How Profitable Are Vending Machines?

Thanks to vending machines, you don’t have to be on standby to receive orders from customers. The customers can basically serve themselves. These automatic retailers are the new trend in the commercial sector and they can dispense a range of items. From foods and drinks to medicines and newspapers, they are customized to dispense them all.

Since they allow convenience and flexibility in terms of purchases, they are likely to guarantee a steady income. Simply, if you are looking to improve your revenues, you can do it with the right vending machines. So, it’s not a question of whether they are profitable or not, as they are, but a question of how.

Understanding the Profit Margins

You probably have seen adverts indicating that you can make some amazing financial returns without so much effort if you use vending machines. But, how realistic are the adverts? According to a recent finding by NAMA (National Automatic Merchandising Association), about 18% of vending machines around the globe generate $1-$5 million annually.

Well, this can be good news or bad news depending on how you look at it. It’s bad news in the sense that the Better Business Bureau warns of so many scams and unending lawsuits which could erode your profits. On a positive note, nonetheless, vending machines can be really profitable if well taken care of and used creatively at the right locations.

Also, vending machines situated in high-traffic areas like shopping malls, hotel lobbies, hospitals, and schools are likely to generate more profits than those located in low-traffic areas. In this case, NAMA suggests that you are likely to generate $250/day if you sell drinks and $500/day if you sell snacks in the high-traffic areas.

Generally, NAMA considers the following factors to be important in determining your profit margins:

  • Your day-to-day operations
  • The location of your business
  • Your source of financing
  • What you are dispensing
  • Your regular suppliers

Understanding How the Profits Are Generated

You probably are wondering where the profits will come from considering that you’ll spend some hard-earned money to install vending machines. Well, there are different ways to generate profits for your business and one way to do it is through savings. Here are some logical ways of saving with these machines:

  • Saving on operating costs – Vending machines are generally cheap to operate as they do not require so much labor. Actually, you only need someone to occasionally inspect and restock them. The other duty is to pick up the money. This is a one-man job and so you don’t need to employ extra hands. So, the money saved on labor can be injected back into the business to make up for profits.
  • Saving on overhead costs – As already mentioned, you are able to save massively on labor costs. In addition, you don’t need to incur advertisement costs as vending machines self-advertise.
  • In-house saving – Let’s face it; it’s not just the outsiders who’ll buy from your vending machines. Even your employees will do it. This is usually the case when vending machines sell foods and drinks. Since the employees don’t have to go out looking for food and drinks, they are able to save office hours and this is a plus for your business. More importantly, the employees pay for their items and the money contributes towards your profits.

Besides savings, you can make profits with vending machines in the following ways:

  • Steady income – The advantage of vending machines is that they can sell any time of the day or night, unsupervised. So, you are guaranteed steady income as long as the machines are in operation and as long as customers continue buying. The secret is to base your vending machines in high traffic areas. The moment your customers sees your business to be a reliable one, they’ll always buy from you.
  • Employee productivity – The availability of vending machines in your business not only motivate customers to make purchases but also the employees. They are able to understand that their personal needs can also be met when they are still working and this boosts their work morale. Their performance improves significantly and at the end of the day, this improves your business productivity and profit margins.

Understanding the Costs Involved

Usually, the difference between making money with vending machines and suffering a loss is the costs involved. Here are the major ones:

  • Cost of the machine – The cost of buying and setting up vending machines varies depending on the type of machine and what is dispensed. Some companies offer standard vending machines for snacks or drinks at a bundle price of $2,500. This covers 10 machines.
  • Repair and maintenance costs – Most vending machines come with extensive warranties and so you don’t have to worry about the repairs and maintenance. But still, you should verify from the seller what the warranty covers.
  • Cost of restocking – Once you have set up your vending machines, you have to put some money aside for restocking it until the profits are steadier. The cost depends on what you are planning to sale.

General Tips for Improving Your Profit Margins

  • Busy location – If you are looking to sale more, then you have to find a busy location to set up your vending machines. It can be on a busy street, around a movie theatre or in a shopping mall.
  • Be trendy – Vending machines are a trendy innovation and so you have to invest in the latest designs. Furthermore, you should sell items that the current consumers want to buy.
  • Grab attention – You can install bright and shiny bulbs on the vending machines to attract distant customers.
  • Act convincing – Preferably, go for clear glass fronts so as the passersby customers can notice what you are selling. It’s a powerful way to convince them to buy.
  • Stock up – With vending machines, the more you stock up, the likelier you are to make sales. The more the sales, the higher the profits.
  • Use a truck – Depending on how big your business is, you can make it mobile by installing vending machines on trucks. This will help you reach a wider audience.
  • Get licensed – Since you require a seller’s license to run vending machines in some places, you should get it. This ensures that you operate freely.

Closing Thought:

There’s absolutely no doubt about vending machines being a source of profit for businesses. You can use them to generate more revenue each day. However, you have to know how better you can leverage their powers so as to take advantage of willing customers. This means coming up with a perfect marketing strategy. Vending One can help!