Pricing route (part 38)

[guile]

As I continue to start my business, in addition to building/creating my own route, I am also looking at other prespective routes for sale. I came across one today and was wondering what some more expierienced vendors would think about it.

 "There are a total of 23 locations. Total actual service time is about 7 to 8 hours, every other month! Low commissions paid out! These routes could be expanded and make a great addition to an existing vending business, or will make a great supplemental income for you. This is a simple turnkey operation.

The last two years' gross sales on all these locations averaged well over $8k each year (all figures documented!). Price $9,500 firm including merchandise inventory, a few extra machines, and extra parts inventory."

Now, I know it's difficult to access this without having more info, but looking at the bottom line gross (that is, if he can validate his claims), is his asking price in line?

g

[vendamania]

If you want me to sugar coat,sure it's worth it...buy it.

But if you want me to tell it like it is....here goes.

If they are triples or doubles I don't believe the numbers for a second.They are probably more in the line of half that.How is he going to validate those numbers?   Put them on his computer and print them out.You more or less have to look at the face value of a route...equipment value,type of locations ect.

I hope this helps and saves you thousands.I am guessing the route is worth less then half that.

Routes these days are hard to sell for 6 months gross.Years ago they were worth a year gross.

Fred

[guile]

Thanks for that Fred. While I don't have much info at this time, I too felt (at least from an avarage standpoint) the numbers were a bit on the high side. Again, there may be racks in there for all I/we know. I will get more info just for ha ha's and see if it looks (at the very least) worthwhile.

Thanks again.

g

[alyssamma]

Agree with Fred. The numbers on bulk machines are almost always high and are virtually impossible to validate.

Also, don't believe the "figures documented" part. I had one guy tell me he had his stuff documented...it was an Excel spreadsheet No way he could have made that up...

Anyway, my original thinking was 70% of gross...and I think that is fair. But now I am starting to think $100 per location - 50 for the machine and 50 for the location.

The first approach would be $5600 for the route...the 2nd way would be $2300.

If you really trust the guy go 70% - esp if you are getting extra machines, stock, parts. However, if you think he is shady go $100 per location.

Kevin

[Jax Snacks]

As others have stated, the biggest problem with buying a bulk route is verifying the gross sales of the seller. Many vendors do not keep any records of any kind to review. That is why I only offer the asset value of the route (no. of machines x used resell ebay price) plus a small location fee ($25 or so) for only 60% of the locations. I do this, so if the seller is fudging the numbers AND has a lot of crappy locations, I can sell his equipment (and also keep the good spots) and get most of my money back. So I really could care less about their gross sales claims and they can simply take it or leave it.  As long as I have decent locators and can continue to get decent locations, I will continue to play hardball with other vendors selling their routes and only offer asset value. I would also suggest reading the back posting on this topic and research ebay to get a good estimate of his equipment value.   Of course there are other factors to consider, but this is my starting point.  Just my .02!

Jax

[caserri]

Amen Jax. My philosophy exactly. Any route, regardless of gross income, can be reproduced. That fact alone is why I would never entertain gross figures when assessing the value of a route.

Asset value plus a modest location fee is all that it is worth. You can show me any route and I guarantee you that I can reproduce the route for far less than the asking price.

Steve

[alyssamma]

Steve, I really like your way of thinking. In fact, you are the one who influenced me above to start thinking $X per location instead of X% of gross.

However, I have a Q for you. Do you actually buy routes? Or, really, is that your preferred method of expanding? Or do you prefer to buy used machines cheap and locate them yourself?

I'm actually leaning a little to the latter for bulk. Just wondering what your thoughts were.

Thx.

Kevin

[caserri]

Kevin,

Yes, purchasing routes is my preferred method of expanding for one simple reason. It's quick! I can purchase a 100 location route and be servicing it many months before I can physically buy and place 100 locations on my own.

However, As stated above, for a route to be eligible for me to purchase, it has to be priced according to the asset plus location criteria from above. That way the route will cost me equal to, or less than, what it would cost me to replicate. 99% of the routes available in my area do not have a motivated enough seller to meet my price. That's okay. It's those very few diamonds in the rough that makes the whole process fun and even more rewarding when they are unearthed.

Steve

[vendamania]

I wouldn't buy a bulk route either on gross because you can't believe the numbers.

It was just a basis to start on his numbers.But like the rest stated price it on the machines and be careful they could all be $10 locations.If they were you be doing a whopping $230 gross a month.

If the machines are kind of used looking the route may only be worth like a thousand or so.If the machines are vendstars then the route is worth $600.

 

Fred