We have all bought something from a vending machine at some time in our lives. However, did you know that these machines are an excellent source of passive income? Let’s see how this business works and what to do if you are interested in starting your own vending machine business.
benefits and disadvantages of starting a vending machine business
Having a vending machine business (also known as vending machines or vending machines ) has some advantages and disadvantages:
Pros:
- The high percentage of profit for each sale (from 100% to 400%)
- You can earn passive income for life
- Get to be your boss
- The initial investment is not too high
- You can scale as you increase your earnings
- It is not a complicated business to run
- You free up your time without working in an office or traditional job
Cons:
- It will take about a year to recover the initial investment per machine
- Can be competitive
- Finding the perfect place can be the most challenging part
Are you looking to get into the vending machine business?Let’s see the ways you must follow to achieve it.
How much profit can you make with a vending machine business?
One of the great benefits of having a vending machine business is its high level of profit. It is normal to get between 100% to 400% profit for each product sold.
In our experience, after subtracting expenses and product costs, the average vending machine earns approximately $ 14,336 annually, with a profit of roughly $1 per sale.
If you sell more expensive products or have a machine in a busy place, you will earn more money.
The amount of cash you’ll earn from a vending machine business will depend on:
- Machine location
- Number of potential buyers / Flow of people
- Price of the products you will sell
With an achievable average of 25 sales per day, a vending machine stores between 30 to 40 products, so the average profit for each product is between $300 to $515.
Ideally, you should average 25-30 sales per day. Therefore, the combination of products, prices, and demand at a specific price will significantly influence how much money you can make from a vending machine business.
What is a typical day like when you have a vending business?
This is a question many of us ask when considering a vending machine business to make money. A typical day as a vending machine owner will go something like this:
You will start your day on your computer, checking the inventory of the vending machines. You will see an updated report on low on the production machines and need to be restocked.
After taking a look at the inventory report, your next task will be to print reports that will tell you the exact number of products you need. So you can restock these products and get them ready to fill your vending machines with these products.
You will have to restock your machines and inspect, clean, restock them and of course, collect the cash on them!
Depending on the products you decide to sell with your vending machine, you will collect bills, coins or if your device is equipped with a credit card reader, you will receive your earnings directly to your bank account.
This is known as “servicing” vending machines. As your business grows, you can hire someone to take care of this for you and have a 100% passive vending machine business.
How much does one need to start a vending machine business?
Starting a vending machine business doesn’t require as much startup capital as other alternatives.
Many vending machine owners recommend used or reconditioned machines, which cost between $ 1,200 and $ 3,000. A new machine will cost between $ 3,000 and $ 10,000, depending on its size and features.
How to get financing for your business
If you would like a loan to purchase your vending machine, consider these two options:
1. Interest-free credit card
Another way to get money when starting a vending machine business is by applying for an interest-free credit card. This is probably the cheapest option to obtain financing since you will have the option of not paying interest.
However, getting one of these cards will only be possible if you have a good credit score.
Many credit cards offer you the facility to use them for several months (generally between 12 to 18 months) without interest.
Two good interest-free credit cards are:
- Chase Freedom (see a full analysis )
- American Express Blue Cash
- Discover IT (see analysis )
These cards do not require too high a credit level to be approved.
1. Short-term loan
If you have a good credit score and a documented income history, obtaining a short-term loan to finance your vending machine business might be the best option.
After reviewing your credit and income sources, the lender will deposit a sum of cash directly into your bank account. You will pay the loan, plus interest, over a predetermined period.
As the name implies, short-term loans must be repaid in a short time, usually in 18 months or less. Also, the interest rates are slightly higher than those of long-term loans.
However, short-term loans are generally easier to qualify for than long-term loans.
3. Financing of machines
You probably don’t need that much capital to start a vending machine business. But if you need a little help, some manufacturers provide loans to finance machines.
These sorts of loans will depend upon your equipment’s value, which also acts as collateral if you do not meet the payments.
However, this sort of loan is typically more complicated. In addition to their financial information and business plan, you will need quotes for the machines you plan to buy. Some manufacturers will ask you to buy a higher volume of machines.
Steps to start a vending machine business
Although it sounds simple, starting a vending machine business can be a bit overwhelming. Fortunately, we have divided this process into easy-to-follow steps.
1. Needs of your area and ideal market
Start by finding an ideal place to have your first vending machine. This is an extremely flexible business, so you will only be limited by your imagination. Remember that these types of machines exist almost everywhere: from offices to shopping centers and airports.
This would be the perfect place and paradise to start a vending machine business: a place where people are forced to wait or regularly feel like eating something light.
Some of the most profitable places to place a vending machine are:
- Medical consultants
- Hospital and mechanic waiting rooms
- Bus stations
- Schools
- Petrol stations
- Gyms
- Laundries
- Factories
- Professional offices
- Restrooms
- Hairdressers
2. Where and how to buy a vending machine
Finding a vending machine can be as simple as an online search. Start by comparing the prices at these stores:
- Amazon (many new machines available)
- eBay (they have new, used, and reconditioned machines with good warranty)
- Sam’s Club – new machines at wholesale prices
- Craigslist – used vending machines can be found on this site
To get an idea of the different offers and prices that exist, you should compare your local suppliers’ prices. You should also take into consideration the value of inventory when looking at the prices of the machines.
When buying a vending machine, you will find that they come with various features and capabilities, all at different prices. Some of those unique features include:
- Snack and beverage combination machines
- Credit card functionality
- Touch or voice accessibility
- Remote monitoring software and low inventory alerts
- Custom design for the front of the machine
- Interactive screens
However, try not to be tempted to spend too much on a too advanced machine, as these can be expensive. Choose the machine that most accurately fits your location and the products you will sell, respecting your budget.
Tip: The size and shapes of beverages will affect your machines’ availability, so if you plan to sell beverages in cardboard boxes or products with irregular shapes, you will need to find a machine that will fit your product.
When buying a vending machine, you should keep these tips in mind:
Large manufacturers are preferable
Wholesale vending machine manufacturers or suppliers have the widest selection of machines, the latest technology, and the most comprehensive delivery, repair, and training services.
This will be the most expensive option. Even some manufacturers will ask you for a minimum order of multiple machines.
Consider starting with used/reconditioned machines
You can start a vending machine business with a lower investment by exploring makes and models of used machines in good condition.
For example, eBay has thousands of vending machines for sale with reputable sellers who offer their machines’ warranty. Some of these sellers also offer free shipping.
This may be the best option for vending machine entrepreneurs who are just starting and do not want to spend thousands of dollars on a new machine.
Also, consider vending machines in refurbished or renovated condition. These are usually vending machines in good condition that have been repaired by a company.
3. The best vending machine for your business
There are many more options than the snack and soda vending machines we are used to seeing. There are three types of vending machines. Let’s see what they are and choose the vending machine that best suits your business.
Whichever sort of slot machine you select, start with one or two machines with a specific focus on the market. This way, you can gradually learn about popular stock patterns and specific sites and add new machines accordingly.
Food and beverage vending machines
With food and beverage vending machines, your business will earn income by selling snacks, soft drinks, and sweets. These are usually the most common vending machines.
If you decide to go for a food and drink vending machine, you should be clear that drinks usually represent more than half of your earnings.
Of course, this is not always the case. Although you can get a machine that offers only drinks, you should also consider a candy and snack machine. You can also choose to have different types of machines for the same place. Everything will depend on the needs of your customers.
Our advice: start with one type of machine and focus on this one. For example, focus on healthy snacks, drinks, or fresh foods, so you can differentiate yourself from the competition and have an advantage. At the same time, you get to know this industry.
To achieve maximum sales, offer market-oriented products from the location of your vending machine. Some examples are:
- Fitness center: vending machine for healthy food and drinks like protein bars and shakes
- School: vending machine with juices, sweets, and granola bars.
- Waiting room: drinks machine with soft drinks, water, and chips
Another good strategy in 2020 is to offer a vending machine with healthy alternatives since many people associate vending machines with junk food. You could change this concept and earn a lot of money at the same time.
Candy and toy vending machines
This is a superb option if you’re looking for a business that requires very little capital with low maintenance costs. You can start a vending machine business with machines that store gum, stickers, or rubber balls.
These machines don’t require tons of maintenance and may not be glamorous, but the profits add up.
Plus, they offer the lowest investment cost when starting a vending machine business. A reconditioned machine can cost you less than $ 50 and typically produces an average of up to $ 30 per month.
The products typically sold on these machines are incredibly low cost. In the right place (like a school or amusement park), this modest investment offers the potential for a highly reliable and passive source of income.
The operating costs are very low since they do not require electricity or batteries to operate. That said, you won’t have the advantage of monitoring your inventory digitally, so you will have to review them to restock them personally.
Special vending machines
These are the big leagues of vending machines. Vending machine businesses are not just limited to selling food and beverages.
The biggest profits (but also the biggest investment) are concentrated in vending machines located in large places such as stadiums, airports, and shopping centers. Products are often technological accessories, beauty products, and other special items tailored to customers’ needs.
Some examples are:
- Hot beverage vending machines: Selling coffee or hot beverages is often most successful in offices, universities, and conference centers.
- Sale of special items: Essential travel items like phone chargers, headphones, and neck pillows can be a very lucrative income source if you can negotiate a contract with a local transit station or even an airport.
- Laundry Products: A machine full of packaged detergent, fabric softener, and tumble dryer are great items to sell if you manage to position yourself in a laundry room, apartment complex, or dorm room.
4. The best location for your vending machine
Suppose you have already identified a place in need of a vending machine. In that case, you should contact the owners or managers of this place and propose a commission for letting you place your machine in these places.
Note: it is unnecessary to pay them a commission, but it will be much easier to start this way.
Although this step is more straightforward said than done, it is possible to start a vending machine business without having personal connections.
Your mission in talking to the person in charge will be to make a good impression and talk about the benefits of having a vending machine on site.
Start by printing some contact cards (you can print FREE business cards with this service ) and make a sheet with the benefits of having a vending machine. This sheet should include your contact information.
Be personable, positive, and professional from the first handshake and keep a smile until the meeting. The meeting must be fast and accurate. It begins by listing the benefits of properly maintained and stocked vending machines.
Adapt the advantages of your machines to the needs of your contact. For example, suppose you’re an office. In that case, you can start talking about how vending machines contribute to employee satisfaction and better productivity. If it is a waiting room, highlight how customers will be more willing to wait to have something in their stomach.
Even if the owner or manager decides they are not interested in your vending machines, always keep a smile, a firm handshake, and thank them for their time. Leave a business card and benefit sheet. You will never know if he will change his mind when he thinks better of it.
You can also try visiting your local chamber of commerce. They will offer you information on your area’s main businesses, which could give you some ideas about possible locations. Ideally, you want to place your machine in companies with at least 100 employees or significant foot traffic, such as a multi-office complex.
How much do you have to pay the manager?
Depending on your vending machine’s location, it is very likely that you will have to pay a commission to the owner for allowing you to have the machine in this location and the electricity needed to run the machine.
We recommend paying the property owner 10-25% of their machine income.
It is also advisable to draw up a contract with the owner specifying the agreed compensation rate, the contract’s duration, and the agreed terms.
It is important to include provisions for breach of contract and expectations and obligations on machine maintenance. You should consist of what would happen if there was any vandalism or theft of the machines.
As always, ask an attorney to review the contract before signing it.
5. What to sell with a vending machine
Once you have purchased a vending machine, you must supply it with the products you sell.
The products you offer will greatly affect your sales, so you should plan this step very carefully. Instead of selling typical food and drinks, pay attention to the place’s specific local needs.
Start testing. In many cases, finding the best products to sell will be a matter of trial and error. When starting, don’t over-order products, and take note of the best-selling products.
If you decide to stock your vending machine with food and beverages, remember that drinks will make up most of your earnings.
Tip: You can explore more beverage options and offer sodas, coffee, flavored water, and even healthier beverages like coconut water. It is worth considering whether the location can support more expensive specialty foods and drinks (which will generate better profits).
6. The best price for your products
One of the advantages of having a vending machine business is its high-profit percentage. By choosing the price of the products that you will sell in your vending machine, you will be able to mark them for 100% or more.
Here’s an example:
Let’s say you want to sell these granola bars (which you can get at an extra 15% discount by using the Subscribe & Save program ). Ideally, it would be best if you sold it for $ 2.75, with which you will get an approximate profit of $ 1.75.
A standard vending machine has 32 to 40 items to choose from, so you will have several chances for a good profit.
In general, you should choose the items you think will sell well in your area and experiment with prices, taking into account what others are charging.
It would be best if you also controlled the cost of the products you will sell. A lower-cost will translate to better profits, so check prices at vendors for membership discount businesses or stores like Sam’s Club, Costco, and others.
7. Supply and maintenance of machines
After installing your machines and choosing the ideal price for your products, the most important things you can do to boost sales are to maintain the machines:
- Well stocked
- Clean
- Optimize its operation
Clean, well-lit, and well-stocked vending machines are more attractive and drive sales.
Keep machines well stocked
An empty vending machine will give the appearance of having old products, which should never be the case when selling food, candy, and beverages. Also, if customers can’t find what they’re looking for, they’ll buy it elsewhere. This means that not stocking your machines on time will cost you a lot of sales.
So do your best to keep your machines full.
Since you’re just getting started, your first machine probably doesn’t include a remote monitoring system. So it will be necessary to make frequent trips to check your machines until you have an idea of how fast they sell the products.
Keep machines clean
Keeping your machines clean does two things:
- Increase sales
- Reduce maintenance costs
If their machines are dirty, your users will associate this with low-quality food. A clean machine will also reduce the number of vending machine failures and reduce the need to repair internal mechanisms.
General maintenance of machines
Regardless of how clean your machine is, it will eventually need to be repaired to keep it running.
To give you an idea, a Coinco / Royal Vendors brand vending machine (the largest brand of vending machines for cold-packed drinks) may require one or two service calls a year.
These maintenance calls can cost approximately $ 100 to $ 150, depending on who provides the service and where the machine is located.
Starting a Vending Machine Business: Summary
The vending machine business moves billions of dollars around the world each year. Fortunately, you can enter this lucrative market with a few thousand dollars and start building a business that can eventually be a good source of passive income.
Owning your vending business means having a relatively low startup capital. Still, you will have to spend time and energy storing, maintaining, and collecting money from your machines regularly.
As your business grows, you gradually invest in several vending machines. You will start generating passive income without having to take out a massive loan or go into debt.
If you have questions or doubts about starting a vending machine business or where to buy vending machines, leave us a comment, and do our best to help you solve your doubts.
