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Price increase mini rant


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I don't know about the rest of you, but I get bothered by price increases. Customers aren't the only reason, but the physical act is another.

One of the customers I acquired was all upset with their previous vendorwho sold out. This account had an abandoned/broken royal can machine, a national 146, and a nice vendo 540.  I told them in October that I could fix everything and remove the can machine but I'd have to raise all prices. Wouldn't you know... I raised soda to $1.40 and a few are acting like I'm a con artist. I'm really not upset because I could cancel or lost this account without batting an eye, but I am disappointed that people are fine with paying $1.70+ at the store for the same product but want to try to get personal with me about the price out of the machine.

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This has and always will be a issue in vending. Customers don't care about our cost increases and never bat an eye when prices go up in a C store. This is one reason micro markets are getting so popular. But MM will never replace all traditional vending. 

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I've been quietly going up on a bunch of my items.  No one has said much yet, but in my part of the country, cost of living is low so my costs are pretty reasonable.  I'm mainly doing it in accounts that are somewhat slow, ones I'm not worried about potentially losing, and ones that I know no one would go in if they called on someone else.

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We can be our own worst enemies on pricing sometimes; new vendors and hobby operators bidding prices too low with accounts for example.  It seems like everyone is afraid one of these small little accounts will get upset.... I have lost one account in 6 years because of price increases, and I don't miss it, it was out of the way, small, and seasonal... hope whoever got it is not losing too much money!

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Our larger accounts under contract have pricing spelled out and most have provisions for price increases. We lose a few accounts over price increases, and these are usually smaller accounts that know more than we do. (sarcasm). We also lose accounts to competition with lower prices but usually get the account back due to poor service or the competitor went out of business. 

Be respectful, reasonable, and play nice. But also be prepared to leave. There's another location that will love the equipment. Usually, you have one that could use an upgrade. 

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On 8/9/2017 at 8:12 AM, lacanteen said:

Our larger accounts under contract have pricing spelled out and most have provisions for price increases. We lose a few accounts over price increases, and these are usually smaller accounts that know more than we do. (sarcasm). We also lose accounts to competition with lower prices but usually get the account back due to poor service or the competitor went out of business. 

Be respectful, reasonable, and play nice. But also be prepared to leave. There's another location that will love the equipment. Usually, you have one that could use an upgrade. 

Although my average prices are probably still lower than the larger vendors in my area (by anywhere from 5-15 cents depending on the item), I am definitely not at the level of some of the really cheap vendors out there.  I think it's a good time to make a point that some of the cheapest vendors in my area, even the medium-sized ones (locally speaking.. with 4-8 routes) have either gone out of business completely or they are relatively unheard of and only keep the accounts they already have.  I acquired some of the rejected accounts that the buyer of that company didn't want, and they were selling candy for 75-80 cents, pastries for 80-90 cents, 1 oz chips for 50-55 cents, LSS for 75-80 cents, and cookies for anywhere from 65-80 cents.  Bottles were 1.25 almost across the board from what I could tell and cans were usually 65 cents.  These prices are too low if you ask me, but I had rarely ever even heard anyone mention them in the past 10 years, despite only selling out last year.  The lesson is that lower prices usually just lead to an eventual dead-end as there's not enough profits for growth and customers are only willing to allow for those prices increases if you put newer machines in. 

Starting last year, I began increasing prices everywhere.  At first, I was only increasing candy to 90 cents and leaving chips at 50-55 cents while only focusing on putting bottles at 1.35.  I realized that it just wasn't enough.  I also realized that customers who had regular price increases weren't so angry when prices increased 5 cents or 10 cents at a time.  So... I began to focus strictly on slower locations with nice equipment and low prices.  My mentality was... if you don't like the price increase, then check elsewhere, but if you want to have good equipment then you'll have to pay fair prices.  Worst case scenario is that I get good equipment, get rid of a slower account, and upgrade better customers.   Best case scenarios is that my profits simply go up at that location. 

After I had taken care of all of the stragglers (and not getting canceled even once from price increases), I began to focus on the better accounts.  If their equipment was crappy, I'd try to upgrade them with better equipment.  Soon after, I would raise prices.  The same mindset applied -- If you don't want to pay fair prices, then you won't get the nice equipment.  The thing is, I inadvertently found out that putting nicer equipment with better features (such as $5 acceptance, CC acceptance, drop sensors, etc...) made sales improve.  Also, in locations where they were undersized with equipment, my sales boomed and I no longer have to service them as often either.  So, on top of greater margins from price increases, my sales numbers improved with better equipment.  All of this has taught me about the catch 22 in that it PAYS to keep prices comparable to your higher-end competitors and invest in better equipment with those extra profits.  Better equipment = more sales and better margins.  More sales and better margins = you can afford better equipment.

Now I just need to consider selling off a chunk of my route to get rid of some of the under-performers.  I probably have 10 accounts I could get rid of all now and setup a decent little route for someone starting out without paying too much.

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