Profitability Challenges

Vencoa's prices are lower than machines from Selectivend, Fawn, Federal, or USI.

Times are changing and the vending machine industry needs to start changing too. The general economy has experienced a good degree of growth, but the vending machine industry is not sharing in its prosperity due to work site downsizing, outsourcing by large employers, creation of smaller work sites, and increased competition from other non-vending machine retailers. The cost of operating vending machines seems to be rising faster than vending machine sales and vendors' retail price points which greatly affect vending machine operator profits. Additionally, vending machine prices are not keeping up with inflation rates or the cost of wholesale products. Both the vending machine and foodservice industries have found it difficult to raise prices due to low inflation rates, but the foodservice industry has raised their retail price points more than the vending machine industry. However, vending machine operators can maintain profits if they adopt a new action plan.

Raise vending machine product prices:
Vending machine operators face unique challenges in price changes because vending prices are based on overall profitability which includes taxes, commissions, costs of goods sold, vending machine depreciation, shrinkage, spoilage, vending machine service costs and overhead. Most vending machine operators are reluctant to raise prices and will first consider other options such as removing an unprofitable vending machine, charging vending machine rental fees, reducing the level of service or lengthening service intervals to vending machines. Furthermore, vending machine operators need to carefully consider the impact of the consumer price index on the price environment and consumer confidence.

Today's economy will allow for vending machine product increases because consumers recognize that retail prices are increasing. Also, consumer confidence is up due to economic improvements and positive employment prospects. Vending machine operators will meet with by resistance from customers to increased vending machine product prices. However vending machine operators can point out their own reluctance and infrequency of price changes in order to convince vending machine account managers to increase prices. Vending machine operators can also offer incentives such as price reduction on vending machine products which are less popular. One other technique that has proved successful is trade-up snack marketing where large-size vending machine products are sold in order to increase consumer value.

Cut commissions:
Reducing commissions to vending machine customers is often the easiest change with the least impact on vending machine consumers. This strategy can be implemented in order to avoid raising vending machine product prices. However, profit-saving concessions should be offered to vending machine account customers. Good communication between vending machine operators and vending machine account managers is very important in determining what type of concessions to offer. Vending machine customers will be more willing to accept changes if they are presented with detailed information about the performance of a vending machine account.

Partner with vending machine customers:
Vending machine operators need to invest in employees because accurate accounting at a supervisory level is critical to determining the profitability of an account and making adjustments to vending machine products and prices. By developing a relationship with customers where financial information is shared, vending machine customers will be more willing to cooperate with the changing needs of a vending machine operator.

Incorporate new technology:
New vending machine technologies require an upfront capital investment, but they will result in improved efficiency and profitability. Line-item sales data is very useful in convincing a vending machine account manager to remove unprofitable vending machine items or adjust product prices. New vending machine software is capable of analyzing vending machine sales by location, machine, and line-item. This type of technology would allow vending machine operators to determine what vending machine products to sell. Other key technologies include more versatile vending machine equipment and payment options.

The bottom line is that in order for vending machine operators to maintain vending machine profits, they need to increase the operational efficiency of their vending machines and develop good working relationships with their vending machine customers.

For more information, please contact Peter LeVine or any one of his talented colleagues at (800) 223-4101, (650) 493-2258, or contact us through our Info Request form

Buy Soda Vending Machines from Vencoa

All vending machines are priced lower than the identical machines from Selectivend, USI, Fawn, or Federal.

Plus we offer:

• Zero Down Financing
• Lower Interest Rates

Questions? (800) 223-4101 or contact us through our Info Request form