New Location is it worth it

[putrevus]

Hi all,

 

I would like an opinion on this proposal, I got a request from a location with 120 plus employees with three shifts, M-F. Overnight shift has 25 plus employees. They have one Dix Narco Bev4 ,one full size snack machine and one frozen machine for dinners.They also have full size coffee machine and Pepsi  beverage machine maintained by Pepsi.All these machine are with usa tech readers.

 

 

The snacks are being sold at 85 cents and soda 20 OZ at 1.35 cents and dinners sold at 2.50 cents.When asked why they are changing they repiled they are having some issue of stales and not proper service from present vendor.They are asking for commission too.

 

 

Is this location location worth pursuing. 

 

 

Thank you all in advance

[Bvending]

Employee count is good. What commission rate are they asking for? I hope everything isn't .85 for snacks

[putrevus]

Employee count is good. What commission rate are they asking for? I hope everything isn't .85 for snacks

Don't know they put that on me, asking me to give them best commission possible in the proposal, the snacks I checked prices were 85 cents as manager was right behind me and I did not get a chance to check prices for candy.I am assuming they might be one dollar.

 

Coffee was like 1.25

[Bvending]

If it was me. I would submit a proposal. Just don't compromise on your prices so that it's not profitable. Most accounts I get like this, my prices are a little higher but in the end they want better service so they are willing. I gave up the coffee business about 7 years ago so I can't help there

[RJT]

Don't know they put that on me, asking me to give them best commission possible in the proposal, the snacks I checked prices were 85 cents as manager was right behind me and I did not get a chance to check prices for candy.I am assuming they might be one dollar.

 

Coffee was like 1.25

 

Not to be rude but I (nor anyone) cant give you a good answer without knowing all the information and current price is important. Also did you ask what their current commission rate is? Did you ask how much their "average" is on what they are getting paid on commission? In order to figure out if the account is worth proposing and then doing you need to find out how much volume they are doing. 

[putrevus]

Not to be rude but I (nor anyone) cant give you a good answer without knowing all the information and current price is important. Also did you ask what their current commission rate is? Did you ask how much their "average" is on what they are getting paid on commission? In order to figure out if the account is worth proposing and then doing you need to find out how much volume they are doing.

How can anyone get what volume the previous vendor was doing, I did ask them about volume they said they did not know that and also prices are 85 cents snacks and 1.35 soda and 2.50 for dinner items.

I would love to know the volume myself but they did not know and regarding commission they said you give your proposal so what else can anyone ask do in that scenario.

[RJT]

How can anyone get what volume the previous vendor was doing, I did ask them about volume they said they did not know that and also prices are 85 cents snacks and 1.35 soda and 2.50 for dinner items.

I would love to know the volume myself but they did not know and regarding commission they said you give your proposal so what else can anyone ask do in that scenario.

 

It can be done by either getting all the right information to figure it out or in worst case scenario you do a proforma based on an educated guess. Before you ask NO I will not give you all that information because it is looong and in-depth. 

 

The problem you are facing (like many others) you do not have enough info to determine if the risk is worth the reward. It can be a very tough learning curve once you cross over into accounts with this much investment going into the unknown. The other issues is all the logistics that goes into an account like this. Logistics could be hard or not so bad depending on what machines you choose, how demanding the account is, how often it needs servicing, could be a few times a week or a crappy producer you are fighting stales, etc, etc. 

 

You said .85 on snacks but you where not sure about candy and such. When you say dinners I assume you mean frozen entrees? It had no other items at a different price point other than $2.50?

[Southeast Treats]

Be careful too when quoting prices and commissions; they know (or should) that they are related, so they may get your offer then ask you to cut prices for a smaller commission.  I would set my base prices then add the commission percentage.  Also, when you say Pepsi maintains a machine, does that mean it is a loaner to the current vendor or is it Pepsi full service?  If it is full service you should insist on being the only vendor on property whatever that takes...

and be clear on the length of time you will maintain the prices you offer (1 year max) and that price increases after that are at your discretion.  How long was the current vendor in place? 

[Snickers]

The stale items is sometimes a red flag. If they all had USA card readers than the vendor knows how much is being sold daily. They might be servicing less frequently based on the sales data knowing it's not worth stopping if the machines have only sold xx amount in dollars. You may be servicing the account more frequently than you like not because it needs product but that it needs rotated. Paying a commission to an account where you constantly rotate is no fun.

[putrevus]

It can be done by either getting all the right information to figure it out or in worst case scenario you do a proforma based on an educated guess. Before you ask NO I will not give you all that information because it is looong and in-depth.

The problem you are facing (like many others) you do not have enough info to determine if the risk is worth the reward. It can be a very tough learning curve once you cross over into accounts with this much investment going into the unknown. The other issues is all the logistics that goes into an account like this. Logistics could be hard or not so bad depending on what machines you choose, how demanding the account is, how often it needs servicing, could be a few times a week or a crappy producer you are fighting stales, etc, etc.

You said .85 on snacks but you where not sure about candy and such. When you say dinners I assume you mean frozen entrees? It had no other items at a different price point other than $2.50?

I would love to get long and deep answer if you, all machines did not have prices on them except entrees which were $2.50, while I was there I checked prices of snacks and soda. I could not check others.

How else would you extract info other than asking them directly which I did, like you said these are huge investments and can actually make or break a small operator.

[RJT]

I would love to get long and deep answer if you, all machines did not have prices on them except entrees which were $2.50, while I was there I checked prices of snacks and soda. I could not check others.

How else would you extract info other than asking them directly which I did, like you said these are huge investments and can actually make or break a small operator.

 

I am not going to spoon feed you all the information because like I said that is a looong process and that is what people pay me to do in my consulting. However, If you couldn't check prices then how do the employees know how much to pay for the items? 

 

Also, if they get a commission then you can get a good idea what kind of volume they are doing. If they are unwilling to give you that information (commission rate and average commission paid, (ie "about $250 a month) then you either did not ask the question the right way or they probably would not be worth fooling with. You have to be able to ask the right questions correctly in order to get the answers. This will take experience and or training to figure this type stuff out. These accounts have to be made to understand that this is a large investment and NO company would make an investment for another company without having some idea of a return on that investment. That would be like asking a printing company to invest $30k on specialty equipment to print stuff I need printed and me tell them I dont know and not willing to tell you but you invest in the equipment and lets see how it goes.

 

With that said sometimes the account truly has no clue how much volume they do because they get know commissions. Then you are going to have to do what I already mentioned and use a proforma and generic data based on your (or someones) knowledge and experience. An example would be a "Quick Lube" worked every other week most vendors would say they might average around $50 per week based on similar accounts they do.  

[putrevus]

I am not going to spoon feed you all the information because like I said that is a looong process and that is what people pay me to do in my consulting. However, If you couldn't check prices then how do the employees know how much to pay for the items? 

 

Also, if they get a commission then you can get a good idea what kind of volume they are doing. If they are unwilling to give you that information (commission rate and average commission paid, (ie "about $250 a month) then you either did not ask the question the right way or they probably would not be worth fooling with. You have to be able to ask the right questions correctly in order to get the answers. This will take experience and or training to figure this type stuff out. These accounts have to be made to understand that this is a large investment and NO company would make an investment for another company without having some idea of a return on that investment. That would be like asking a printing company to invest $30k on specialty equipment to print stuff I need printed and me tell them I dont know and not willing to tell you but you invest in the equipment and lets see how it goes.

 

With that said sometimes the account truly has no clue how much volume they do because they get know commissions. Then you are going to have to do what I already mentioned and use a proforma and generic data based on your (or someones) knowledge and experience. An example would be a "Quick Lube" worked every other week most vendors would say they might average around $50 per week based on similar accounts they do.  

 

I thought this was a  forum where people are helping each other by sharing their experiences  anyway thanks for your suggestion.

[RJT]

I thought this was a  forum where people are helping each other by sharing their experiences  anyway thanks for your suggestion.

 

It is and I dedicate a lot of my spare time doing just that but some topics and information is just to deep and complex for me to get into. Just FYI, I have already given lots of information is this post that should be helpful to you. 

[psk007]

Hey Putrevus when you get a chance shoot me a pm and ill walk you through of how I would handle this account.

[smartvendnw]

I would have to agree with RJT here. I am new to vending, but years of solution-based selling experience in my full time career.

My first thought is the customer contacted you right? Leverage that. You need to clearly determine why they did that? What are the pain points with the current vending company? There should be 3 areas, maybe more. Then from their answers you need to gather detailed info for your proposal. You say in order for me to service you correctly I need this info. Ask all of the questions stated above. If they don't know the answer you have to present a way to figure them out. Be tactful and professional.

I mean anyone can slap a candy bars in a machine... Show them why they should choose you. Know the questions to ask and answers to give. Best of luck.

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[putrevus]

Hi All,

 

Please help me in making the right decision.

 

They offered me the location but asking 15% commission which previous vendor was paying them.

 

The have sent me  commission statement from April 2016  has four machines

 

One Pepsi, one Coke,one snack and  one Food. Pepsi  did total sales $175 , Coke did $440, snack did $382 and food did &240. Total for month is 1237 and this part is where I am totally confused.

 

There is total commission before generation = $185.00

              Total commission after generation = $ 265.00

 

then                                  Amount due is =$265.00

 

Two questions is this location worth it and second should I pay this commission and is there anyway I can deduct costs like credit card reader fees and sales tax from this commission.

 

Thanks a lot for your help and input.

[AngryChris]

First, you need to know the pricing. While it looks like a decent account, it doesn't justify such a huge commission if you ask me. That's $280'ish per week.

If the pricing reflects the additional 15% commission, then it might be a really good account. If the pricing is low, then you need to negotiate a higher price or walk away.

[Southeast Treats]

First, you can deduct anything you negotiate with the client to deduct, and sales tax for sure should be as it is not your money ever, it belongs to the state.  I always deduct swipe fees, but many people also deduct monthly credit card fees. 

 

It looks like this: Total collections minus sales tax and other fees = gross sales x commission rate = commission. 

 

15% is a little high for the volume, you have to be sure the retail prices support that and if the account wants to beat you up on both ends (commission rate and retail price) it may be time to walk.  I had an account larger than this and gave 20% but all of the prices were much higher than my average account (that was an airport so the prices were in line with other outlets there). 

 

Some talking points for the account:  higher commission = higher prices = fewer sales.  Is their goal happy employees or higher commissions?  Your service will be better than the current service because ______ (fill in the blank) better selection newer machines better service ??  Better ______ costs money to provide, it's not just more profit for the vendor.  Increased sales increases commission also.  The deal has to work for both sides or it won't last, you  have to make money to provide the best service. 

[putrevus]

First, you need to know the pricing. While it looks like a decent account, it doesn't justify such a huge commission if you ask me. That's $280'ish per week.

If the pricing reflects the additional 15% commission, then it might be a really good account. If the pricing is low, then you need to negotiate a higher price or walk away.

These are prices i quoted snacks between 90 cents to $1.25, drinks from $1.10 to $1.50 and entrees  from $4.00 to $4.50.They are okay with these prices.

[putrevus]

First, you can deduct anything you negotiate with the client to deduct, and sales tax for sure should be as it is not your money ever, it belongs to the state.  I always deduct swipe fees, but many people also deduct monthly credit card fees. 

 

It looks like this: Total collections minus sales tax and other fees = gross sales x commission rate = commission. 

 

15% is a little high for the volume, you have to be sure the retail prices support that and if the account wants to beat you up on both ends (commission rate and retail price) it may be time to walk.  I had an account larger than this and gave 20% but all of the prices were much higher than my average account (that was an airport so the prices were in line with other outlets there). 

 

Some talking points for the account:  higher commission = higher prices = fewer sales.  Is their goal happy employees or higher commissions?  Your service will be better than the current service because ______ (fill in the blank) better selection newer machines better service ??  Better ______ costs money to provide, it's not just more profit for the vendor.  Increased sales increases commission also.  The deal has to work for both sides or it won't last, you  have to make money to provide the best service. 

 

 she has attached their current vendor's  monthly commission statement.I called and asked her but she does not know if that is total collections or gross sales.

 

The statement from the current vendor states 15% commission  all vending ..

[TKK]

Yup

Higher comissions = higher prices = lower sales = unhappy employees.

O tell them i have places who just want great service and want to offer their employees the best pricing. Then i tell them if the comisssion is high then employees will bring their own snacks. Then i hit them with would u rather.... 10% of $15,000 a year $1500 for the year. Or 15% of $7,000 $1050 for the year. They automatically revert to even no comission. I even throw in, we have acts that wanted to really give back to their employees and instead of having free snacks they make us put everything at .50c and they pay the diference. That shows them how un greedy some places are and bam! Also i sray away from cofee and frozen. I tell them as a vendor i have to offer great service and that comes w snacks and drinks only.i twll them weve tried cold food and cofee only to remove them. I tell them the cofee is like the fountain drinks were sometimes the syrup/ mixtures get off and you get bad tasting cofee just how theyve gotten wattery coke before at a mcdonnalds. Then frozen i twll them they tend to mess up and cause a thaw issue. And then they go oh well thats ok im sure we dont need those anymore. And ur in.

Pricing, send them a thorough price point.

I sell crackers at .60c. That allows me to put in the pricing sheet snacks .60c to 1.25. Then i do 16.9 bottles. And they r used to 20oz bottles. Some places are 1.25 or 1.35 or 1.50. How cool is it to say our bottles are 1.25 so they get u cuz its either the same or cheaper. Most dont notice the size dif. And if they do after, you said nothing wrong.

[AngryChris]

These are prices i quoted snacks between 90 cents to $1.25, drinks from $1.10 to $1.50 and entrees from $4.00 to $4.50.They are okay with these prices.

Are these the prices you quoted before commissions were mentioned or do those prices include the commission?

[putrevus]

Are these the prices you quoted before commissions were mentioned or do those prices include the commission?

Before commission were mentioned.

[AngryChris]

Before commission were mentioned.

If you gave a quoted price without commission, then you need to adjust for a new quote. If 20 pz bottles were $1.50 before commission, they should be at least $1.80 after commission (for example).

I've know places that get 10% commission but they gross at least $100,000 per year. This location doesn't do that. Unless it's a nursing home or school, this location seems to be getting an unusually high commission. I'm worried that you'll end up barely making a dime after commissions, credit card fees, overhead, etc...

Why are they interested in switching? Either the current vendor's service is bad or the current vendor is demanding a price increase and they are refusing to accept it. If it's due to a price increase, you don't want the account because they'll look for someone else as soon as you ask for a price increase too. If it's a service issue, you need to persuade them to let you increase prices to get the commission OR reduce the commission and argue that your service is worth it.

[smartvendnw]

Maybe I'm over simplifying it in my approach with locations that want a commission. I'm a new company so I decided early on to use this price model and commission formula.

12 oz pop $1.00 (why charge .85 they still put in a $1 bill)

1.5 oz Chips $1.25

Candy Bars $1.25

Misc items a nice healthy margin- say Monster at $2.50, cost is like $1.31.

Chex Mix .33 sell for $1.00

Etc...

Maybe it's my market- Seattle but I've not received any push back. I just won a 3 location deal where the current vendor had pop at .85 and chips at 1.00 and no commissions. They wanted commissions- I gave them that pricing and told them I do 15% on an adjusted gross profit- meaning I shave off a flat rate of 25% off the top (covers partials costs and taxes) and then pay 15% on the balance. When all said and done I'm paying about 11% on gross.

Will I go out of business here?

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