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  1. #1
    Join Date
    Mar 2006
    Location
    KY
    Posts
    158

    Post

    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 ]

  2. #2
    Join Date
    Feb 2006
    Location
    USA
    Posts
    109

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    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.

  3. #3
    Join Date
    Jan 2006
    Location
    Southern California
    Posts
    632

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    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.

  4. #4
    Join Date
    May 2005
    Location
    Chicago,IL
    Posts
    4,552

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    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 ]

  5. #5
    Join Date
    Jul 2004
    Location
    Jupiter, Florida, United States
    Posts
    1,575

    Post

    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!
    Whether you think can or think you can\'t, you\'re probably right!

  6. #6
    Join Date
    Oct 2003
    Posts
    176

    Post

    >>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?

  7. #7
    Join Date
    Mar 2006
    Location
    KY
    Posts
    158

    Post

    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 ]

  8. #8
    Join Date
    May 2005
    Location
    Chicago,IL
    Posts
    4,552

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    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 ]

  9. #9
    Join Date
    Feb 2006
    Location
    USA
    Posts
    109

    Post

    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

  10. #10
    Join Date
    Mar 2006
    Location
    KY
    Posts
    158

    Post

    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.

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