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Negotiating the commission

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16 replies to this topic

#1
dperry

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I took a vacation day today to clear some machines out of my garage. Had enough vistas to make 2 4-head racks. Had no luck til I came upon a Chinese buffet. I gave them my pitch of 25%. They told me that others have offered 50%. Long story short, I got them to 40% of gross with both my 4-way racks (all toys, half at 50c) sitting in the entry with the promise of more 2in and flats later.

But the thing is, this isn't the first time I was told "others have offered 50%". It seems to me that if others had offered 50%, then we wouldn't be having this conversation, as those others would be in there right now. So I'm thinking its just a negotiating tactic on their part. It's really just a starting point, which is why I got them down to 40%.

#2
caserri

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So I'm thinking its just a negotiating tactic on their part. It's really just a starting point, which is why I got them down to 40%.


You're right. Chances are, no one ever offered them 50%. I ran into that a lot myself. Then one day, I realized that it just isn't possible that all of these places were offered 50% yet none of them had taken it.

#3
will.vend

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I run into the 50 % question too! I usually start at 30% but go no higher than 40%, one thing that clouds their thinking is alot of the video/arcade/poker machines that are electronic and require no refills of product do offer 50%, if we had no other cost than our equipment then 50% might not be out of line, but even so I would still start at 30%
the reason I start at 30% is when it comes time to pay commission if you arent giving them a decent amount of money then you will lose the account.

Edited by will.vend, October 18 2011 - 05:54 PM.

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#4
timberframe50

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Good job Daryl, I don't want to start another debate on how to pay commission so I will be quite.

#5
minivend

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Any bulk vendor who is truly giving the location 40-50% of the revenue will go out of business. Give the location quality equipment, product, and service along with no more than 25% of the total revenue and you'll both make money. A good business deal is when both parties benefit.

#6
dogcow

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Good job Daryl, I don't want to start another debate on how to pay commission so I will be quite.

quite what?

#7
timberframe50

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Quiet, I'ts the damm phone.

See it did it again. It's

See it did it again. It's

#8
timberframe50

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See it did it again. It's

#9
Big Mike

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Any bulk vendor who is truly giving the location 40-50% of the revenue will go out of business. Give the location quality equipment, product, and service along with no more than 25% of the total revenue and you'll both make money. A good business deal is when both parties benefit.


You must not have anyone to compete with. You would have no locations at 25% around here.

Mike

#10
caserri

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You must not have anyone to compete with. You would have no locations at 25% around here.

Mike


I'm sure it does depend on your area. I had several at 25% but most at 30%. I wouldn't entertain more than 30% because it wouldn't be worth it to me.

But that's just me.

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#11
Poplady1

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I'm sure it does depend on your area. I had several at 25% but most at 30%. I wouldn't entertain more than 30% because it wouldn't be worth it to me.

But that's just me.

Sent using Tapatalk from a phone that's smarter than me.

Commission promises in bulk vending must be just as squirrely as full line. No one knows what those high promised commission payments are based on. We all know you can't pay 30% commission on a .75 can and still be in business. I am sure you can't pay 50% commission in this line of business either. Bottlers whittle down their commission payments to accounts by reducing it with gas, tax and misc. You have to wonder about that misc column.

We have won several bids when we run up against those 50% commission accounts by saying I bet you will receive more more commission from our vendor based on the formula we use which is 10 or 20% of sales (less tax and product costs). And in most cases they do because the 50% guy was just sticking a check in the mail making up some figure or as many vendors say, they were making a donation. Full Line clients understand you can't afford to pay commission on the cost of goods sold and stay in business. So we just tell them what the commission will be based on and it works. In bulk wouldn't that be true too?

Poplady

#12
McCanndy

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I've got 133 bulk machines out there and not one do I have to deal with any commissions.

I simply utilize the charity stickers! The cost of the labels per month is WAY cheaper than any commission, and 9/10 the biz owners are supportive of it without questions!

#13
Big Mike

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In the midwest bulk vending/rack commissions are based on gross sales. Its my job to keep product cost in line. I have no interest in back office work to figure everything to pay on net. If your not doing that and just "averaging" your costs then your just paying on gross like I do but doing it the hard way.

I dont know enough about the full line business around here to really know how the big accounts are won. The few we have are either no commission or 5% of gross.


Mike

#14
Poplady1

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In the midwest bulk vending/rack commissions are based on gross sales. Its my job to keep product cost in line. I have no interest in back office work to figure everything to pay on net. If your not doing that and just "averaging" your costs then your just paying on gross like I do but doing it the hard way.

I dont know enough about the full line business around here to really know how the big accounts are won. The few we have are either no commission or 5% of gross.


Mike

I hear you on the office work. On the full line business, surprisingly the larger the account the less interest they have in commission. They want to keep the price down for their employees. Middle size accounts are still interested in trying to find money any way they can to pay the bills. You can't blame them, its hard in today's market to keep it all running....but to do that they have to accept higher product pricing.
Poplady

#15
will.vend

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In the midwest bulk vending/rack commissions are based on gross sales. Its my job to keep product cost in line. I have no interest in back office work to figure everything to pay on net. If your not doing that and just "averaging" your costs then your just paying on gross like I do but doing it the hard way.



Mike

I agree! It's the same in my area! To put it in perspective my total average for last year was 26% now I have accts from 0% to 40% but like I said earlier I wont go above 40% I am happy with that average, but that's just me!
It's easy to get caught up in the "whoa 40% is to much to pay" well I agree if everyone of your accts are at 40%, I have to look at the big picture and work throughout the year to control all my expenses.
and as far as charity goes and only paying 1.00 a month per machine, show me a fulltime charity vendor that is making a decent living, charity vending is great for others but it doesnt fit my business model! I am the charity!



#16
dogcow

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charity vending is great for others but it doesnt fit my business model! I am the charity!


when i was a kid i used to work for a family friend selling cotton candy at parades and street fairs ...one woman asked "do the proceeds go to a good cause" without missing a beat i told her "yes to a needy child"...boss was in ear shot he about died laughing

#17
minivend

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If your bulk equipment is metered and you have a solid bulk vending program (product reports, sales tax reports..just to name a few) You can easily see your cost of goods percentage per month. I had a meeting with Bernie from Beaver Machine last September and we discussed the 40-50% commission numbers that are flying around the United States. We both agreed that those numbers will get the operator in trouble. Also, we (Americans) must move toward the $0.50 $0.75 and $1.00 vend. With product costs ALWAYS increasing, the bulk community is going to run into serious trouble if these price points arent met. The consumer, of course, is part of this equation. Sorry to go off subjuct..