Increase Profit Margins by Keeping Down Product Costs in Gum Ball and Bulk Candy Vending
It's no secret prices have skyrocketed on seemingly everything. Bulk vending is no exception.
Gumballs, candy, and especially toys sold in vending machines have gone up sometimes as much as 25%. Bulk vendors are often hindered by the fact that it is difficult to increase prices from 25 cents since most vending machine mechanisms only accept quarters. Going to 50 cents on most products would be considered outrageous by most people and would greatly hinder sales. Higher product prices translate to lower cash flow for the vending machine operator. Lower cash flow means lower profit margins if you don't compensate for these higher product costs.
Here are three main options you have:
- Adjust the amount of product you dispense. This makes more quarters per bag or box of product you sell.
- Buy product in larger quantities. Larger quantities can often be purchased for lower unit cost.
- Save on expenses in other parts of the business to compensate for higher product costs.
Dispensing correct portions is a huge key to candy vending. It is easy to give so much product that you end up making a very small profit. My suggestion is to give no more than necessary for each sale. A good rule of thumb is to give about enough candy to fill a child's hand. In general numbers I give 5-6 pieces of larger candies like M and M Peanuts and about 10 pieces of smaller candies like Runts, M & M chocolates, Reese's Pieces, and Skittles. For gumballs, you can order a smaller size gumball and actually get more sales per box (in most situations) thereby helping to preserve a good profit margin. Check with Sam's, Costco, or your gumball supplier about prices and information on smaller size gum.
Concerning point three above, we accomplished this by extending the amount of time we serviced our machines. This accomplished two things: One, it saved on our servicing expenses such as gas, meals, and lodging (I regularly stay in motels to service our 2,200-plus machines). Two, it cut down on our time investment in the business.
There are many many "little" things you can do to increase your profit margins. I invite you to spend some time on my site reading articles I have provided to help bulk vending operators and those considering buying vending machines to launch a new home business.
Good luck!
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