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Cost of Goods


BluePlate

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Hey all, I was presented with a snack/soda route.  This is new to me, they have no records or anything.  

What % should I expect for cost of goods.  We are looking at cans and a variety of snacks.  

Sorry about the newbie question.....

 

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You might be mixing apples and oranges.  When you say "some of the accounts he's paying 30% of gross" do you mean commission or cost of goods?  Cost of goods is generally calculated for an entire category of sales or for an account of several machines or across the entire route.  It's unlikely that they are calculating this for each machine as that would be mind-numbingly tedious.  That percentage could only be correct if that machine has a very high price set on it.

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I would say that anyone claiming they pay 30% commission on any full line vending account is lying to you or the account.  You can't pay that unless that account has outrageous pricing or the vendor is planning on going out of business soon.

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MidState is on track, 20% net IF you have no employees is the target.  Labor costs will cut into that deeply (and debt service will eat up your cash flow).  30% commission is a false number somehow, but some vendors seem willing to throw out big numbers to impress a location, without explaining how they really intend to "figure" the commission....

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2 hours ago, MidStateVending said:

%50

Buy produce (Subtract 50%)

Pay state sales tax (10% of gross)

Gas, insurance, repairs (10%)

Federal taxes (10% of net)

Profit of 20% if you're lucky.

I am sure I am missing something.

 

Just saying.. but 10% of net would mean that, after deducted 70% for the other two, you end up with 30% before 10% federal (which depends entirely on your level of income.  10% of 30% is 3%.. so you'd be at 27% with your numbers, not 20%.

Regardless of the math there, the last few years I have been around 20% operating profit in my bookkeeping (which doesn't show depreciation the way tax returns do).  I am expecting to be over 25% this year.

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