commission opinions?

[SeaTurtle Vending]

I stated in an earlier post that I was able to acquire an AP 6600 through a really good deal. I was not looking for the machine, it was just part of a deal i could not say no to. The machine is very nice condition, however, i still plan to repaint and do an overhaul cleanup on it. Initially, I was going to put it up for sale on Craigslist and get back th etotal I paid for other machines just by unloading this one. However, the principal of the middle/high school I work at said he would like to have it in our teacher break room. He wants 50% of the profits to go to the teacher fund. When all is said done, profits usually hit at about 50% for snacks. I figure this really means about a 25% commission. I was thinking due to the high commission rate, prices will have to be a little higher and since I work there servicing the machine does not require any extra gas. I will actually get to count the miles to work on days I service the machine.

The question is, does my logic sound right and do you feel it is a deal i should go through with.

[moondog]

I've got an AP6600 that's doing $300 a month gross but it's definitely not in a teacher's lounge - I'd stick that LCM in there if you feel the need to do this deal. The commission rate is insane considering most people would not want this location, especially with no soda machine.

Remember, your mileage deduction only works if you're actually making a profit - which you won't be with deals like this.

[SeaTurtle Vending]

Drinks cannot be placed in any schools. There is a contract with coke that forbids. Only coke can place and service machines in any of the schools. They must pay a huge amount to the school system. It sucks to, because their service is horrible. Our machines (staff and student) sit empty for near 2 weeks before servicing. they come by monthly and they have 3 student machines and 1 staff. The money they let slide by with the poor service is insane.

anyways about the snacks machine. I am running the numbers in my head and when I look at snacks when you average all the products out, the COG is usually around 50% with taxes and gas included. Some products go for more than 50% chips, some at 50% candy bars. Average is usually at 50%. I am not going to sit down and do exact calculations on profit margins each service. My approach will be profits are 50% and you get half of that. In essence 25% commission. However, I will adjust the prices upward so the margins are better than 50%, but treat calculation to the location the same. Thus increasing my net per item.

Example, crackers go for .17 each, normally sell for .50, here I would sell .60. AN extra nickle in the schools pocket an extra in mine, which helps curb that high commission rate.

Do you feel this makes the location servicable since I am on sight anyway everyday?

Damn, I hope that made sense. It seemed clear as I was writing it.

[dogcow]

The short answer is, pass .

the long answer is , thats not how commissions are usually calculated. Generally you want to keep your costs at 40-50% cogs, so you start from there, so you figure your "base price" based on that cogs figure. Essentially a 20c item would sell for 40 c. 40c is your base price. If they want a 25% commission on top of that, then your base prices go up 25%. I have a spreadsheet I take with me to every account i made in excel it shows my base price on a variety of common vending items (mars,lays,lance, etc... ) the first column is the base price, the rest of the columns show the prices @ 5% commission, 10%, 15%, 25% , I have it set up so i simply enter the cost of the item and it calculates these figures for me( the cost column switch to hidden when u print it out ). I tweak the numbers here and there but generally its right on, this is a great too to show the location how commission impacts pricing it has been very effective for me.

Those prices at 25% work in some places primarily hotels and other tourist places, but teachers i doubt u would make much volume at $1.25 or so for a candy bar. I would not do this account or I would try to get the commission to be way lower. OR i would ask what the money is used for? is it to throw them a party? they may not even care about the money they may just want a catered party at the end of the year. If that is the case simply offer to cater the party for them. This will cost you far less than the commission , throw them a bbq or a pizza lunch, cater it yourself from sams club. you will foster good will and get out of paying a commission this is a common vending sales tactic.

[SeaTurtle Vending]

The short answer is, pass .

the long answer is , thats not how commissions are usually calculated. Generally you want to keep your costs at 40-50% cogs, so you start from there, so you figure your "base price" based on that cogs figure. Essentially a 20c item would sell for 40 c. 40c is your base price. If they want a 25% commission on top of that, then your base prices go up 25%. I have a spreadsheet I take with me to every account i made in excel it shows my base price on a variety of common vending items (mars,lays,lance, etc... ) the first column is the base price, the rest of the columns show the prices @ 5% commission, 10%, 15%, 25% , I have it set up so i simply enter the cost of the item and it calculates these figures for me( the cost column switch to hidden when u print it out ). I tweak the numbers here and there but generally its right on, this is a great too to show the location how commission impacts pricing it has been very effective for me.

Those prices at 25% work in some places primarily hotels and other tourist places, but teachers i doubt u would make much volume at $1.25 or so for a candy bar. I would not do this account or I would try to get the commission to be way lower. OR i would ask what the money is used for? is it to throw them a party? they may not even care about the money they may just want a catered party at the end of the year. If that is the case simply offer to cater the party for them. This will cost you far less than the commission , throw them a bbq or a pizza lunch, cater it yourself from sams club. you will foster good will and get out of paying a commission this is a common vending sales tactic.

that makes complete sense! I cant believe I did not approach it that way. This means I need to create myself a little spreadsheet to get working on this. I am hoping to get him down to a manageable 15% as I have discovered that is the standard number for other schools.

[AZVendor]

First off, my experience is that Teachers lounges are not high volume or very profitable. In a high school the student machines make all the money and the teacher's machines don't make any.

Because of this, here are two different approaches to take. Obviously the principal wants the teachers to be able to earn some money from the machine and is doesn't matter what it's for. The BS Coke contract that every frickin school district signs now directs all the commissions to the sports programs leaving nothing for teachers to benefit from.

Offer the machine on what's called a "Cooperative Vending" basis. This is where you supply the machine and sell them the product for them to load into the machine themselves. You can supply the machine for free or rent it to them, adding the cost to the invoice they pay for the products. All you have to do is provide a list of products you can supply for them and then deliver to them once a month. This is actually a good business model for larger vendors to consider. It allows a vendor to place idle equipment and they can earn money from marginal accounts they wouldn't normally install equipment in. You only have to establish a minimum monthly product purchase in order to supply a machine. You do still have to repair it when it breaks as you still own it.

Another idea is to donate the machine to the school. The IRS allows a business or individual to donate goods or services to qualifying charities or tax exempt entities and deduct the fair market value from their federal income taxes. You might actually have to donate it to the PTA/PTSO organization at the school as they would be more likely to have tax exempt status than the school and it would be less messy. See this IRS publication: http://www.irs.gov/p...rs-pdf/p526.pdf for more information. After you make the donation your "profit" will be your tax deduction and then you can still sell them product to fill the machine with or even fill it for them on your commission structure or for a fee using the products they bought from you.

Just some other ideas to mull over.

[TKK]

15% off of net is still a lot. Now what makes you think they will buy candy at elevated levels? What if you only gross $200 a month? $100 for cogs and they keep $50. Is it really worth that trouble to get only $50? Tell him that you can adjust comission based on sales for the first month. Then hit him with it only made this much if I paid comission I'd be working for almost free. He will want to leave it there instead of taking it out. Unless it makes good money ofcourse then reason with him. Most places always ask for 50%. Some laundromats I have want 65% lol

[moondog]

Drinks cannot be placed in any schools. There is a contract with coke that forbids. Only coke can place and service machines in any of the schools. They must pay a huge amount to the school system. It sucks to, because their service is horrible. Our machines (staff and student) sit empty for near 2 weeks before servicing. they come by monthly and they have 3 student machines and 1 staff. The money they let slide by with the poor service is insane.

anyways about the snacks machine. I am running the numbers in my head and when I look at snacks when you average all the products out, the COG is usually around 50% with taxes and gas included. Some products go for more than 50% chips, some at 50% candy bars. Average is usually at 50%. I am not going to sit down and do exact calculations on profit margins each service. My approach will be profits are 50% and you get half of that. In essence 25% commission. However, I will adjust the prices upward so the margins are better than 50%, but treat calculation to the location the same. Thus increasing my net per item.

Example, crackers go for .17 each, normally sell for .50, here I would sell .60. AN extra nickle in the schools pocket an extra in mine, which helps curb that high commission rate.

Do you feel this makes the location servicable since I am on sight anyway everyday?

Damn, I hope that made sense. It seemed clear as I was writing it.

How about this? Let Coke run their own damn snack machines !!!

[dogcow]

All commissions are paid off Gross not net,why? Net is a function of gross sales

As I explained ur margins don't actually change,ur volume might

The point of the spreadsheet is the dm will usually experience sticker shock when they see the prices @ those levels and can be talked into a different deal because they want the employees to be happy.

[SeaTurtle Vending]

All commissions are paid off Gross not net,why? Net is a function of gross sales

As I explained ur margins don't actually change,ur volume might

The point of the spreadsheet is the dm will usually experience sticker shock when they see the prices @ those levels and can be talked into a different deal because they want the employees to be happy.

That is what I was thinking about. Using the spreadsheet to get to manageable commission rate, which keeps the cost of goods at a reasonable rate.

I will spend the weekend mulling this over and play with some ideas. I will keep you all informed as to what I do.

15% off of net is still a lot. Now what makes you think they will buy candy at elevated levels? What if you only gross $200 a month? $100 for cogs and they keep $50. Is it really worth that trouble to get only $50? Tell him that you can adjust comission based on sales for the first month. Then hit him with it only made this much if I paid comission I'd be working for almost free. He will want to leave it there instead of taking it out. Unless it makes good money ofcourse then reason with him. Most places always ask for 50%. Some laundromats I have want 65% lol

i fully agree if it turns out like this.I am not willing to put in this much time for $50.

If you consider 15% a high commission rate, then what do you work with on your snack machines. As far I have seen in this area that is a standard rate.

In addition, this is a fairly nice sized school. It is a 6-12 public school. We have near 90 teachers plus many more support staff, custodians, security, lunch ladies, secretaries, etc. Probably an additional 35 or so employees.

[mission vending]

It is a 6-12 public school. We have near 90 teachers plus many more support staff, custodians, security, lunch ladies, secretaries, etc. Probably an additional 35 or so employees.

Just because you have 90+ teachers/employees does not mean anything. You also have to have the kind people that have money and are willing to spend it in a vending machine as well. In my experience teachers lounges are not known for being great locations. Add to that the facility is closed for basically 3 months out of the year with summer, Thanksgiving, Christmas and spring break all costing you revenue.

Yes, you are already going there every day but that still does fix the problem of being a small vendor with few locations and struggling with trying to get products sold before they expire.

[SeaTurtle Vending]

Based off the advice I am receiving from the more experienced full line vendors, I think I am going to make the machine look real nice. (paint job etc) At the bare minimum, I will have ended up with an extra vendo at an existing location for free and a discount on the combo I wanted.

I'll call that a win.

[moondog]

Based off the advice I am receiving from the more experienced full line vendors, I think I am going to make the machine look real nice. (paint job etc) At the bare minimum, I will have ended up with an extra vendo at an existing location for free and a discount on the combo I wanted.

I'll call that a win.

That AP6600 will come in real handy when you do get that "good" account - clean it up and be patient.

[AngryChris]

An AP6600 is worth far more than an AP7600 or other old 5-wide if you ask me. Why? Because that 6600 is a 4-wide and those can be hard to come by for some vendors.

The more you raise the prices, the less sales you make! I would simply make a counter-offer of 10% of the gross if commission is demanded and you really want the account. If that doesn't work, make another counter-offer to have the school go 50/50 with you on repairing the machine too!