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bullman
03-15-2006, 12:44 AM
While in the process of setting my prices, I'm thinking it would be a good idea to set my energy drinks at $2.25 (vending machine price). I will have to pay sales tax at 6% just like convenience stores, and if you go into a C-store for a can of Red Bull, you'll pay $2.12 before you leave the building. It doesn't make sense to me to price my drinks at $2.00 and eat sales tax when C-stores are able to charge for it. Especially if I'm paying commission to my location. If I charge $2.25 across the board and get some locations commission-free, then I'm making some pretty decent profit even after sales tax. Any thoughts, anyone?

[ 03-15-2006, 12:47 AM: Message edited by: bullman ]

Red Bull Vendor
03-15-2006, 11:02 AM
I charged $2.25 at first, but sales were very low. If you look at the pop machines they sell a 20 oz bottle for $1.25 at teh most, these el in the stores for $$1.29-1.49 each, the machines are cheaper. Once I lowered my cost to $2.00 on some and $$1.85 on some of the others my sales went up. I dont think you will get the $2.25 for these, its one thing to pull $2.00 out of the pocket, but to add a quarter to that, the customers get a little picky. I would recommend nothingh higher than $2.00. Just remember this, a bottle of pop cost .93 cents from pepst and is sold for $1.25 at the most. This is a 32 cent profit, what makes you so confident that you can get a .90-$1.00 profit on a can of RED BULL. Do not listen to Creative Concepts claims of a dollar profit per can, be happy with a 50 cent profit thats almost double of what you get on a bottle or can of pop.

CStoreCatMan
03-15-2006, 11:10 AM
I agree with the point of making someone come up with that extra quarter! It takes the convenience factor away as opposed to just taking two single bills out of one's wallet. If you can still make enough profit at a $2.00 price point, you will be competitive w/the general market and it will be convenient for customers.

Mr Zabe
03-15-2006, 11:38 AM
I agree with last two comments. If at all possible the less work for the customer the higher the "impulse" probability. I can only speak from my experience, that's how my brain is wired. I'm more likely to feed a $1 bill into a machine them fumble with pocket change(which I do not carry very often on my person).

Note: Many vending machines do not collect change for out change or do not work, this will slow or stop sales. Collecting $1 bills will work until bill holder fills to the top.

[ 03-15-2006, 11:48 AM: Message edited by: Mr Zabe ]

greg
03-15-2006, 12:32 PM
Originally posted by Mr Zabe:
I agree with last two comments. If at all possible the less work for the customer the higher the "impulse" probability. I can only speak from my experience, that's how my brain is wired. I'm more likely to feed a $1 bill into a machine them fumble with pocket change(which I do not carry very often on my person).

Note: Many vending machines do not collect change for out change or do not work, this will slow or stop sales. Collecting $1 bills will work until bill holder fills to the top. Good Post!

DrPepperYummy
03-15-2006, 01:11 PM
>>C-stores are able to charge for it. Especially if >>I'm paying commission to my location. If I charge

Well I guess my question would be if you're paying comission for the location, and its in the c-stores where they can purchase redbull inside... why wouldn't you want to compete by matching price to draw them to your machine instead of them buying a warm one inside and making no money on it?

bullman
03-15-2006, 01:21 PM
Originally posted by DrPepperYummy:
>>C-stores are able to charge for it. Especially if >>I'm paying commission to my location. If I charge

Well I guess my question would be if you're paying comission for the location, and its in the c-stores where they can purchase redbull inside... why wouldn't you want to compete by matching price to draw them to your machine instead of them buying a warm one inside and making no money on it? Sorry that seemed a little confusing. I'm not planning on talking to any convenience stores. I was just making a comparison that they can sell for $2.00 and charge extra for sales tax whereas if I sell for $2.00, I end up eating sales tax. Vendors in my area typically charge, from what I understand, 5% commissions, and if it's a really good location and they can't get it paying 5%, some will go as high as 10%. Ouch.

Here's an example... with a 10% commission and a 6% sales tax on a $2.00 can, that's $0.32 coming right off the top before I pay for anything else. If I buy Red Bull from Sam's, that leaves me with $0.37 profit before I deduct anything else from it.

If I pay 5% commission, then I make .47 profit, which is better, but I still need to make sure the location can produce enough sales to make any money.

I just hope I get enough locations where I don't have to pay ANY commission to help even it all out.

[ 03-15-2006, 01:23 PM: Message edited by: bullman ]

Mr Zabe
03-15-2006, 02:17 PM
The way I see it, the cost of doing business verse the net profit of loosing a sale has to be considered. If you sold 20 cans a day with taking say 10% less net profit is it worth your while to sell say 5 cans at 10% more profit?

My point is that you may need to figure out a way to maximize your opportunity to get volume sales. Making $0.10 or $0.20 more per can could cut your volume and profit drastically. On the surface it seems minimal but if you loose 10 sales or so a day,you loose all that much profit.

It's basically a lesson in micro economics. Any college student or interested adult; take a micro economics class and you will learn so much about business.

[ 03-15-2006, 02:25 PM: Message edited by: Mr Zabe ]

Red Bull Vendor
03-15-2006, 04:56 PM
Originally posted by bullman:
</font><blockquote>quote:</font><hr />Originally posted by DrPepperYummy:
&gt;&gt;C-stores are able to charge for it. Especially if &gt;&gt;I'm paying commission to my location. If I charge

Well I guess my question would be if you're paying comission for the location, and its in the c-stores where they can purchase redbull inside... why wouldn't you want to compete by matching price to draw them to your machine instead of them buying a warm one inside and making no money on it? Sorry that seemed a little confusing. I'm not planning on talking to any convenience stores. I was just making a comparison that they can sell for $2.00 and charge extra for sales tax whereas if I sell for $2.00, I end up eating sales tax. Vendors in my area typically charge, from what I understand, 5% commissions, and if it's a really good location and they can't get it paying 5%, some will go as high as 10%. Ouch.

Here's an example... with a 10% commission and a 6% sales tax on a $2.00 can, that's $0.32 coming right off the top before I pay for anything else. If I buy Red Bull from Sam's, that leaves me with $0.37 profit before I deduct anything else from it.

If I pay 5% commission, then I make .47 profit, which is better, but I still need to make sure the location can produce enough sales to make any money.

I just hope I get enough locations where I don't have to pay ANY commission to help even it all out. </font>[/QUOTE]I dont pay any comissions at my locations, they are happy to have the vendor there, I will tell you that locations are VERY hard to get, I gopt most of my GOOD locations for the local REDBULL distributor. The problem is all the vendors expect a $1.00 profit because thats teh hype that CC told them. You should actually expect 40-50 cents which is actually high compared to other products vended. Look at the profit on a candy bar or a bag of chips!!! If you want the sales on your machines you are going to have to compete with the C-store prices, also remember they can get REDBULL is 4 packs, and 6 packs, and I heard from my distributor that they are soon coming out with 12 packs which makes the purchasers price even lower!! My 2 cents, dont vend for more than $2.00 if you want reasonable sales

bullman
03-15-2006, 05:12 PM
I dont pay any comissions at my locations, they are happy to have the vendor there, I will tell you that locations are VERY hard to get, I gopt most of my GOOD locations for the local REDBULL distributor. The problem is all the vendors expect a $1.00 profit because thats teh hype that CC told them. You should actually expect 40-50 cents which is actually high compared to other products vended. Look at the profit on a candy bar or a bag of chips!!! If you want the sales on your machines you are going to have to compete with the C-store prices, also remember they can get REDBULL is 4 packs, and 6 packs, and I heard from my distributor that they are soon coming out with 12 packs which makes the purchasers price even lower!! My 2 cents, dont vend for more than $2.00 if you want reasonable sales Thanks for explaining that. If I'm vending Red Bull, Sobe, Monster and Starbucks from the same machine, I wonder how enthusiastic the local Red Bull distributor will be in helping me find locations?

I don't think it should matter. They have more competition in the convenience stores. I don't see what difference it would make. I'll see if I can find out who the local distributor is. Right now, locations is what I'm after.

Red Bull Vendor
03-15-2006, 05:55 PM
They wont help if your machines are not BRANDED with the RED BULL logo, I thought you had redbull machines.

bullman
03-15-2006, 07:12 PM
Do you think they would also refuse to wholesale product to me? I suppose one could argue that in helping me get locations, they would be furthering the cause for selling Monster and Sobe. But it shouldn't matter. They sell to convenience stores and there's a lot more competition there than there would be in my machines. Of course, they sell more than I will for a while, but everyone has to start somewhere.

I started looking for locations today and want to have a few lined up before I order machines. I don't want machines sitting in my garage costing me money with no locations in sight. I have a full-time sales job and am working this in as I have time.

[ 03-15-2006, 07:13 PM: Message edited by: bullman ]

Red Bull Vendor
03-15-2006, 07:21 PM
Im pretty sure they will wholesale, mine does, they match CC price and I dont have to buy 50 cases, the route driver stops at my house once a week, How did you do on locations? This is my part time job also, so I dont have alot of time to get teh locations. I wish i did, but I just dont have the time, what kind of locations are you looking into?

bullman
03-15-2006, 08:16 PM
I called Red Bull and found out who my local distributor is. They are a local independent who distributes mostly beer, I think. I'm sure they handle multiple brands of beer, so I'm going to pursue asking for their advice with getting locations. I don't have anything to lose and the worst that could happen is that they say no. Maybe they'll match CC in price as well. It's better than Sam's price.

I started out today for the first time hitting elephant accounts just to break myself in. Mainly because I knew the chances of talking with someone who could authorize placing a machine there would be minimal at best. I wanted to adjust, if you will, to the feeling of representing my own company with my own business card and my own marketing piece. This, of course, after forming an "S-Corporation" and creating a truly legitimate company instead of just being someone on the street with a few machines. I've never had my own business before, so for me this is completely uncharted.

Tomorrow I will hit businesses with between 20 to 100 employees. Mainly industrial. I'm looking for parking lots with lots of pickup trucks and sitting areas outside. If the business is small enough (but not below 20 workers), my chances of walking in and getting to the decision maker increase substantially. I don't have much time, so I need to be able to walk in, get a decision and walk out all in one sales call. As soon as I get just one or two, I will order my machines.

Also, I know this is optional, but being in sales, I feel the value of having something in writing is pretty high. I have a simple agreement for a 1-machine placement, and a more detailed agreement for multiple machines.

[ 03-15-2006, 08:19 PM: Message edited by: bullman ]

Mr Zabe
03-15-2006, 08:26 PM
Bullman,
Your approach to getting your feet "wet" is outstanding. Like you said all this is very new to you. You could not have done better. The key is to be able to "pitch" yourself and your business opportunity so that you optimize the chance of getting a YES from the location that you want. If you show how much you believe in your pitch the decision maker will most likely actively listen and give your plan a good consideration. The thing is to show him that you are there to put money in his pocket doing no work to get it.

One last thing, the most important thing a man hears is his own name. Us the man/lady's name a few times to show that you are interested in his business and that you are personable.

Good Luck

bullman
03-15-2006, 10:59 PM
Thank you Mr. Zabe for your vote of confidence. But I feel like I'm at the bottom of a very high mountain and I've only just begun climbing it. I'm anxious to see where I'm at in a couple of weeks.

Mr Zabe
03-15-2006, 11:06 PM
My friend it is good to feel anxious (well not mental ward anxious).LOL Some anxiety will keep you on your toes and thinking sharp. I have confidence that you will do well. smile.gif

Red Bull Vendor
03-16-2006, 12:14 AM
bullman, keep us up to date on your progress, I am interested in seeing how you do, and also your experience with PRIME VENDING

EntreEnergy
03-17-2006, 04:56 AM
You will have no problem with your local distributor getting the same price as CC, since CC has to go through the local distributor lol.

There has been discussion as to how much volume of sales will drop with an increase in price. Also don't forget- how much MORE volume will you need at a cheaper price. Put the numbers together and you will be suprised when u find the # of red bulls you need to sell at $2 to match 2.25 and 2.5 in a bulk figure.

JP QuikServ Drinks
03-22-2006, 08:10 PM
my vote is $2.00, and prey for location and volume, which in my opinion are more important then unit price.

Seaside
03-22-2006, 11:47 PM
I'm getting 10 RB machines delivered in April and I'm for $2.50/can across the board. People are paying $2.19 & $2.29 + tax at gas stations and convenience stores around me. I may be wrong, but I think people will pay the extra dime if they really want it. Anyone else doing the same??

Mr Zabe
03-23-2006, 12:27 AM
My last cent. LOL

I guess it boils down to the location and kind of traffic that your machine will be exposed to.

If your machine is let say in a well trafficked location with a nearby chain drug store or grocery store, than I would try to vend at least 25cents lower than the store price. I can only speak for myself, I would walk half a city block if I thought a vending machine was higher priced than a few nearby stores. Like I said in my previous post, the idea is not net profit per can but getting as many vends as costs and simple profits are covered.

Meaning that your gross revenue is more important to positive cash flow than making per unit higher profits at the detriment of volume sales.

Now if the machine is located in a 150 employee lunch room, there will be some leeway in vending price. Customers will pay a small premium for convience and they will most likely remain your customers if you don't take advantage of them.

These are my "common sense" thoughts, IMO.

bullman
03-23-2006, 09:06 AM
Veruca, others have pointed out earlier that making the customer dig for the extra quarter (if they have an extra quarter) will probably cost you sales, even though you make more when sale is made, your advantage is incrementally lost with each sale you lose.

I really think it comes down to location and how easy it is to buy their Red Bulls elsewhere, or even bring them from home via the 4-packs that are now being sold at Wal-Mart and C-stores. A $2.25 price that I pay for a Red Bull at the office may, after a few weeks, motivate me to buy 4-packs at Wal-Mart for a lot less and take them with me each morning.