% to location

[Amall23]

I've been reading online about what % of sales to give to the location.  From what I have been reading its 10%-35%.  I think, in my noobish mind, that 15% of gross profit is fair.

What do you all do?

[nam]

Amall,

It isn't really gonna matter what you think is fair, it's what the market will bare. If you have a really good location and are only paying 15% someone is gonna come along and offer them 25 to 30% and you've lost your good location. I'll pay a low commission to a small location that isn't gonna make much money to help make it more worth my time to service. If there isn't much in the box I want to keep a bigger share of it myself. If it's a bigger location that I want to keep even if I started them at 10% they're gonna get a raise before someone else steals the account. If it's an account that is a better producer I'm gonna at least pay 25 to 30%.

Another main consideration is how much profit you have in the product. If the location is just candy like a single, double or triple head machine, I want it on charity or maybe 10% commission and if someone wants to steal let them have it. The cost of the candy is too high and you won't get enough volume to make up for paying a high commission. Maybe, if it's like you're best location and really is making some money offer 20- 25% period.

Actually, I'd rather have these little candy machines on charity so I don't have to take the time to count when servicing the route. In addition the pulls are so low that it makes it more worth your time if you basically keep the entire $11 yourself. Sorry for being sarcastic but it's the truth an awful lot of the time. I can't see having to pay most of these locations with the candy machines when so often it's hardly worth the trouble anyway.

Now if it's a big rack with sticker/tattoo, toy/capsules, candy and real high volume you can afford to pay a better commission. The cost of your product may be high but if you're volume is high it will allow you to pay a decent commission. Again, if you don't someone else will want that location and offer a higher percentage to the owner anyway.

Now if you have a big entertainment gumball machine like an Oscar, Wowie, Coaster, Zingo, etc. we have a new ball game. Here you will normally be vending only gumballs at a cost of about 2 cents and selling them for 25 or 50 cents. I pay $14.98 for a box of 850's. I would pay a min. of 25% and up to 50% to the location. If I vend one box of 850 at 25 cents a vend that's $212.50. Now if I paid 40% commission that's $85 to the location and $15 cost in gumballs so I've still cleared $112.50 ballpark. If the location is doing a couple three boxes a month I'll pay them 50% and still clear a nice profit.

So there are alot of varibles to consider when talking about what commission should be paid. The easiest time to talk is when it's you and the owner alone. When another vendor comes into the picture and you're only paying him 10 or 15% you likely won't get a second chance. You'll be history. If you're already paying 25% and another guy offers the owner 30% he may stay with you because the difference isn't that great, he now likes you or he may at least give you the chance to match the other guys offer.

Hopefully this will give you some all around information from my view. I'm of course talking in general terms and each location and situation may merit it's own unique situation to consider.

nam

[nam]

Kelly,

You are exactly right as long as it isn't much money. I don't care about losing it either. lol However, when it comes to a larger account making alot of money it matters a great deal.

nam

[BruceRehm]

Nam,

Excellent suggestions and ideas.

I have my first four machines and two gumball coasters to go out and will be starting that on Monday.

I will be making a trip to Sams on Saturday to start getting goodies to fill them.

Bruce

[havending]

I pay around 40% if you are paying less people like me will still the account away. Not being mean but the company willing to pay the most will bet the locations. The trick is buying products right so you can afford to pay higher com.

[nam]

Kelly,

Again, I agree with you. If you have a good relationship with the owner you won't get kicked out over $10 bucks a month.

When you have an account making a grand a month and are paying 20% commission to the location or $200 a month. Another vendor offers exactly the same machines but offers to pay 40% commission or $400 a month you will likely need your dolly. Now if you take this to a couple three grand a month you're really gone. You pay the location owner $600 a month at 20% and someone else comes in and offers 40% of $3,000 or $1,200 a month your own next door neighbor will kick you out.

When you start getting alot of accounts you'll have the same owner or corp. office with locations in towns all over the place. You might end up driving to mult. states just to service these accounts. This people may smile and be real friendly but business is business. They're overhead is very high and usually these people are very successful at making money. They don't do that by giving it away.

These numbers are totally realistic and vendors are making that kind of money and paying that kind of money monthly. In some cases weekly!Vendors have alot of mult. accounts with mult. machines in the same location taking in hundreds of dollars a week. Now I've had them on 30% and had another vendor offer 40% but talk them into allowing me to stay by a compromise at 35%. The problem is if you get a big new restaurant and offer 20% and the owner doesn't know any other vendors yet. When another vendor comes in and offers 40% now you look like you were really trying to take advantage of him and he'll likely not even give you the chance to keep your equipment in there.

Now again the numbers I'm using vary according to equipment and volume of the location. You can't pay 40% commission if your running a crane with high dollar plush and candy machines selling PMM's and cashews. At least not and make much money. lol Now if you've got a pool table, gumball machines, arcade games, and higher profit candy and toy/capsules you can do it very easy. Again, volume of the location is just as important as who wants to pay 40% to a location only doing $100 a month?

nam

[nam]

havending,

Exactly!

nam

[sbishop]

havending

I am glad you are not in texas LOL

[havending]

When it comes to comm. and location profit you also have to buy right and get your best deals to allow you to be able to offer higher comm. I am able to keep my cost including freight and displays below 20%. The only way I can do this is order product by the pallet load instead of a few boxes. I also have many locations from vending managment companies where im required to pay 40% such as Regal,Pizza Hut etc. I really wish they would take 20% lol. This is the most agresive industry that I have ever been involved in. I do agree that it helps to build relationships with you locations esp. mom and pop types. I have location owners from way back and I have seen there kids grow up and its like we are friends. But when it comes to the big boys you just have to buckle down and pay up. My best private owned place does 700 to 925 amonth and its just all bulk toys and gum. I got him at 45% I beat the guy that was paying 40 and I agreed to put in vend counters. The locations that I have at 25 or 30% are picking up the slack for where im paying that guy 45. I tell guys to look at the comm as a whole and just find an adv that you can live with.

[Amall23]

Vend counters, eh? Well I hadn't thought of those... Where do you find one?

[chris in md]

Amall,

It isn't really gonna matter what you think is fair, it's what the market will bare. If you have a really good location and are only paying 15% someone is gonna come along and offer them 25 to 30% and you've lost your good location. I'll pay a low commission to a small location that isn't gonna make much money to help make it more worth my time to service. If there isn't much in the box I want to keep a bigger share of it myself. If it's a bigger location that I want to keep even if I started them at 10% they're gonna get a raise before someone else steals the account. If it's an account that is a better producer I'm gonna at least pay 25 to 30%.

Another main consideration is how much profit you have in the product. If the location is just candy like a single, double or triple head machine, I want it on charity or maybe 10% commission and if someone wants to steal let them have it. The cost of the candy is too high and you won't get enough volume to make up for paying a high commission. Maybe, if it's like you're best location and really is making some money offer 20- 25% period.

Actually, I'd rather have these little candy machines on charity so I don't have to take the time to count when servicing the route. In addition the pulls are so low that it makes it more worth your time if you basically keep the entire $11 yourself. Sorry for being sarcastic but it's the truth an awful lot of the time. I can't see having to pay most of these locations with the candy machines when so often it's hardly worth the trouble anyway.

Now if it's a big rack with sticker/tattoo, toy/capsules, candy and real high volume you can afford to pay a better commission. The cost of your product may be high but if you're volume is high it will allow you to pay a decent commission. Again, if you don't someone else will want that location and offer a higher percentage to the owner anyway.

Now if you have a big entertainment gumball machine like an Oscar, Wowie, Coaster, Zingo, etc. we have a new ball game. Here you will normally be vending only gumballs at a cost of about 2 cents and selling them for 25 or 50 cents. I pay $14.98 for a box of 850's. I would pay a min. of 25% and up to 50% to the location. If I vend one box of 850 at 25 cents a vend that's $212.50. Now if I paid 40% commission that's $85 to the location and $15 cost in gumballs so I've still cleared $112.50 ballpark. If the location is doing a couple three boxes a month I'll pay them 50% and still clear a nice profit.

So there are alot of varibles to consider when talking about what commission should be paid. The easiest time to talk is when it's you and the owner alone. When another vendor comes into the picture and you're only paying him 10 or 15% you likely won't get a second chance. You'll be history. If you're already paying 25% and another guy offers the owner 30% he may stay with you because the difference isn't that great, he now likes you or he may at least give you the chance to match the other guys offer.

Hopefully this will give you some all around information from my view. I'm of course talking in general terms and each location and situation may merit it's own unique situation to consider.

nam

great post, nam!  got my vote.

 

[shvend]

Amall,

I myself am a commission vendor.  I have only one charity that I work for and it is the local Loins Club.  They also get a commission not a set monthly payment for each machine that is on location. 

Like nam said commissions depend on what part of the country you are in and the market.  I would love to be were nam is and get away with 25% to 30% on most locations.  I will be honest with you I would be on a beach somewhere right now instead of writing this post.  Instead I am having to fight 30% to 50% commissions with other companies. 

As with many parts of the country the vending business has hit a huge bum over the past 10 years with people learning that if done right there is good money to be made.  The only problem is some of these new vendors start out with commission routes and offer high commissions to business owners running the market up on all the old dogs. 

Nam said it in his first post of this thread the higher the commission the less profit you will have.  I will not set here and give you all the same figures that nam just have you, but you get the point. 

Just do some research around your town or city and see what the commissions are going for.  Call other vendors around your area and see what they give for commissions.  Explain to them you are not wanting to go around raising the commission market you are wanting to keep it low and fair.  Most sensible vendors will love to hear that and tell you anything you want to know. 

Good luck to you in the future

[nam]

Luke,

It's the same here. The 25 - 30% are the smaller location and yes vendors are paying as high as 50% on larger locations!

nam

[pdavid]

50% off the gross or net?

[shvend]

Oh is it, I know it is tough when you walk into a location and they tell you someone wants to pay them 50% I have to match or I am gone. That hurts!

[nam]

Luke,

I've never started a location at 50% but have had to raise a couple from 40% to 50% or lose them. It's so frustrating to have to pay that much and wouldn't do it if the location wasn't a really good one! Some have allowed me to stay after I told them I'd have to move my equipment out. I've told some where to go look at competitors equipment and they could see the machines were not keep clean and serviced like mine, etc. Sometimes I think these owners try making you think someone has offered them 50% when no one really has. Know what I mean? I can tell you which customers are most likely to do that too but not gonna do that here. lol Some can really be full of BS.

Oh well, if you're gonna be in this business you better have a truck and a dolly handy.  

nam

[dkochan]

If you are paying commission greater than 35%, count the money in the car. I don't see how you can make money paying 40% or greater commission.

I typically pay 25 - 30% commission for gumballs and toys and 20% commission for bulk candy.

[nam]

dkochan,

I've told some of my locations the same thing. lol "I don't see how you think I can make any money paying you 40% commission. I can't do that and make any money"! lol Everything has to be right including their volume or you just can't do it and make it worth the trouble.

nam

[shvend]

Come on nam,

You know no one would lie to you in the vending business.....  I have some pictures of my big compitions machines and I keep them with me.  They were taken in very high resolution so they dirt would really standout.  I show the owner the pictures if they start talking that 50% junk and they change there tune very quickly most of the time.  Then I give the a little gift like a extra 5%.  I do that without even telling them, they think there money is little better and they tend to forget all about the other guy. 

gotta go play littel mermaid now with my little one!

[nam]

Oh Luke,

That is a great idea to take pictures of your competitors machines!!! Oh I like that one and you can bet I'm gonna do it. I've given them exact locations to go see for themselves but I know they don't normally do that. This is great. Get a nice pic with all the dust showing and low cannisters. I used to carry a binder as thick as a phone book with my pictures but not the competitors. May have to carry to photo books now. ROFL  

This could even be a great lead into the location when the owner asks why you are taking pictures of the machines.  He has to be concerned when he thinks the machines look so bad you want to take pictures of them to show other people.  He's gonna be thinking about you showing these pictures to other business owners and telling them where these dirty bad machines are located.  That's got to get him thinking.  Great time to take out photo book number one and say now this is the way I take care of my locations machines.  I'd take my time taking pictures and hope they ask me why and what I was doing.  Just hope I could keep a straight face.

nam

[shvend]

Now you are getting nam!!!

[Amall23]

I'm right there with you Kelly... well, at least I plan to be. I don't want to start with a lot of machines, just a couple to see if I like it. So the % is pennies and really not worth a conversation even, in my opinion!

[lurtsman]

I love the camera idea. I may pull that stunt in a couple areas when I really want to get something located there. I might find myself thrown out, but I also might find someone who cares about the way the entrance to their business looks.

[guile]

You know no one would lie to you in the vending business.....  I have some pictures of my big compitions machines and I keep them with me.  They were taken in very high resolution so they dirt would really standout.  I show the owner the pictures if they start talking that 50% junk and they change there tune very quickly most of the time. 

 

Brilliant....bloody brilliant!!

g

[shvend]

You know no one would lie to you in the vending business.....  I have some pictures of my big compitions machines and I keep them with me.  They were taken in very high resolution so they dirt would really standout.  I show the owner the pictures if they start talking that 50% junk and they change there tune very quickly most of the time. 

 

Brilliant....bloody brilliant!!

g

I am Brilliant aren't I:D