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Tuesday, August 26, 2008

Is your Vending Business Profitable?

The number one question people are asking me is how to fix a broken vending business. Before you can even begin to fix problems you MUST know your numbers. Are you even profitable?

What are your fixed costs?

What are your variable costs?

Remember that equation from school? - y=mx+b

OK, it isn't that complicated but that would be the best way to calculate it. Knowing your commission and product cost you can figure out your net profit. For sodas mine is about .40 = .75 (sales) - .36 (product cost) - 0.0 (0% commission, remember I do not pay commissions). Multiple that number by the average number of sales per service (obviously we would also add net profit from snacks but I want to keep this example as simple as possible). Now that you know your net profit you need to determine what your other costs are, i.e. fuel, machine depreciation and time. Subtract those costs from your total net profit. If it is negative you are not making money. If it is positive you are making money (you can then divide your cost of equipment by this number to get your ROI).

Sorry if this sounds complicated but you asked for it ;-)

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