This is a Hard Business

[zanygames]

Thanks everyone for the great posts here.  It has been very helpful and has allowed me to avoid many first timer pitfalls.

I have a small arcade game route, mostly arcade machines and pinballs, some cranes, and sticker machines. 

These games weight 300lbs and up, cost a ton of money, have monitors that go out, hard drives that die and all kinds of other issues.  Top that off with most of the amusement companies that made these machines are out of business and getting parts can be difficult.  Also locations always want you to bring in new stuff constantly, so you have to move these around.  I have $10k just in one pizza location, and I buy my machines as cheap as I can, fix them up, etc.  to reduce my costs.

I decided to try bulk vending a few weeks ago.  My sister's 10 year old son makes $50 a month from one plastic two head gumball machine I gave him a few years ago.  Every month he makes $50 from the barbershop he has it at.  He now has six locations and averages $25 a machine a month.  That's $150 every month, no commissions, all free machines, and he's ten. 

I have had arcade game locations with $1,500 invested for a driving game in there and make $100 a month, minus 50% split, so $50 my half on a good month. 

So anyway, I am happy to try something that fits in the back of my car, does not have a PC board that will cost me $300 to replace myself, if I can find one on ebay, or a gun that a kid will smash and cost me $80 to replace.  I would much rather invest $50 in a used NW machine and make $25 - $50 a month from that if I could. 

My main concern is the commission with bulk vending.  I have read here that some people are giving 30%, 40%, or more commission.  I understand doing the 50% split for arcade games, but when I am driving out to a location to service a gumball machine and have product that might go stale, it's hard for me to imagine giving anything over 20% of gross.  Plus I have the cost of the candy which is 35% from what I have read here, since I have candy and no gum in my tripples.  PMM cost a bit at Sams.  Plus I read that collection reports and some of these locations are making $10 a month and then you give the owner 40% of net.  so take off 35% for COG (3.50) leaves $6.50, then give the owner 40%, so $2.60 and make .90 for myself.  So that kind of has me worried. 

So I guess the key is getting locations that are above average, and keeping your commissions low.

Steve

[G-man422]

Steve, I'm glad you will be giving bulk a shot.  Keep in mind you don't have to do commission.  You can also do charity or just offer a free service like your nephew does.  Either way, don't let the commission scare you.  There are at least 3 main ways to get into a location.  Just by reading your post I think you will be pleasantly surprised at how much less of a hassle bulk is compared to amusement vending.  If you can get some decent used machines at a good price it is very possible to recoup your investment after a few months.  As you more than well know its all about location.  Now go buy some machines!  Good luck!

[Jax Snacks]

I have been wondering about the arcade business for a while.  I rarely see people playing the video games in the sports bars any more - mostly just pool and darts.  I have a technical background and have intentionally avoided anything electronic.  Maybe I am a bit paranoid, but I have personally seen what rapid technology changes can do to a person, career or business.  Not to digress, but I once read an interesting case study on Jiffy Pop Popcorn many years ago and how the invention of the microwave destroyed them.  Newspapers, Original Phone Companies, Video Rentals, Music Stores all have become "victims" of massive technology changes.  I just wonder if the arcade business is about to become another "victim".  I would think that most video game addicts simply buy their own hardware and don't really need to go to the arcade any more.  The one exception I have heard is that the bar top videos are a good money maker.  And yea, the owners always expect the latest and greatest video games.  Bulk seems to be more stable in that regard and the metal machines like Oak and NW have not changed much in 40 years and should be around for the foreseeable future.  I don't envy having to repair and keep those games updated - not to mention the larger investment. 

My advise would be to get more into the 1 inch toys and back off the candy a bit.  A small toy rack or double/triple would be a good fit in your current arcades and it would block a potential competitor as well.  If you must do candy in a toy location, I would limit it to just one selection like Skittles.  I rarely offer MMP in a commission situation.  You should also consider interactive machines like shootin hoops or pinball machines that vend gumballs or superballs.  Have fun with your new "toy".

Jax

[tooldini]

I am going charity so far but if needed with worth with commision. I am using my local Humane Society which so far the 3 locations I have are very excited about that since they are in need of money and it is well know around town. They Human Society is even gonna list me on there site and promotions as a steady donator of money even though it isn't much LOL. Just and idea learn what your town is passionate about and work with that. It helps that I love animals also

[cavity]

They Human Society is even gonna list me on there site and promotions as a steady donator of money even though it isn't much LOL. Just and idea learn what your town is passionate about and work with that.

Do they keep live humans at the Human Society?  Do they give them away for free, or do you have to buy them? I thought our govt. abolished all that human trafficking years ago.  JK 

We too have a good relationship with our HS.  They have allowed me to place 4 machines within their facilities.  It's great that they are promoting you on their website.  I'm currently in the beginning stages of working with another animal shelter.  I'm doing whatever I can to get more exposure.

[T BIRD]

Good luck with giving bulk a fair shot Steve.  It's a numbers game IMO.  You have to have large numbers of machines placed to make money. Sure there are down sides to bulk.  But bulk has been around for many many years and is not going anywhere.  The technology is what it is and will remain the same. 

[zanygames]

Hi,

I went out and bought some used machines.  No $10 a head deals like I see people getting here from time to time, but some very nice clean machines for a fair price I think.

My lastest batch is 11 NW Super 60 setup as five sets of double heads, with stands, two extra globes, lots of extra parts and vending wheels, etc for $300.  These will be nice because I will be able to get into 1" gumballs or bouncy balls.

I have some bulk candy three heads and vendesign machines, which both are like new, but they only vend bulk items, so I am missing out on the great profit from gum and bouncy balls.

I also bought a used nine head rack and placed it commission free at the pizza place.  I filled that completely with toys 1" and 2", which was my first mistake because at the time I did not have a price list from AA Global and I went with Coast Ent. and paid a bunch more for the same items.  So my profit on this first batch is going to be weak.

The rack allows me to get into bouncy balls which is awesome since they cost me about .05 each.  I also sell the 2" bouncy balls for .50 but they ran me .23 each with shipping, so not as good a deal there.  The 1" toys are running me .14 each (with shipping),  I can get them from AAG for about .07 each I think next time around.

I also placed a six head sticker machine at the pizza place, commission free.  I got that used for $200 which was not a great deal, but it came with 12 boxes of stickers / tattoos, so I really got the machine for free and paid under $20 a box for the stickers. 

I also placed a Vendesign 4 sided bulk candy at the pizza place.  So that is my first charity placement.  I have MMP, MM, Mike, SK.  It has been in there for two weeks and did $8 gross in those two weeks, but my Mike n Ikes was not vending so I fixed that, so maybe it will pick up. 

[kai1836]

  Steve,

  Sounds like your on your way. That pizza place sounds like it will be a winner for you. Your getting fair prices on your equipment. If you want to get the 10/head deal you need to be patient. Every now and again one will pop up on craigslist. It is usually a large number of heads but the price will be very low. Keep an eye on craigslist and you'll see one. Good luck.

[davidsurvz]

I am sure you will be able to do well in this arena with your background. We wish you the best. It sounds like you are getting started off right.

David

[tooldini]

Damn I forgot an e