Maddog3632 Posted October 7, 2013 Share Posted October 7, 2013 I am looking for advice on a new account of 70 people. I was approached about taking this account on as my first and I am new to the business but have quality machines and am ready to go. One problem I am having is the accounts desire to keep prices consistent with the last vending service. The previous vendors prices resembled those of 2000 prices. 85 cent candy bars, 1.00 20oz pepsi products, 1.75 specialty drinks (Monster, etc). The account has asked that I keep prices "consistent or below" the previous account pricing. I had a discussion about attempting to price as close to their pricing as I could, however we did not discuss the exact prices or what I would be offering. Does anyone have any advice for how to approach this in the future and also for what you think the best tactic for my situation would be? Thanks in advance. Link to comment Share on other sites More sharing options...
AZVendor Posted October 7, 2013 Share Posted October 7, 2013 You need to find out exactly what your costs will be by unit for the specific items you are concerned about. I can tell you that the previous vendor was not doing himself, or you now, any favors by selling at below market pricing. There is no profit to be made at .85 on chocolate, 1.00 on bottled soda or 1.75 for energy drinks. Those are ridiculously low prices and need to be increased. You are in a tough spot because you have no experience yet so that when you walk into an account you don't know what prices you will be offering. After a few years you will be able to dictate the pricing because you will know what margins you need to operate by. It's entirely up to you if you choose to abide by the customer's wishes, but they are asking you to not make a profit because they have no realistic idea what it costs for you to provide the service to them. You need to sell yourself as a service provider. You will provide quality equipment, quality snacks and drinks at prices that will allow a reasonable return on your investment and service costs, but that means you determine the product pricing, not them. You might need to walk away from this unreasonable account. Link to comment Share on other sites More sharing options...
AngryChris Posted October 7, 2013 Share Posted October 7, 2013 I had the opportunity to take an account that had candy at .50, chips at .50, pastries at .75, cans of soda at .50, and 20 oz at 1.00. The account also had a food machine and the owner said he didn't care what I charged on everything else (including food) as long as his employees could get a candy bar AND a can of soda for $1.00. I walked away from the account as that was completely unreasonable, and I would rather see the previous vendor keep shooting himself in the foot as punishment for having such INSANELY low prices. $.50 for candy??? He loses money on every sale! Link to comment Share on other sites More sharing options...
Maddog3632 Posted October 7, 2013 Author Share Posted October 7, 2013 Thanks for the responses. Fortunately for us we know the prices of product because of selling them using another avenue, so we understand the needed markup for profit. I am going to have an honest conversation today about what I will need to do in order to make it work from our business side. Link to comment Share on other sites More sharing options...
mission vending Posted October 7, 2013 Share Posted October 7, 2013 Don't do this until you have a very direct conversation about pricing, going in pricing AND the need for future pricing. These are used to getting well below market prices, if you don't take the time to properly educate them this issue will NEVER go away. Even if they agree to higher pricing now when you need to raise prices in the future you will be the one getting tossed out because some other schmuck that has no idea how to run a business offers them pricing a nickel cheaper than yours. No business is better than bad business ..... Link to comment Share on other sites More sharing options...
orsd Posted October 8, 2013 Share Posted October 8, 2013 @ angrychris You coulda did .75 soda and do the fun size candy bars for .25 Link to comment Share on other sites More sharing options...
Maddog3632 Posted October 8, 2013 Author Share Posted October 8, 2013 Thanks all for the advice. I had a great conversation with the manager about how my services will differ and what they should expect for service from me. To highlight, their previous service came by 40-60 days apart which left the machines very empty if not completely sold out. I will adapt products within reason to their requests, they would not. I will be within the area if problems arise and will service frequently because I live within 10 miles rather than the 50 miles the other vendor is from. Overall, it wasn't that difficult just communication about what will be provided and why costs will be what they are. I agreed to go 1.00 for candy, 1.50 for 20 oz soda, and 2.00 for most energy drinks. Still a bit lower than I ultimately would like for most other accounts but am very very grateful as I know this will work for us. Thanks again for your advice. Link to comment Share on other sites More sharing options...
AZVendor Posted October 8, 2013 Share Posted October 8, 2013 Good job Maddog!!! You handled that very well and you have now set up a great line of communication with the management. You should be golden. Link to comment Share on other sites More sharing options...
bcron Posted October 8, 2013 Share Posted October 8, 2013 Yeah, good job. One way to approach it is that in most cases, we are providing service in manufacturing or business industries. They should know as well as anybody else that you can't sell product for what you paid for it. They have an expectation to make a reasonable profit on the product they offer. They should not have an unreasonable expectation for you to not profit from your hard work as well. Link to comment Share on other sites More sharing options...
AngryChris Posted October 8, 2013 Share Posted October 8, 2013 It concerns me that they came every 1-2 months to service the equipment because that would mean that sales aren't great. However, it's also possible that the machines did not look trustworthy to the customers or products were expired or any other reason (which could be due to lack of sales). I have bought accounts off of other vendors and, upon providing a better service, increased sales anywhere from 25%-50%. One of the accounts that I got several years ago started off only doing about $25/week. I actually took the account as a favor to someone else. Long story short, I ended up doubling the sales in 6 months. The reason was two-fold... 1) the customers started getting 2 hours of overtime and... 2) they previously had a Rowe snack machine with a broken validator. Link to comment Share on other sites More sharing options...
Maddog3632 Posted October 9, 2013 Author Share Posted October 9, 2013 Thanks for the feedback everyone. AngryChris, I think you may be on to something with the 1-2 months routine being due to trust, product, and general reputation. The snack machine was old, had multiple products that absolutely no one would eat, had at least 3 rows with the same product. The soda machines had hand written labels, were coke leased machines with Pepsi products and they looked like dog crap with the 12 pack can cutouts for the selection buttons. I hope my nice LCM II and clean but older bevmax will provide coupled with great service and product will help to increase sales and provide a good relationship. Thanks again everyone. Link to comment Share on other sites More sharing options...
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