bhumphrey829 Posted May 10, 2016 Share Posted May 10, 2016 Okay, I have posted on here previously about me working out a deal with Dr Pepper and them placing machines in my snack box locations and I would buy my product from them and they would maintain maintenance on the machines. Well it was actually they would order the machines and I would come pick them up from their warehouse and place them at the locations myself. Well, i don't have the means to do that. I run my snack business out of an SUV so i would have to hire someone to move them for me,, then I would have to have about $800.00 to buy the product, then another $900.00 to fill the coin mechs. So this was all out of my price range, so i asked him if there was any other options and he said they could actually place the machines in my locations, stock them and I wouldn't have to do anything and they would pay me 20% commission on all loctions. Is this a fair deal in your guys' opinions? Link to comment Share on other sites More sharing options...
AngryChris Posted May 10, 2016 Share Posted May 10, 2016 Just out of curiosity, how do you get $800 to buy product and $900 to fill coin mechs? $900 in coin mechs sounds like about 10-20 machines depending on what kind of coin mechs are inside. In addition to that, most honor box locations aren't very good for soda machine sales. As for giving you 20%, that sounds great but unrealistic. I will tell you this... if a 3rd party company offered to service the soda machines at my snack box locations and give me 20% of the sales, I would agree absolutely without question.. why? Because if it is small enough for an honor box, it is probably also too small for a soda machine. You wouldn't have to change anything with how you do business but you would basically be getting "free money" for doing no work. In reality, the fair thing to do (in my opinion) would be to let 7up/Dr Pepper (whoever it is) place the machines and service them and collect their own profit while you just do snack sales... and use that option as a benefit to your honor box service. In other words, you find prospective honor box locations and say that they can get a Dr Pepper machine in addition to your snack box. Service might not be as good as what you would do,but snack box accounts typically don't last forever and it wouldn't be your problem... it would be Dr. Pepper's problem. You and I both know that it takes almost no effort (except driving) to pick up an honor box, so getting an extra 20% is great. On the other hand, if you can get 3rd party leases that easily (which IS easy if you ask me), then I would look for better vending locations and get snack machines to go with the leased soda machines. Would you be transitioning from honor boxes to vending machines? Yes. Is there more profit to be had? The potential profit is much much higher with vending than with honor boxes, but without the simplicity of what you currently do. You would need a larger vehicle. As a final note, paying someone to move machines is the norm in many areas. Most small-medium sized companies that I know (grossing $2 million/year or less) typically don't have the equipment to move machines. Rather, they pay a mover to do it. Why? As long as you know what you're doing, vending machines typically don't get moved and placed nearly as often as honor boxes. Having an account for several years is pretty common, and the profits from good locations justify moving expenses. The other reason is that moving equipment is expensive... more expensive than hiring someone for a few hours to do a few moves all at once. Purchasing $800 worth of soda is nothing. Filling $900 worth of coin mechs is (because it's a lot of cash just sitting in coin mechs) but it really takes a lot of machines to put out that much cash. Even then, a good location will turn that investment around pretty quick. I just don't want you thinking something like "Vending machines aren't worth it because I have to pay movers and all of this other crap" when it could be a good investment for you. Honor boxes are a different business in my eyes... aside from the product, the operations are totally different. If you ever wanted basic information about vending machines as a business, I could provide that to you. All I would want in exchange is information on how you approach locations so easily. That's my Achilles heel. Link to comment Share on other sites More sharing options...
bhumphrey829 Posted May 10, 2016 Author Share Posted May 10, 2016 Just out of curiosity, how do you get $800 to buy product and $900 to fill coin mechs? $900 in coin mechs sounds like about 10-20 machines depending on what kind of coin mechs are inside. In addition to that, most honor box locations aren't very good for soda machine sales. As for giving you 20%, that sounds great but unrealistic. I will tell you this... if a 3rd party company offered to service the soda machines at my snack box locations and give me 20% of the sales, I would agree absolutely without question.. why? Because if it is small enough for an honor box, it is probably also too small for a soda machine. You wouldn't have to change anything with how you do business but you would basically be getting "free money" for doing no work. In reality, the fair thing to do (in my opinion) would be to let 7up/Dr Pepper (whoever it is) place the machines and service them and collect their own profit while you just do snack sales... and use that option as a benefit to your honor box service. In other words, you find prospective honor box locations and say that they can get a Dr Pepper machine in addition to your snack box. Service might not be as good as what you would do,but snack box accounts typically don't last forever and it wouldn't be your problem... it would be Dr. Pepper's problem. You and I both know that it takes almost no effort (except driving) to pick up an honor box, so getting an extra 20% is great. On the other hand, if you can get 3rd party leases that easily (which IS easy if you ask me), then I would look for better vending locations and get snack machines to go with the leased soda machines. Would you be transitioning from honor boxes to vending machines? Yes. Is there more profit to be had? The potential profit is much much higher with vending than with honor boxes, but without the simplicity of what you currently do. You would need a larger vehicle. As a final note, paying someone to move machines is the norm in many areas. Most small-medium sized companies that I know (grossing $2 million/year or less) typically don't have the equipment to move machines. Rather, they pay a mover to do it. Why? As long as you know what you're doing, vending machines typically don't get moved and placed nearly as often as honor boxes. Having an account for several years is pretty common, and the profits from good locations justify moving expenses. The other reason is that moving equipment is expensive... more expensive than hiring someone for a few hours to do a few moves all at once. Purchasing $800 worth of soda is nothing. Filling $900 worth of coin mechs is (because it's a lot of cash just sitting in coin mechs) but it really takes a lot of machines to put out that much cash. Even then, a good location will turn that investment around pretty quick. I just don't want you thinking something like "Vending machines aren't worth it because I have to pay movers and all of this other crap" when it could be a good investment for you. Honor boxes are a different business in my eyes... aside from the product, the operations are totally different. If you ever wanted basic information about vending machines as a business, I could provide that to you. All I would want in exchange is information on how you approach locations so easily. That's my Achilles heel. Hey Angry, I appreciate the feedback. First of all, the $800 and $900 come from 10 soda machines, that's how many locations that want soda machines so far (actually i got 3 more today), so a total of 13 so far. I'm a little confused on why 20% sounds unrealistic, I am signing the contract with Dr Pepper on Thursday and that's what it says in the contract. And that's exactly the it is explained. I get 20% commission because they are my locations. He said if they didn't perform well enough for them, they would simply come and remove the machine. As far as full line vending, I just enjoy snack boxes much more than full line. I actually had 8 full line soda and snack machines and I just didn't like the fact that they were older machines and i knew eventually they would break down and I don't have a mechanical bone in my body lol so I would be having to hire someone to work on them. I don't have that problem with my snack boxes. Also, the competition with snack boxes is pretty much none. Where with full line you are constantly competing with vending companies, and you are limited to the locations you can put them, where with my snack boxes, pretty much if they have front door to open I"m in there trying place a box. But the number one reason is because I am on a "shoestring budget" or I definitely would at least do my own soda machines, but in the mean time, i will just collect my 20% and keep getting locations for myself and Dr Pepper. Does this make sense? Link to comment Share on other sites More sharing options...
Walta Posted May 10, 2016 Share Posted May 10, 2016 If you start each machine with $30.00 in the changer, that is plenty. The 20% commission thing is likely to become the ring of failure. In that to pay that high commission the bottler will set a high vend price per soda, that will drive down sales volume, then the bottler will be forced to pull the equipment. Walta Link to comment Share on other sites More sharing options...
bhumphrey829 Posted May 10, 2016 Author Share Posted May 10, 2016 If you start each machine with $30.00 in the changer, that is plenty. The 20% commission thing is likely to become the ring of failure. In that to pay that high commission the bottler will set a high vend price per soda, that will drive down sales volume, then the bottler will be forced to pull the equipment. Walta Thanks for the info Walta, I will find a lot more about all of this on Thursday when I meet with Dr Pepper Link to comment Share on other sites More sharing options...
AngryChris Posted May 10, 2016 Share Posted May 10, 2016 Unrealistic probably isn't the right word, but in reality, it seems unfair to the location. Normally, the vendor gives a commission to the person in charge of the account. Unless you have a contract, I don't see why that would be you and not the location itself. But hey, if you get the 20%, might as well take advantage. Link to comment Share on other sites More sharing options...
RJT Posted May 11, 2016 Share Posted May 11, 2016 Unrealistic probably isn't the right word, but in reality, it seems unfair to the location. Normally, the vendor gives a commission to the person in charge of the account. Unless you have a contract, I don't see why that would be you and not the location itself. But hey, if you get the 20%, might as well take advantage. This is not unrealistic or unfair at all. Full service is done all the time and I use that method a lot of times depending on the account. 20% for doing nothing other than providing the location is a good deal. I think the big issue here is going to be low volume accounts. I am just guessing here but I am going to say they are most likely low volume accounts and the bottler will pick them up in 3 to 6 months. To the OP you also might want to read the small print and see if their are any minimums they require before they pay you anything. Link to comment Share on other sites More sharing options...
Southeast Treats Posted May 11, 2016 Share Posted May 11, 2016 I agree that honor box locations that are too small to upgrade to snack vending are probably too small for drink vending as well, but if the distributor wants to give you a commission for locating their machines, go for it! Read the fine print to make sure you are not on the hook for any problems. Likely that the local Dr Pepper/ Snapple distributor (being # 3 in the cola wars generally) just really wants to get some exposure and get some machines with their logo out there. If a couple of them take off so much the better!! I have heard of honor box operators who get bird dog/locator fees from vending operators when they find a good vending location for them, so this is about the same. BTW, $30 is usually more than enough to start a changer, depending on the price points. If everything is .25 increments, then a couple dollars in .05 and .10 and 2 rolls of .25 is more than enough - under $25 per machine. More nickels and dimes if the price points are odd amounts like .85 or .90. Good luck!! Link to comment Share on other sites More sharing options...
bhumphrey829 Posted May 11, 2016 Author Share Posted May 11, 2016 I agree that honor box locations that are too small to upgrade to snack vending are probably too small for drink vending as well, but if the distributor wants to give you a commission for locating their machines, go for it! Read the fine print to make sure you are not on the hook for any problems. Likely that the local Dr Pepper/ Snapple distributor (being # 3 in the cola wars generally) just really wants to get some exposure and get some machines with their logo out there. If a couple of them take off so much the better!! I have heard of honor box operators who get bird dog/locator fees from vending operators when they find a good vending location for them, so this is about the same. BTW, $30 is usually more than enough to start a changer, depending on the price points. If everything is .25 increments, then a couple dollars in .05 and .10 and 2 rolls of .25 is more than enough - under $25 per machine. More nickels and dimes if the price points are odd amounts like .85 or .90. Good luck!! Thanks for you input Treats, I have decided to just go with commission pay. If it works great, if not, I didn't start my honor box business to do soda machines anyway so I basically am at not risk. Link to comment Share on other sites More sharing options...
Walta Posted May 12, 2016 Share Posted May 12, 2016 The risk you are taking is not cash but your reputation is on the line. At this point the bottler thinks of you as a viable customer. If you have them waste time and money on loser accounts you may never get a chance to do third party again with a bottler. The vending business is a lot like a small town, in that everybody knows everyone else’s dirt. Walta Link to comment Share on other sites More sharing options...
AngryChris Posted May 12, 2016 Share Posted May 12, 2016 The risk you are taking is not cash but your reputation is on the line. At this point the bottler thinks of you as a viable customer. If you have them waste time and money on loser accounts you may never get a chance to do third party again with a bottler. The vending business is a lot like a small town, in that everybody knows everyone else’s dirt. Walta I agree. But if he has no intention of ever expanding into full line, he's got nothing to lose. I wouldn't bother though. Link to comment Share on other sites More sharing options...
arkhusker Posted May 12, 2016 Share Posted May 12, 2016 Your name is not only on the line with the bottler but more importantly with the customer. I have actually had similar arrangements in the past with bottlers. It didn't work out simply because they don't do as good of a job as I would do. You are letting a total stranger be the face of your business because the location is yours. They won't call Dr. Pepper when there is problem, they'll call you if they call at all. Link to comment Share on other sites More sharing options...
bhumphrey829 Posted May 15, 2016 Author Share Posted May 15, 2016 Your name is not only on the line with the bottler but more importantly with the customer. I have actually had similar arrangements in the past with bottlers. It didn't work out simply because they don't do as good of a job as I would do. You are letting a total stranger be the face of your business because the location is yours. They won't call Dr. Pepper when there is problem, they'll call you if they call at all. L LOL I was kind of confused about this comment, but then i realized this topic is where i was going to go strictly on a commission base. I have since posted under "third party vending" that I have decided to go with Coke and do my own stocking and picking the locations that i have that warrant having a soda machine. I appreciate all of your guys' comments on here, that's I post and then weigh what comments are posted. Thanks for that. I am starting off with only 3 machines (because that's all they approved me for until I build a volume history with them). My plan is to eventually have 400 snack boxes and 50 or 60 soda machines. Link to comment Share on other sites More sharing options...
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