Summit Vending Posted November 2, 2008 Share Posted November 2, 2008 Hello All, I figured I would throw this out as I have been thinking about it for some time now and see what kind of ideas and opinions we could have on this issue. As of late we all have been talking in regards to how much to pay a location and I think I came up with a new way that might work so here it goes. I think we should offer a commission to all of our locations based on the volume each machines does kind of like a progressive commission. $0-100 sales 10%net $100-200 sales 15%net $200-300 sales 20%net Well I think you get my point on this and I believe it creates a new twist on the way full line handles commissions and will bring something new and exciting to the table when presenting a proposal. What do you think? Brian Link to comment Share on other sites More sharing options...
alyssamma Posted November 2, 2008 Share Posted November 2, 2008 Brian, you need to be careful at your boundary points - $99 pays $9.90, but $100 pays $15 You can avoid this by adding a fixed amount - e.g.: $0-100 - 10% $100-200 - $10 + 20% of the amount over $100 $200-300 - $30 + 30% of the amount over $200 Kevin Link to comment Share on other sites More sharing options...
Summit Vending Posted November 2, 2008 Author Share Posted November 2, 2008 Kevin, Agreed it was just an example to get the discussion going but you are correct. What do you think about this? Good idea or not? Brian Link to comment Share on other sites More sharing options...
alyssamma Posted November 2, 2008 Share Posted November 2, 2008 Brian, I have no experience in this I don't have any locations that charge commission. However, I would suggest a flat percentage instead of a progressive one. Kevin Link to comment Share on other sites More sharing options...
Brassine Vending Posted November 3, 2008 Share Posted November 3, 2008 Actually, Before my father in-law asked me if I would place some machines in his place for free. I was seriously debating on whether to pay 10% of gross sale. Or just a flat $50/month. They were going to be outdoor machines open to the public. On one hand 10% would save my rear if it didn't go over very well. but then if I paid $50/month the land owner would be more willing to let me place 3 of them on his property, but then on the other hand, I would constantly be worrying about if my machines were going to bring in over a $50 profit/month after drink cost just to pay the "lease" And what got me on the idea of $50/month is, A guy I know rented a small storage building on the end of town where he lives to put his late grandfather's stuff in until they settled the estate. at his old gas station he had 5 machines. So Josh didn't have any room left in the building so he just set them outside the building. 4-5 days later he gets a call from the storage mgr stating people are complaining that the vending machines don't work and he needs to do something about it. While he was attempting to make room in the storage building for the machines a couple people came up to purchase drinks which obvious they didn't work due to no power. So for kicks, Josh, ran an extention cord to the machines and put a 12 pack of each flavor in the can machines and a 6 pack in the bottle machines. The next day he went back to put more stuff in the storage unit and noticed that several "sold out" lights were lit on the machines. he checked them and sure enough they were empty. and looked in the cash box and the money was there. Josh has been keeping the cans at 50 cents and the bottles at $1 for the last 5 months. The last time I talked to him, he was telling me that after purchasing product from Sam's Club and paying $150/month for the area He usually has between 220-300 cash left from the machines each month. Link to comment Share on other sites More sharing options...
mbicfl Posted November 15, 2008 Share Posted November 15, 2008 With your commision figures, Does 10% net mean 10% of your profit after cost of goods ? Link to comment Share on other sites More sharing options...
Summit Vending Posted November 15, 2008 Author Share Posted November 15, 2008 MBICFL Yes, after taxes and cost of goods. Brian Link to comment Share on other sites More sharing options...
andyinchville Posted April 16, 2009 Share Posted April 16, 2009 I would think a straight 10% would be easiest. Andrew Link to comment Share on other sites More sharing options...
vendnoob Posted April 20, 2009 Share Posted April 20, 2009 i pay 5 cents per vend on a hotel account that i have and it works out great. Link to comment Share on other sites More sharing options...
G-Vending Posted April 21, 2009 Share Posted April 21, 2009 10% of net RIGHT? I would think a straight 10% would be easiest. Andrew Link to comment Share on other sites More sharing options...
lurtsman Posted April 23, 2009 Share Posted April 23, 2009 I'm seeing some comments about after tax. When doing full line do you pay sales tax on selling soda? (In states that have sales tax) If so, do you have to pay the sales tax when you buy the soda? Link to comment Share on other sites More sharing options...
sbishop Posted April 30, 2009 Share Posted April 30, 2009 that is funny about the mini-storage. That is one way to get a location. I like the 5 cents per vend idea. I prefer the KISS (keep it simple Stupid) method Link to comment Share on other sites More sharing options...
G-Vending Posted April 30, 2009 Share Posted April 30, 2009 In Arkansas you pay tax when you buy Soda/Drinks.Like at Wal-mart If you buy from Coke/Pepsi you also have to pay a tax call vend tax another rip off tax. Link to comment Share on other sites More sharing options...
andyinchville Posted May 15, 2010 Share Posted May 15, 2010 HI, Sorry for the delayed response.....but yes, 10% of the net. Andrew Link to comment Share on other sites More sharing options...
mission vending Posted May 15, 2010 Share Posted May 15, 2010 I'm seeing some comments about after tax. When doing full line do you pay sales tax on selling soda? (In states that have sales tax) If so, do you have to pay the sales tax when you buy the soda?In Texas you can get a "resale certificate" which when presented allows you to buy stuff tax exempt. Sales taxes are due on the retail price on items sold through vending machines. Link to comment Share on other sites More sharing options...
gogo Posted May 15, 2010 Share Posted May 15, 2010 If they don't ask for commission, they don't get it. If they ask for commission, they better provide a setting that brings alot of customers. If they are hard-nosed, then they better be doing more than $400/month sales per machine for me to consider anything over 10%. With my business, commision means increaed prices for their employees/customers ... how do they feel about that? No commission means lower prices. Do they want to take money out of their employees' pockets? I am providing a service to them ... a capital-intensive service that they have to put no energy or financial resources into. Don't give up your revenue so easily!! I'm all for being reasonable, but let's be prudent and avoid setting a trend toward ridiculous commissions! It's better for everybody! Really good locations that insists on a commision? I say 15% tops ... any comments on this? Link to comment Share on other sites More sharing options...
andyinchville Posted May 16, 2010 Share Posted May 16, 2010 HI, I recently bid a a couple of pools (I serviced one of them last year). The city wanted a flat rental (monthly) AND a percentage of the gross. I bid $100 for the entire season (3 months....so I essentially bid $33 per month) and 37.5% of the gross....yes gross so it was a very high percentage of the take The other company bid $600 per month and 5% of the gross. I planned on using vending machines solely (snacks and drinks) while the other company would use employees to serve precooked foods (no vent hoods allowed so no frying etc...). I lost the bid because they claimed they wanted "hot" foods and employees to help keep things clean.... It was a 3 year contract with 2 optional 1 year renewals. I am going to try to provide them with supplies (cakes, chips etc)....so hopefully I can still make some $$ off the site (they are very busy caterers and very have time to do much other than serving people...Hopefully by delivering some products for them to use will save them time and make me some $$ too...possibly a win - win situation. FWIW - most of my locations are non commsission....the most I paid on any other account is 10% (2 locations). Hope this helps. Andrew Link to comment Share on other sites More sharing options...
Sparta_Automation Posted May 16, 2010 Share Posted May 16, 2010 I bid $100 for the entire season (3 months....so I essentially bid $33 per month) and 37.5% of the gross.... 37.5% of GROSS..... So if you sold $500 in chips/soda a month....your cost is roughly $250 (Cost of goods), leaving $250 as profit. Now they take $187.50 (37.5% of gross) and $33.00 a month for space rental...leaving you with approx $29.50 for all of your hard work? Hell, at even $2000 in chips/soda a month....you would only make $92.00 Maybe you should be thankful that you didn't get it Travis Link to comment Share on other sites More sharing options...
andyinchville Posted May 16, 2010 Share Posted May 16, 2010 HI, The job would not have been worth doing if the cost of goods sold was 50% of the revenue.... Since the contract was for exclusive rights to sell food / drinks at the site, the mark up would have been greater....As an example chips that would have cost about 25 cents or less would have been marked up to about $1.00....after removing the City's 37.5%...would leave me 62.5 cents per bag sold MINUS the cost of the chip itself (about 25 cents)....thus leaving a profit or net of 27.5 cents per bag of chip (of course not figuring in taxes etc,..).. This "profit" at the pool site despite the city commission would actually LARGER than we typically get when we vend for ourselves (most all machines we have vend chips for 50 cents thus in our other machines, profit per bag sold is "only" about 25 cents per bag of chips. With that and the high volume of sales we would get (two snack machines would need to be filled about every other day) the $$ was there even after the huge commission payout. It did take me a little thinking about it before offering such a high payout but the numbers did work out OK.....and even better than in my other machines (of course I could raise the prices on the other machines too but that is another discussion) Truthfully tho, it may still work out OK or even better if I can just supply the people who won the contract w/ goods.....My only labor would be to box up the products to them and let them worry about selling it (even get to save the time and effort of not having to stock machines!)....I have a set up like this with another company in town and it works out great....Ultimately tho, I think I would like to have had the site myself tho since I am going to be missing out on the drink side also. Oh well, you win some, you lose some....I'll be talking with them on Monday to see if I can supply them . Andrew Link to comment Share on other sites More sharing options...
andyinchville Posted May 16, 2010 Share Posted May 16, 2010 HI Gumball, I like that idea....I didn't think of that option at all.... Thanks! Andrew Link to comment Share on other sites More sharing options...
mission vending Posted May 16, 2010 Share Posted May 16, 2010 Commission structure will vary from industry to industry. I have a hotel that I pay .40 a vend on drinks at 1.75 sale price, 20% of gross after sales tax on snacks and 25% on ice cream. The pricing to support the higher commission is there because it's a hotel. I could not offer those commission rates in a office setting where the sale prices necessary to support the commission would drive customers away. Of course I always prefer no commission structure but paying a commission is just a cost of doing business and as long as you figure it in to your vend prices it's not a big deal. Same goes for calculating commission before or after sales tax, COGS, etc, as long as the pricing is appropriate so that you get the margin YOU want/need then it works out the same at the end. Link to comment Share on other sites More sharing options...
soco Posted May 17, 2010 Share Posted May 17, 2010 Why start @ 10% when you can start @ 5%? Link to comment Share on other sites More sharing options...
mission vending Posted May 17, 2010 Share Posted May 17, 2010 Why start @ 10% when you can start @ 5%? 10% has evolved to be the "norm" over the years. I have also offered to cater in a lunch or a picnic instead of a commission. You just have to be careful in how you set it up so you don`t wind up buying so much stuff that you`d be better off paying commission. Link to comment Share on other sites More sharing options...
mxer518 Posted May 17, 2010 Share Posted May 17, 2010 I work up form 10% depending on the account and the faith I have it being able to perform to certain levels. A lot of accounts I do multiple level commissions such as 10% first 50$ 15% over. I'm certain accounts I have that no product is involved I have been known to do 25% first 100$ 75% over 100$, this is of course on a 30 day service cycle and on accounts I know will very rarely do much more than 100$ on a month. Link to comment Share on other sites More sharing options...
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