works out to an almost identical amount. I let the account pick how they want to be paid, most dont really care, because i explain it as how much you are going to make in terms of dollar amounts, not percentages.

[sherlock]

If it is easier to pay off gross than have to explain commission off NET sales than this type of business may not be for you.

A LOT of successful vendors would disagree with you right there.

Success in vending is not dependent upon whether you use gross or net in your pitch.

And to imply that it is is a disservice to new vendors looking to TVF for advice.

Locating is about self-confidence.

And a lot of our self-confidence stems from comfort.

If you are more comfortable explaining commission off NET to locations, that's the best route for you.

If another vendor is more comfy explaining commission off GROSS, then that's what is best for him/her.

As already mentioned, it can all boil down to the EXACT SAME amount paid to the location if each vendor does it correctly.

So, in either scenario, comfort-level will go a long way towards making someone's locating efforts more successful regardless of how they pitch their commission payments.

[will.vend]

poor dead horse! poor poor dead horse!

[Jax Snacks]

poor dead horse! poor poor dead horse!

Sounds like a horse with no name to boot!!!

At some point, we have been through this forum on a horse with no name!!!

[West Coast Vend LLC]

Let's all promise that we will never talk about this subject, ever again!

[will.vend]

here's a question I have for the 50% of net crowd. why is it always 50%? why not 40 or 30% That's actually a rhetorical question because I know the answer. It is so you can deceive the owner into thinking he is getting a much higher percentage than he actually is. You need this edge because other vendors are most likely kicking your butt in your territory.

Every and I mean every location owner that tells me well so and so is giving me 50% why cant you? I tell them it"s 50% of net. no no it's 50% of gross! I find it unbelievable that every and again I mean every location owner thinks it's 50% of gross.

You 50% of netters should be politicians because you are effing up vending like they are the USA!

[Jax Snacks]

Well....

I only use the "percent of net" approach for discussion purposes when dealing with a new location that already has vending AND the location owner claims to be getting 50%. This happens when either the existing video game vendors are actually giving 50% (which is the standard from what I understand) or other bulk vendors are claiming to pay 50%. But I still pay off gross when servicing and use the 30% of gross = 50% of net argument to make a case (or fuzzy math as others may call it). But I am upfront about the commission calculation with the location so that we are all on the same page. And there are times I still have to remind some locations they are getting 50% after costs. But at the end of the day, it's percent of gross for me. Sometimes I get the point across and other times I can't and have to walk away.

But (to will.vend's point) some bulk vendors will use percent-of-net in order to establish a 50% "marker". This established two things for them. First, it gives the impression to the owner of a 50-50 split - which of course the location likes or maybe demands. Second, it helps the existing vendor fend off competitors trying to take their location. So when a "percent-of-gross" vendor walks in, he can not match the existing percentage. But I always to try to confirm the calculation when approaching a new location. When I ask if the current vendor is paying the commission off of the gross or net, many times the owner does not even know! All they know is that they are getting 50% (of something)! (Or fit-ty pa-cent as they say in the Chinese places!!)

To each his own really on this. I really don't care or judge what other vendors do. But this topic is something every bulk vendor must deal with as it will rear it's ugly head at some locations. In any event, we "percent-of-gross" bulk vendors need to develop a strategy to deal with these "percent-of-net" bulk guys.

[Jax Snacks]

Damn that's so much simpler than saying 30% of gross. Can't wait to explain that to my first generation immigrant customer.

And when you are done explaining it, finish by saying "CheeBurger CheeBurger CheeBurger"!!! LOL

Here is the old clip from SNL for you youngsters. Try explaining percent-of-net to those guys!! Check out the 2:45 minute mark!

http://www.hulu.com/watch/3533

here's a question I have for the 50% of net crowd. why is it always 50%? why not 40 or 30% That's actually a rhetorical question because I know the answer.

Perception IS reality!!! Thank you very much.

[Action Vending]

I ask the location owners If they have ever watched the operator that claims to give them 50% count the coins. Funny how the answer is always the same.

[indiana]

Oof--50% would be pretty tough.

[mjacks]

I go off of gross. To do it otherwise would take half a day at some of my locations that have between 30-40 heads. I can see going off profit if you only have a handfull of machines to figure out.

[treadmill]

Why are we still having this conversation?

[PowerVendor]

Beating a dead horse.....Do it off Gross. Some store owners act like they don't understand how to calculate profit and ask for 50% of profit. They act confusing if they see you only giving them 30% of the gross. Sometimes you have to treat the owners differently to make them happy and you still get your appropriate cut. My 2 cents.

[onecent@atime]

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.

In this business you take the risk and you do the work, its your machine, your product and your insurance on the machines and toys . These business lease the space and can use the net profits for the space they lease and make 0.00 off of. Lets keep this in perspective and stay humble at the same time. We as vendors needs foot traffic to make our business work and they can use as much extra cash a possible . every penny helps them dont think the 800 a year you pay in commissions means nothing. Also dont think that bad vendors wont cost them customers and good vendors wont earn them new customers as well. If you as a vendor dont have pride and passion for what you do or who you are as a person maybe you need to look at a new profession  I for one hold my head high I own and run a business just like these location owners and they are no better than I am.

[timberframe50]

Why are we still having this conversation?

It was dead till you brought it up again. I prefer not paying either.

[treadmill]

It was dead till you brought it up again. I prefer not paying either.

I didn't bring it up. Somebody voted and brought it back up. I certainly would not bring this redundant topic back up.

[nepavend]

Lol.  Gotta love the dead horses.

 

Gross is simpler to calculate and get out of there.

 

We would all prefer 0% or charity but we know what happens eventually.  Higher kickout rates.

[Caio Barba]

Here in Brazil is very common to pay 20% of gross Sales to the location's owner. Sometimes you can get 15% and sometimes where the location is very very profitable 30%.

[Tbuford]

amen!!!!!!!!!!!!!!!!

The 50% of netters are golpher