Profits Posted April 4, 2011 Share Posted April 4, 2011 Many times vendors will offer 50% of the "profit" instead of gross sales. It is an old ploy that seems to still work especially with customers who don't ask to see numbers. I have yet to find a customer who can tell me how they verify profit. I guarantee you they are getting 30% of gross sales at best but the 50% pitch is what gets the vendor in the door. What would lead you to think it's somehow a ploy? I make no bones about paying the commission after product cost. No ploy needed. Customers expect it. It's the only way for you to keep your numbers straight. If they want to verify net, it would be easy to supply product invoices. But I've never had anybody ask for them. Link to comment Share on other sites More sharing options...
Profits Posted April 4, 2011 Share Posted April 4, 2011 Don't make me get on the horn and straighten you out about this AGAIN!...lol I'm comin' for you. I'm on the next flight to Hickville, IL... Link to comment Share on other sites More sharing options...
caserri Posted April 4, 2011 Share Posted April 4, 2011 I'm comin' for you. I'm on the next flight to Hickville, IL... I thought Kelly was from Scratchass Illinois? At the risk of getting Kelly on the horn, I do admit that I processed commissions off of net as well. I think that has been a well documented fact around here. I did it and had well over 600 machines. Either way is fine since it all works out the same in the end but like Profits said, there is no "ploy" or deceit involved. It just comes down to how you prefer to "roll" Link to comment Share on other sites More sharing options...
quotealex Posted April 4, 2011 Author Share Posted April 4, 2011 My way is better and easier! I think so too. For lil guys, it too complicated calculation commissions on the net, especially when you give them their commission on the spot like I do. Link to comment Share on other sites More sharing options...
Hillbilly Posted April 4, 2011 Share Posted April 4, 2011 My way is better and easier! Amen Brother!!! K.I.S.S. Link to comment Share on other sites More sharing options...
caserri Posted April 4, 2011 Share Posted April 4, 2011 My way is better and easier! Maybe better for you but not any easier if you do it right. Like I have said before, you guys are really over-thinking it. I know this because no matter how many times I've tried to explain my process here in the past, the rebuttal I got never had anything to do with what I had just described so I just gave up. Until now.... Link to comment Share on other sites More sharing options...
havending Posted April 4, 2011 Share Posted April 4, 2011 Im with kelly. I keep it as simple as I can. If you make it seem to your location that you have a round about way of paying them then they may think you are trying to skim them even if your not. Then ask your self where will it stop? Will you began to deduct gas? office space? Payroll? Then comes fairness many operators that pay off net never tell the location. They just say 50%. Really either way is good as long as you location knows how you got to the 50% Link to comment Share on other sites More sharing options...
caserri Posted April 4, 2011 Share Posted April 4, 2011 Will you began to deduct gas? office space? Payroll? This is exactly what I mean when I say you guys are over thinking it. Look, I'm not trying to tell anyone which way is better or easier. But I can say without a doubt that net is no more confusing or complicated than gross. This is coming from someone who actually did both. How many of you have even tried it both ways? I would guess none of you. Link to comment Share on other sites More sharing options...
will.vend Posted April 5, 2011 Share Posted April 5, 2011 How many of you have even tried it both ways? I would never ever try it both ways! I am a proud lesbian! Link to comment Share on other sites More sharing options...
Hillbilly Posted April 5, 2011 Share Posted April 5, 2011 Steve, Can you clarify this for me please? You said that you have paid off of the net. Is that net sales or net profit? Link to comment Share on other sites More sharing options...
caserri Posted April 5, 2011 Share Posted April 5, 2011 Steve, Can you clarify this for me please? You said that you have paid off of the net. Is that net sales or net profit? Bub, Because I've written about my process countless times in countless threads, all of which end the same way, with me being ridiculed, I really don't want to explain it here again. Regardless of net sales or net profit, the point I'm trying to make right here is that there is a common misconception that one is more confusing and difficult than the other and that is simply not true. It is only more complicated if one chooses to make it so. It's simple arithmetic either way. Link to comment Share on other sites More sharing options...
Jax Snacks Posted April 5, 2011 Share Posted April 5, 2011 I pay off gross in most places, but “net” in a few places. Either way, keep it simple. For net, I use the “one third” model. Explain that product overhead is one third of the coin box and the remaining two thirds are split evenly between the vendor and owner (for a 50-50 split). A reasonable business person will accept this approach. So I see no need to calculate net down to the penny. I was actually able to lower my commission in a Chinese joint with this approach. The guy insisted on 40%. I asked him if that was on the gross or after product cost. He thought hard about it. As he was thinking, I then told him that if I gave him one third of the coin box, he would be getting 50% of the profit. He was fine with that and liked that approach. So on the next service, I will simply divide the gross by 3 and that will be his cut. So I am still really paying off of the gross even though the agreement was a 50-50 split. I really would prefer not to do this. But in Chinese joints and tourist traps, the competitive nature of the business forces me to do it. My understanding is that most crane operators also use this one third model as well. So one third equals 50%. Lets see ‘em teach that in math class! Link to comment Share on other sites More sharing options...
JEREMYTINA Posted April 5, 2011 Share Posted April 5, 2011 sega has the wal-mart locations here Same here. Link to comment Share on other sites More sharing options...
Profits Posted April 5, 2011 Share Posted April 5, 2011 Steve, Can you clarify this for me please? You said that you have paid off of the net. Is that net sales or net profit? Dude... dude. Dude. Dude. Nobody is talking about "profit". Nobody is talking about all the ways you can deceive someone by trying to use some insane archaic formulaic monstrosity of a deceit mechanism for defrauding your valued customers. All we're talking about is deducting product cost. That's the way businesses operate. That's the way the IRS operates. You deduct the expense of the financial vehicle (the product), and you pay taxes on what you earn. This is absolutely no different... Take a look at that invoice you get from A&A or Brand or whoever. Look at the itemized totals. Let's say the 1" product is $18 per bag. Let's say you have 4 bags. Let's say the shipping cost was $10. Divide your shipping by 4, that's $2.50 per bag. Add $18 + $2.50... total is $20.50. Divide that number by your capsule total (250) and you get your cost per vend (.082). Let's say you your price per vend is .50. You have 150 quarters in your machine, you divide that by .5 to get your total vends. You multiply that number by .082, and subtract that from your gross. You then multiply by the % agreed to by the location. Breath in, breath out. Relax. No deceit here. If it helps you quell your guilty conscience, you can bring the invoice with you to show the location owner where the numbers are coming from. Link to comment Share on other sites More sharing options...
Hillbilly Posted April 5, 2011 Share Posted April 5, 2011 Dude... dude. Dude. Dude. Nobody is talking about "profit". Nobody is talking about all the ways you can deceive someone by trying to use some insane archaic formulaic monstrosity of a deceit mechanism for defrauding your valued customers. All we're talking about is deducting product cost. That's the way businesses operate. That's the way the IRS operates. You deduct the expense of the financial vehicle (the product), and you pay taxes on what you earn. This is absolutely no different... Take a look at that invoice you get from A&A or Brand or whoever. Look at the itemized totals. Let's say the 1" product is $18 per bag. Let's say you have 4 bags. Let's say the shipping cost was $10. Divide your shipping by 4, that's $2.50 per bag. Add $18 + $2.50... total is $20.50. Divide that number by your capsule total (250) and you get your cost per vend (.082). Let's say you your price per vend is .50. You have 150 quarters in your machine, you divide that by .5 to get your total vends. You multiply that number by .082, and subtract that from your gross. You then multiply by the % agreed to by the location. Breath in, breath out. Relax. No deceit here. If it helps you quell your guilty conscience, you can bring the invoice with you to show the location owner where the numbers are coming from. Profits: I wasn't implying deceit. I merely took the post the wrong way. On another note, I would never show a location my invoices from A&A. Steve: No problem. I reread the post and see where others could want to argue about it. BTW I pay off the gross. Link to comment Share on other sites More sharing options...
will.vend Posted April 5, 2011 Share Posted April 5, 2011 putting deceit aside, because we all know this thread isnt about deceiving our customers, hell for that matter this thread isnt even about how to pay commissions, geez louise! why in sam hill would you want to take all that math inside each location to pay commisiions? paying a percentage of gross is simple and to the point, if I hafta get out my chinese abracadabra slide rule to figure a simple percentage then I am complicated the hello out of my job! Im pretty sure we all should just agree to disagree! Link to comment Share on other sites More sharing options...
Rick Falcon Posted April 6, 2011 Share Posted April 6, 2011 Amen Will. Link to comment Share on other sites More sharing options...
havending Posted April 6, 2011 Share Posted April 6, 2011 Dude... dude. Dude. Dude. Nobody is talking about "profit". Nobody is talking about all the ways you can deceive someone by trying to use some insane archaic formulaic monstrosity of a deceit mechanism for defrauding your valued customers. All we're talking about is deducting product cost. That's the way businesses operate. That's the way the IRS operates. You deduct the expense of the financial vehicle (the product), and you pay taxes on what you earn. This is absolutely no different... Take a look at that invoice you get from A&A or Brand or whoever. Look at the itemized totals. Let's say the 1" product is $18 per bag. Let's say you have 4 bags. Let's say the shipping cost was $10. Divide your shipping by 4, that's $2.50 per bag. Add $18 + $2.50... total is $20.50. Divide that number by your capsule total (250) and you get your cost per vend (.082). Let's say you your price per vend is .50. You have 150 quarters in your machine, you divide that by .5 to get your total vends. You multiply that number by .082, and subtract that from your gross. You then multiply by the % agreed to by the location. Breath in, breath out. Relax. No deceit here. If it helps you quell your guilty conscience, you can bring the invoice with you to show the location owner where the numbers are coming from. LOL thats not the way business operate. I have never been to Burger King and ordered a number two and the cashier say "let me deduct the product cost" you new total is ...... The IRS allows deductions to help give tax breaks and help the economy flow etc. Not because its easy. I say use either way you want and wha works best for you. The only time i have a problem is when some one pays off net and the locations does not know. it makes my comm look smaller when in fact its often times better. I do know a guy who deducts gas and other things. Link to comment Share on other sites More sharing options...
Beach Bum Vending Posted April 6, 2011 Share Posted April 6, 2011 Ah my head hurts! Isn't easiest way just count money on spot. We say it's 2 head machine. And you pulled 25.25 And put in bag m&m's and skittles and each bag cost you $3.99 Then save back 7.98 for next time product. And we say 20% then take $17.27 multipled by .020 and commision 3.45 but since in quarters give them 3.50. Is that rite? Or is there an easier way to do it guys? I'm sorry if I sound dumb I feel dumb I never was very good at math and it needs be drawn out and explained in detail to me. I just the forumlas and all the dividing and multiplying is what throws me for loop. And percentages Like when I see you guys talk about COG or COGS is 20% 30% or grown my business so many percent I don't have clue how you all come up with the figures. I'm sure it's simple and I sound really dumb. But I'm lost and like to learn So I can figure my own numbers as well. I don't have anyone really to teach me. And Just a lot of this is very over whelming to me. When try doing all that it frustrates me a lot. And everyone I ask for help Just thinks I should already know it if I'm own my own business. But nobody willing teach me. Sorry if I rambled on and venting just hard when trying learn on your own and don't know if doing it rite. Link to comment Share on other sites More sharing options...
Profits Posted April 6, 2011 Share Posted April 6, 2011 I have never been to Burger King and ordered a number two and the cashier say "let me deduct the product cost" you new total is. Not the same argument. If you're the customer, you're buying the product. Obviously you pay for the product. If you're buying a product, the vendor is not sharing profit with you. But if I'm sharing the profit with you, I'm not going to share the revenue that includes the cost of goods with you. Do you know why? Because you didn't incur that cost. I did. That's why I'm deducting it. If the location paid for 50% of my product, I'd pay 50% on gross... but I've yet to hear of a location that is willing to actually go in on purchases with a vendor. Link to comment Share on other sites More sharing options...
JEREMYTINA Posted April 6, 2011 Share Posted April 6, 2011 Ah my head hurts! Isn't easiest way just count money on spot. We say it's 2 head machine. And you pulled 25.25 And put in bag m&m's and skittles and each bag cost you $3.99 Then save back 7.98 for next time product. And we say 20% then take $17.27 multipled by .020 and commision 3.45 but since in quarters give them 3.50. Is that rite? Or is there an easier way to do it guys? I'm sorry if I sound dumb I feel dumb I never was very good at math and it needs be drawn out and explained in detail to me. I just the forumlas and all the dividing and multiplying is what throws me for loop. And percentages Like when I see you guys talk about COG or COGS is 20% 30% or grown my business so many percent I don't have clue how you all come up with the figures. I'm sure it's simple and I sound really dumb. But I'm lost and like to learn So I can figure my own numbers as well. I don't have anyone really to teach me. And Just a lot of this is very over whelming to me. When try doing all that it frustrates me a lot. And everyone I ask for help Just thinks I should already know it if I'm own my own business. But nobody willing teach me. Sorry if I rambled on and venting just hard when trying learn on your own and don't know if doing it rite. Cost Of Goods Sold means exactly that. What does it cost you each time someone vends your product? Candy portion determines the cost. Most of my candy is set at .05 per vend. I figured this out by converting the cups per bag into pieces. I know how many pieces I vend, and that tells me how much it costs. Hypothetically let's say skittles cost $1.00 per cup, and in that cup you have 200 pieces. You sell 10 pieces per vend. You'd get 20 servings out of the cup. 1.00 divided by 20 servings is a cost of 5 cents per serving. This isn't the actual amount, but you get the point. Your COGS would be 5 cents and your selling price is a quarter. 25 cents divided by 5 cents is 5. 1 dollar in sales costs you 20 cents. Your COGS is 20%. As far as growing your business by percent, it depends on how you are measuring. If you are counting locations, then lets say you have 10 locations, you add 5 more. You grew your location count by 50%. If you are talking dollars, it works the same way. You make $200 a month off your ten machines. You add five more and start collecting an avg of $300 per month. Your business grew by 50%. These are basic examples, but you should be able to see how the math is worked out, and apply it to your own company. Link to comment Share on other sites More sharing options...
Profits Posted April 6, 2011 Share Posted April 6, 2011 Profits your way is easy for you RIGHT NOW. Because you order 4 bags of mania for $87.00 shipping and all divide that X 1000 to get unit price......I agree very simple. Wait until you order 7 different products w/ 2" BB's and displays a few coin mechs thrown in ect ect. Now figure your cost per capsule. or per BB ect ect. Also you will not want to sit and count each and every quarter to find out how many vends you got....thats crazy if you have loc's that do $400.00 plus a month w12 heads. Your way is slow. ps. Run your business like the government (IRS) runs theirs and let me know how that works out for ya. Link to comment Share on other sites More sharing options...
Profits Posted April 6, 2011 Share Posted April 6, 2011 I've got spreadsheets that do all the calculations on the fly. No more playing with numbers at the location. Easy. And you know... I also know exactly what my profit is. Do you? You know "around" what it is... lol Link to comment Share on other sites More sharing options...
Profits Posted April 6, 2011 Share Posted April 6, 2011 I can tell you to the penny every dime that goes in and out of my business.I can also tell you to the very % what my COG's and Commissions are /month or year. When I say they are "around" is because it does float from 18-22% during the month or year. All I have to do is get on Computer and do some simple math and I can tell you exactly what it is. Link to comment Share on other sites More sharing options...
JEREMYTINA Posted April 6, 2011 Share Posted April 6, 2011 I've got spreadsheets that do all the calculations on the fly. No more playing with numbers at the location. Easy. And you know... I also know exactly what my profit is. LMAO at this hijacked thread. I do love the fact that people are finally starting to participate monre in the conversation though. I know that my profit has been $112 for this year so far. Between buying machines, refurbing, and growing my business, I spend almost exactly what I am making every month. I am through playing part time vendor, and plan on making my business a player in this market and many others as time goes on. So look out California, I may be there in another 10 years. I would also hope that someone with a screen name of Profits knows exactly what he's making. Just messing with you. Link to comment Share on other sites More sharing options...
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