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Service Charge Question; Need some experts advice


exhilti

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I have a snack machine at location doing about $440 month. They are doing a remodel (adding a break room) in the upstairs/downstairs office. Giving me another opportunity to put a machine on the lower floor. I had a meeting today and they want a proposal put together. (They have a coke machine to which they only charge .25 to staff)

 

They are looking at the following options. My question is what to charge and which would be the best for me.

(This is for the possible new machine only, wanting combo snack/coke)

 

1) They buy the machine and I service both snacks and cokes.

2) They buy the machine and I buy snack and keep profits. Could also charge fee to fill cokes for them?

3) Buy the machine (wanting a new model) and negotiate the rate on the cokes. Snack would be your typical you service it and keep the profits.

 

The president is leaning towards buying their own and pay me to service. The facility manager would rather I buy and handle everything.

 

Just want to make sure I don't price myself out of a better deal. Any feedback would be greatly appreciated.  

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I would only do this on a full service basis by you. If they want to subsidize the soda then you will bill them for the difference between what you would normally charge and the subsidized price. If your normal price for cans is .75 and they want it to sell for .25 then you should own and service the machine, collect all money and then bill them .50 for each can sold. This is the cleanest way to do it, but realize how fast the soda will sell and how little a combo machine will hold. You might have to service it every day.

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This is a complicated deal. Regardless of who owns the machines, you still need to make a profit. In the long term, the machine won't eat into your profits too much so you can't take a huge cut on prices to make up for it. The only fair deal (in my mind) is that you take a traditional role and charge a traditional price (you provide the equipment) or you buy the snack machine and charge standard prices on snacks and let them provide their own soda machine and let them stock their own. Anything else and you might regret it. You could also try a subsidy.

From what it sounds like, they want the lowest prices possible for everything but vending is a for-profit business. If this account won't make any more than $250/month in profit from snacks and soda, I wouldn't even consider fooling around with it. It's too complicated without taking a traditional roll. In fact, just off of what I read, I would pass it up entirely but that's because I prefer not to mess around with situations in which the customer already has the idea of controlling my pricing.

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Thanks for the feedback! We have met since this post. They are going to keep everything as is on my machine on the top floor.

Was thinking of giving them 2 options for the additional machine.

1) I buy the machine and price as I see fit.

2) would charge them a $500 stocking fee for both snacks and coke. (Not buying any items) This would still give me my profit margin and keep my other machine in office.

I wouldn't even consider this deal, if I didn't have a machine onsite already. Since I was in the building, I figured this is just a quick trip down one floor. Just didn't want to underprice myself. I figured if they did this they would have to have a staff member to get all the snacks/soda. By the time you pay them mileage, time and liability of them on the road during company hours this would sway them to allow me to put in my machine on my terms.

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