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Figuring the true costs


Vendingguy
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I have one question that I have been puzzled over for a little while.  We all know how many pieces to vend at one time on a particular kind of candy.  This enables us to make a generous profit, as well as make the customer happy when they recieve enough to fill their desire.  However, I have been digging alittle deeper into this spectrum to find out true costs before I endure them.

I was wondering if anyone knows how many pieces of candy are in each pound of candy.  I don't really care about gumballs, as I know I'll only vend 1 at a time, and I know I buy 850 at one time, giving me approximately $212 in sales from each box.  My main concern is bulk candy, like M&M's, runts, reeses, skittles, and really any kind of candy that dispenses several pieces at one time.  If I know how many pieces are in a pound, then I can easily figure my rate of return from each pound purchased by doing simple mathmatics.

I also know each vend is not exact, as sometimes the vend amount is plus or minus 1 or 2 pieces above or below your actual setting, but it would be fair to say that a person can make a calculation as to the Highest amount a person can make, as well as the lowest, and come up with an absolute average on a per pound basis.

Now, with this being said, I know that Peanut M&M's are number 1 in sales, but that does not mean they are #1 in profits.  A simple spreadsheet, along with a line graph could easily prove, ( or disprove)  that a vendor can make as much money or more on a cheaper product, but with less sales within the same time frame.  We can do this on every type of candy that we sell, and show the amount of sales needed for each product to be equal in profits.........This will give a person facts as to what kind of candy they need to push in order to maximize profits.  The cheapest candy may be the most expensive candy that we have out there ( in terms of profits generated), but I don't know, or vise versa.

To put it into perspective, let's say a vendor can get 32 vends per pound of M&M peanuts, with a cost of $2.20 per pound......A vendor would make $8 in sales, with $5.80 in gross profit per pound.  Now let's say another vendor can get 32 vends per pound of runts at $1.2 per pound.....A vendor would still make $8 in sales, but profit $6.80....One full dollar more per pound.  Will the peanut m&m's make up for it with continous sales....Yes, I know it would, and was only using this as an example, but what if we had this information so we can compare "like" candies to one another, such as skittles and runts, or plain m&ms and reeses.  this way, we can focus on getting as much as we can on a per vend basis.

The same holds true with finding out how much to vend at each time.....I believe a vendor should offer more per vend in comparison with what a person would recieve in buying an individual bag.  This way, the customer feels like they get a good deal...( If they think of it at all), but what if you dispensed 7 or 8 pieces of candy at one time, instead of 10.  In contrast, you would save an  additonal 25 cents for every 4 vends.  If you average 2 vends per day for a whole month, You would have saved retail $3.75 worth of product per machine, or a little over $1 in actual  candy costs.  Now stay with me........If you have 50 machines that you do this with, your business would actually save $50 by purchasing a little less candy, and generate more income of $87.50 off of the existing candy that you have.  This is per month if you average 2 vends per day and have 50 machines.

Again, there is a fine line between profits and customer loyalty,  would this work....Maybe.  Would a customer realize that they got 8 m&ms as opposed to 10....Maybe, but I doubt it.  As long as you are giving them some sort of value for their purchase, they wouldn't mind, or more importantly really notice.......

Alright, I know I'm long winded, but you got to know me.....I analyze everything to a tee.  I figure out everything, and weigh the options.  I draw up plans that would maximize effeciencies, increase profits, and minimize downtime.....( That's what I do in my full time job) so please forgive me if I am way off base on this subject.  In order for any business to be successful, they must be pro-active in their quest to generate an income.  Give the customer what they need, at the same time as cutting costs in every way imaginable. If this means teaming up with a local candy warehouse and saving a dime per pound, to reducing the amount of candy vended at any one time, to common sense advise that enables the vendor to service some lower volume machines bi- monthly, in which will cut down on overall service time, and gas.  We all heard the saying " a penny saved is a penny earned", well this advise is especially true to business's.  At the end of the day, not only do you want to make money, but it is essential that your business makes money as well, and as far as I know, there are only 2 ways of doing it.  One is increasing the cost of the product...( not advisable) or cut your own costs of doing business in every way that you can....I will almost promise you that if you make "a game" out of saving money for your business, or making money in unique ways, your business would be not only more enjoyable, but also more financially strong.

Alright, I'm done, what is your take on the matter?   Not only in cutting costs, but with the amount of pieces per pound of specific candies.....

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well i never counted out how many m&m's are in each bag but I have my machines set to wide open to vend the max amount of candy at one time. Generally for me ( based on my machines) 1 bag of m&m's that i get at sames will vend me about 45.00. That if there is no more m&m's in the machine. So i figure if the bag costs me 8.00 roughly that ia m making $37.00 gross profit. then you have to take in account gas but that is divided over the entire route so I would say roughly $32-$34.00 profit.  But thats the way i look at it.

My goal every month is to make $20 per location. If I have a machine with m&m's I can go 2 months without buying more product. So overall it does well.  But liek i always say, bulk vending (in my experiences anyway ) is all a numbers game. More machines you have out the greater chances to make money you have.

 

 

Mike

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A while back we checked some of our vends by weight. We found that generally, independent of product, the machines kick out 1 oz. There was a little play of about 10% in weight, but we did this for many products, several machines, and many repeats, so the results in our mind are statistically meaningful. In short, a 56 oz bag of MM's should yeild about 56 vends. 0.25 X 56 = 14. Cost is 7.88 in Sam's, so we feel we get  6.12 in profit for each bag of MM's.

Hope this helps,

Regards,

Philo

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Man,  now that's confusing....The previous post said that they get $45 from each bag of M&M's, with $37 gross profit, and your profiting only $6.12 per bag..........I'm assuming both are using the 56oz bags sold at Sam's.    Which means showmevending is vending out just over 1/4oz of product, where your vending out 1 full oz.  Look at the difference in profits.

This is a prime example of how much our costs effect our profit.  Between these two operators, there is a $30 difference in profits from the same product offering.  The only difference is 1 operator vends 1/4 oz, while the other vends 1 full oz.  As a customer, I would much rather go with Philo's machines, but as a business owner, there must be a happy median of generous profits, and customer satisfaction......1/2 oz would make $28 per 56oz bag of m&m's, with $20 in gross profit.  The other factors that cut into the profits indirectly are the more service trips that must be made, and additonal stops at Sam's.....All of this breaks down profits.

A while back we checked some of our vends by weight. We found that generally, independent of product, the machines kick out 1 oz. There was a little play of about 10% in weight, but we did this for many products, several machines, and many repeats, so the results in our mind are statistically meaningful. In short, a 56 oz bag of MM's should yeild about 56 vends. 0.25 X 56 = 14. Cost is 7.88 in Sam's, so we feel we get  6.12 in profit for each bag of MM's.

Hope this helps,

Regards,

Philo

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i cant really say how many oz he is vending. i have my machines set to WIDE OPEN, meaning that the wheel is all the way open. You get handfull of m&m's. With my v-lines thats about 10-12 m&m's per vend. and yes i get my bag at sam's club. I dunno how this guy is doing it but I gorss profit roughly 37-40.00 on a bag of plain m&m's.

 

 

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Averages

1 lb M&M plain = 515 pieces

1 lb M&M Peanut = 188

1oz of M&M Plain = 32 pieces

1oz of M&M Peanut = 11.75

Try my quick and dirty percentage calculator in the members section of vending tools. Also TJ King and Actionmatic give average counts for product weight, check them out.

Grumpy

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Grumpy:

Thanks. I think I'm going to re-create the weight experiment to see if my information is accurate (although I usually get good info here). If not, I'll post the corrected weights that are vended ASAP.

Regards,

Philo

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