When it comes to securing an agreement to locate a vending machine in a certain location, the 'decision maker' will often expect to receive a cut of the profit for giving you the right to do so. Because of this natural 'what's in it for me?' attitude that many people have it is important that you have a firm policy in place so that you can deal with the question when it arises. In this article we look at vending machine commissions and some of the various approaches that operators takes towards this issue.
As you meet with prospective clients you should try to convince them that there are advantages for them in having one of your vending machines on their premises. Let them know that your machines offer a service to their customers or employees by offering them convenience and by providing them with reasonably priced products. Let them know that you would rather keep prices down then have to increase prices to cover their commission.
Some locations will come up with the logical argument that the machine will be using their power. You can counter this argument by saying that your machines are all efficient on energy use and that you can even install timers so that they shut down after hours.
Some vendors feel that commissions are too much hassle and they have a 'no commission' policy. They will politely try to avoid the issue and if pressed they would rather lose the account than give in. These vendors prefer to compete by offering high quality products and excellent service and a large part of the market will find this to be enough with financial compensation not being necessary.
Some vending businesses are officially associated with charities and this can make it difficult for them to offer commissions as well.
Other vendors will enter into agreements that offer the authorizing party a share of machine takings. Sometimes this is absolutely necessary in order for a vending business owner to win a large account. If the account is really worthwhile you can even assure the 'decision maker' that they can watch you as you empty the machine. Some people find it hard to trust others and this should reassure them that they will indeed get the full commission that they are owed.
Some vendors like to let an account run for a while before they will discuss a commission rate. This reduces the risk as they can assess how the machine is performing at that location and calculate the commission accordingly.
Other operators like to sign a contract with the decision maker setting out the commission rate as a favorable part of the deal for the authorizing party. At the same time the vendor will include other clauses in the agreement that are in their favor such as having the client agree to have machines on site for a longer duration.
A fair vending machine commission rate in the industry seems to be around 5% to 10% of gross sales on powered machines and even less on machines that don't require electricity. Locations that have an exceptional amount of foot traffic may expect even higher rates and 20% would not be unrealistic for these locations. Vending business commissions often only add up to a small amount but having to organize payment is an extra hassle for operators.
However you approach this issue you should make sure that you set out a firm policy before you talk to prospective clients. By setting your rules, being consistent and not letting clients push you around over commissions you will find that there are good market opportunities out there for your vending business whether you offer commissions or not.
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