Why not .50 cans?

[nrpick44]

I just bought a can machine at a oil and lube place. Its set at .70 right now and the guy i bought it from said it makes roughly $100 net per month. I cant help but think that if i lower the price to .50 ill have people from the tire place and paint and body shop next door coming to my machine in no time. Plus the guys at the oil and lube will LOVE me. 

Thoughts please.

Thanks in advance!

[mission vending]

It's your business and can certainly run it how you see fit. There is no way I would do it, it was way to hard to get past the .50 mark to even consider going back, even if the cost of cans goes down on a permanent basis.

The current price wars that have lowered the price of sodas to $5 per case will come to an end. It's already been mentioned in another thread today. So what do you do next week month when the cost per unit goes back up to .30 instead of .20, are you still willing to work for that much less?

Think how the location will react both ways, yes it will be great when you go down on the price but how will they react when you go back up?

Does the lower price still leave you enough room to set aside $$ for the inevitable, mech, validator or compressor repair?

The location has already accepted that price point, why do you want to give $$ back?

Just a couple of thoughts.

[NinnJinn]

Hi there same price neighbor!    tomorrow I will have had my first can machine for 2 weeks.  It was set to 50cents when I bought it, and I left it there.  A lot of folks here will say and has told me to raise the price.

On prices, the way I look at it, if I wouldn't pay xx cents for a can of soda, why should I expect someone else to?  especially on an outside machine.

Now, if I had a factory location or something like that, then yes, I would tinker with the price somewhat.  Especially if I had an outrageous commission to pay.

I generally try to double my money.  after commission etc

I'm new to Soda machines, But I honestly think once the word gets around that the price has dropped to 50cents, your sales will increase.

Around here anyways, you can get 32oz fountain drinks all day long for 79cents plus tax, so why pay 70cents for a 12oz can of soda?  Just my two quarters worth.

[NinnJinn]

Mission does have good points.

And for me, if the cheapest price hits 30cents a can,  I will be forced to raise prices in order to double my money.

If the 70cent ordeal was good for the previous owner, go around and see what others are charging for a can of soda.  and if they are cheaper, either match or beat it by a nickle.

So far, I am doubling my money AND I have the cheapest cans in town!

[nrpick44]

lol, i have to atleast try it now. Im just glad i wont be the only one.

[Alan R]

The value of the dollar has dropped so much, do you think they will worry about 20 cent? If you lower your price by 20 cents and your volume picks up but your profit per unit  will go down and all you'll be doing is carrying more inventory into the location for the same profit. If you think your volume is going to go up over 20 cents to beat your current monthly profit your wrong. Soda machines just do not have the same effect as a gas pump, people wont drive across the street to save 20 cents. 50 cents per can does not make good business sense, if you want to do this as a hobby, I guess its fine, if you want to do it for business you'll never make it.

-Alan

[Technivend]

The problem with selling at .5o cents is you are telling the customer that the service you perform has no value and you are only selling a product. You become a commodity and not an asset, don't sell yourself short. One of the biggest downfalls in the late 80's when there was a small recession a lot of vendors stopped selling on value and benefits and started selling on price alone. This just hurts everyone. If you think that the price is your only driving force then why aren't people lined up at the supermarkets and buying 2 or 3 liters for .99 cents instead of wasting any money in a vending machine. Get your .70 and try for .75.

[nrpick44]

Those are some great points for sure. Thanks fellas.

[coinvestor]

While the post is about a different service, its a good article:

http://www.mostinspired.com/blog/2008/05/15/costs-of-underpricing/

[Sparta_Automation]

I have all my cans (inside - Offices....outside - Gas Station) set at .85 and no one complains.  In fact, I had the local coke rep talk with me and he said "nice pricing on your machines".

Travis

[antoniocinisi]

first of all do you really care that much how much a location may or may not love you? as mission said and I quote"The location has already accepted that price point, why do you want to give $$ back?"also whoever compared FOUNTAIN soda with a can of soda needs to be updated on FOUNTAIN soda prices which are about .3 cents an ounce of finished product,yes you are reading that right thats about 1/3rd of a penny  per ounce.sometimes the owner of a mechanic shop or other will get a hold of a soda machine and sell soda inside his shop to barely make a profit while provideing a convenience for his employees.this is the only time you will see a can for 50 cents.if you want to make a liveing keep the price you already have.

[NinnJinn]

"also whoever compared FOUNTAIN soda with a can of soda needs to be updated on FOUNTAIN soda prices

I am assuming you read it wrong.  What I was saying is, around my neck of the woods, Gas stations are selling 32oz fountain drinks for 79cents each.

[antoniocinisi]

I am assuming you read it wrong.  What I was saying is, around my neck of the woods, Gas stations are selling 32oz fountain drinks for 79cents each.

thats what they go for here too,but thats no reason to lower can prices.reread technivends example with the 2 liters.

[NinnJinn]

.reread technivends example with the 2 liters.

click, click!!! theres that damn light bulb!  I can't believe I am even considering raising it!

I am damn proud of my machine! Sure, it might be old and out dated, but I wash it, I check on it often.  etc.

"The problem with selling at .5o cents is you are telling the customer that the service you perform has no value and you are only selling a product."

If that is really what so called customers think, then they have another thing coming!  I believe in a good deal customer wise.  What I don't understand is, if I am doubling my money after rent or commission, then what is the purpose of raising the price another quarter?

I know, 50cent profit instead of a quarter profit, but besides that?

I am not being smart or argumentative, I am new to full line, and I just want to understand the reasoning behind a higher price etc.  Teach me to think the way you guys think.

If you don't want to speak on open forum, feel free to pm me if you wish.

[antoniocinisi]

do you have insurance?do you pay for gas to get the money from the machne?

[gogo]

$.60 absolute minumum. No way around it.

You'll regret it in time ... no need to be so cheap,

Most buyers don't care about a dime when they're thirsty.

[antoniocinisi]

$.60 absolute minumum. No way around it.

You'll regret it in time ... no need to be so cheap,

Most buyers don't care about a dime when they're thirsty.

nor will they walk or drive around for a cheaPER CAN

[Technivend]

click, click!!! theres that damn light bulb!  I can't believe I am even considering raising it!

I am damn proud of my machine! Sure, it might be old and out dated, but I wash it, I check on it often.  etc.

"The problem with selling at .5o cents is you are telling the customer that the service you perform has no value and you are only selling a product."

If that is really what so called customers think, then they have another thing coming!  I believe in a good deal customer wise.  What I don't understand is, if I am doubling my money after rent or commission, then what is the purpose of raising the price another quarter?

I know, 50cent profit instead of a quarter profit, but besides that?

I am not being smart or argumentative, I am new to full line, and I just want to understand the reasoning behind a higher price etc.  Teach me to think the way you guys think.

As a sole operator with one machine they way you look at things can be different then someone with employees or multiple routes. My concern is that your mindset will keep you at that small level and not give you the profits you need for growth, unexpected repairs, and money to live on. Right now you are working for free to pay off the machine and initial product fill and the mech and vals you bought for it. It will take you 25% more time to do this at you lower price then at 75 cents.

One important factor is geography. I am in the Boston area and we have a 5 cent deposit. Cans are mostly at .75 and up, bottles $1.25 and up. So .50 cans is just so hard to fathom.

What I am trying to say is this. At 50 cents you are almost doubling your money on the cost of your product. But if I read your post about you latest ventures to wally's you borrowed a truck (free this time), had 4 people meet you there (free this time), bought 5 cases of product you can't sell and will give away, plus your time, initial outlay of money. Add in the possible back end expenses of insurance, income taxes, licensing, wear and tear on your machine (just like the allowance for a car, you need to have a slush fund).

Using your numbers:

product sell price $924 - product cost $500=$424-$34 cost of product you won't sell=$390 profit on $500 purchase less ANY expense. So right here before any expenses you are only making 78% not 100% markup.

Lets get away from numbers though and think about what you are really about as a vendor. You are providing a service and convenience. This service and convenience comes at a price, why? Couple of reasons. If the location has a beverage machine and even snack the employees can refresh themselves which improves production. If the employees can refresh themselves without making a spectacle of it by asking everyone if they want anything at the store and then playing banker and wasting everyone's time, this increases productivity. Now lets talk about convenience. A convenience store gets more money for a product because it is convenient. A gas station just off the highway gets more per gallon as it is more convenient for travelers. A 16 oz soda that sell for $3.00 at a baseball game sells because it is more convenient at the time.

People pay for convenience and I am sure you do too. And more people will give up that convenience for a better deal. But you are offering the convenience without the convenience price.

Think I am starting to babble now...............................................

[Technivend]

Why can't I find the edit button?

Different computer and IP address?

What I wanted to add is this. At 50 cents you have a nice hobby, at 75 cents you are on your way to being able to be a profitable, sustainable business.

[NinnJinn]

What I am trying to say is this. At 50 cents you are almost doubling your money on the cost of your product. But if I read your post about you latest ventures to wally's you borrowed a truck (free this time), had 4 people meet you there (free this time), bought 5 cases of product you can't sell and will give away, plus your time, initial outlay of money. Add in the possible back end expenses of insurance, income taxes, licensing, wear and tear on your machine (just like the allowance for a car, you need to have a slush fund).

Using your numbers:

product sell price $924 - product cost $500=$424-$34 cost of product you won't sell=$390 profit on $500 purchase less ANY expense. So right here before any expenses you are only making 78% not 100% markup.

HOLY golpher!!

Say this recent purchase lasts 1 month

$390.00 profit.

$  12.09 gas to get the product

$ 23.42 Liability insurance

$ 64.68 Sales tax

$ 20.00 good will rent

$ 10.00 new lock and key (waiting to arrive)

$ 68.00 DBA ( still waiting to arrive)

$191.81 Profit  WTH???

That doesn't even include the price of the machine, wear and tear on car (even though I drive past it everyday)  gas, time to stock it, time to clean it,  What if my pepsi mech breaks?  holy golpher!  there goes 50-60% of my sales! 

I started this adventure with $300.  And was going to use NO MORE money out of OUR account.

When I purchased stock, it was coming from the vending sales.  If I purchased anything vending related, it was coming from vending sales.  And that is how I was going to grow my business.

Here I am just about an hour ago,  looking at the family (wife and I) online bank statement, Wondering if we could afford another $300 to invest into the "business" to purchase another machine on location.

Back to numbers here. 

55cents= $114 more profit minus extra sales tax 

60cents = $228 more profit minus extra sales tax

65cents= $342 more profit minus extra sales tax

70cents= $456 more profit minus extra sales tax

Holy golpher batman!

The average outdoor vending price for cans around here is running between 60-65cents!  I could dang near DOUBLE my gross profit after cost of goods by just costing my customers an extra dime to a dime and a nickle!

When and IF my DBA ever gets here, the price is " movin on up!!"

[NinnJinn]

Technivend!  Thanks for the slap to jar my brain!  Will pm you about changing prices when the DBA comes in!

[gundog]

Glad you see the light Ninn Jinn.  Like I mentioned in the other thread- back when I first started I was of the exact same mindset- keep prices real low and sell more volume.  Did not take long to realize I was wrong- very wrong.

To the author, no way, no how, do not volunteer to lower your price.  If they force it- that is one thing.

If the consumer has been at that price for a while, you might not even increase sales at all by lowering.  You are at a very fair price- don't do it.

[agrantha]

I just bought a can machine at a oil and lube place. Its set at .70 right now and the guy i bought it from said it makes roughly $100 net per month. I cant help but think that if i lower the price to .50 ill have people from the tire place and paint and body shop next door coming to my machine in no time. Plus the guys at the oil and lube will LOVE me. 

Thoughts please.

Thanks in advance!

Nrpick44

It is scary that you would even consider lowering your price.  You have already made a considerable investment in your business and if you will not take the advice of veteran vendors then your machines will soon be on Craig's List or Ebay…For Sale.

When I started vending 6 months ago, I was hard headed and stuck on Vendstars.  These guys talked some sense in to my head.  These machines may hold for the short run, but for a long term viable business, I need to go with a more durable machine like Northwesterns or Beavers.  If you are going to make it in this business you need to accept what it takes to make it in this business.

[mission vending]

As a sole operator with one machine they way you look at things can be different then someone with employees or multiple routes. My concern is that your mindset will keep you at that small level and not give you the profits you need for growth, unexpected repairs, and money to live on. Right now you are working for free to pay off the machine and initial product fill and the mech and vals you bought for it. It will take you 25% more time to do this at you lower price then at 75 cents.

One important factor is geography. I am in the Boston area and we have a 5 cent deposit. Cans are mostly at .75 and up, bottles $1.25 and up. So .50 cans is just so hard to fathom.

What I am trying to say is this. At 50 cents you are almost doubling your money on the cost of your product. But if I read your post about you latest ventures to wally's you borrowed a truck (free this time), had 4 people meet you there (free this time), bought 5 cases of product you can't sell and will give away, plus your time, initial outlay of money. Add in the possible back end expenses of insurance, income taxes, licensing, wear and tear on your machine (just like the allowance for a car, you need to have a slush fund).

Using your numbers:

product sell price $924 - product cost $500=$424-$34 cost of product you won't sell=$390 profit on $500 purchase less ANY expense. So right here before any expenses you are only making 78% not 100% markup.

Lets get away from numbers though and think about what you are really about as a vendor. You are providing a service and convenience. This service and convenience comes at a price, why? Couple of reasons. If the location has a beverage machine and even snack the employees can refresh themselves which improves production. If the employees can refresh themselves without making a spectacle of it by asking everyone if they want anything at the store and then playing banker and wasting everyone's time, this increases productivity. Now lets talk about convenience. A convenience store gets more money for a product because it is convenient. A gas station just off the highway gets more per gallon as it is more convenient for travelers. A 16 oz soda that sell for $3.00 at a baseball game sells because it is more convenient at the time.

People pay for convenience and I am sure you do too. And more people will give up that convenience for a better deal. But you are offering the convenience without the convenience price.

Think I am starting to babble now...............................................

Excellent Post, that hits the nail on the head with a ten pound hammer.

8)

[mission vending]

HOLY golpher!!

Say this recent purchase lasts 1 month

$390.00 profit.

$  12.09 gas to get the product

$ 23.42 Liability insurance

$ 64.68 Sales tax

$ 20.00 good will rent

$ 10.00 new lock and key (waiting to arrive)

$ 68.00 DBA ( still waiting to arrive)

$191.81 Profit  WTH???

That doesn't even include the price of the machine, wear and tear on car (even though I drive past it everyday)  gas, time to stock it, time to clean it,  What if my pepsi mech breaks?  holy golpher!  there goes 50-60% of my sales! 

I started this adventure with $300.  And was going to use NO MORE money out of OUR account.

When I purchased stock, it was coming from the vending sales.  If I purchased anything vending related, it was coming from vending sales.  And that is how I was going to grow my business.

Here I am just about an hour ago,  looking at the family (wife and I) online bank statement, Wondering if we could afford another $300 to invest into the "business" to purchase another machine on location.

Back to numbers here.   

55cents= $114 more profit minus extra sales tax 

60cents = $228 more profit minus extra sales tax

65cents= $342 more profit minus extra sales tax

70cents= $456 more profit minus extra sales tax

Holy golpher batman!

The average outdoor vending price for cans around here is running between 60-65cents!  I could dang near DOUBLE my gross profit after cost of goods by just costing my customers an extra dime to a dime and a nickle!

When and IF my DBA ever gets here, the price is " movin on up!!"

Sounds like our newest full line neophyte is starting to get the idea of the difference between a hobby that makes a few bucks and the beginnings of a real business.  LOL ;D ;D