Vending Machine Placement Fees And Commission Plans

The concept of paying for a location in the vending business can be categorized under one of three headings:
1.Placement Fees
2.Commissions
3.Locating Fees

It’s important that you understand the unique nature of each of these items. Snack and soda vending account placement require a bit of effort in marketing and sales to make the right placement locations. Using a vending account locator service to find accounts for you might seem like a simple way to land locations for your machines but understand that when you use such a service you will have to pay a Locating Fee to the service when you close the deal with the property that your machines will be placed at. These fees are generally only one time expenses but can be very large in some cases based upon the perceived value of the account to your business, meaning the amount of money that you are expected to make from the account over the course of the first year.

Placement Fees are in a word BAD in another word STUPID and in a final word REDICULOUS. Never agree to pay a placement fee. If the property owner asks you to pay a placement fee it means that you are not important to them, they do not value your relationship to them and they will replace you as soon as your competitor comes along willing to pay a higher fee than you are.

Commissions are a normal part of the vending machine operations business. Not all accounts need or warrant commissions but they are a good way to keep the relationship between you and your accounts strong. The only problem with commissions is that they require a higher pricing scale than their non-commission counterparts. When it comes to the bottom line a commission can turn your previously profitable accounts into a liability that can support itself. Most of the accounts are going to want a higher level of service more reliable attendants and better product choice. This along with a lower pricing scale can be more advantageous to both you and the accounts property owner.

A commission based program requires extra effort on your part; most of the accounts will want sales reports that can be used to verify the integrity of the commission earning statement that you offer to them; you or someone on your staff will need to formulate, compile and manage these reports. This means labor cost is being used toward an activity which makes no extra profit to the business.

In low volume accounts avoid commission programs like the plague if you can. Also be mindful of not falling into the trap of paying commissions for power bills or space requirements, these type of “commissions” are really just placement fees in disguise. What most of these property owners don’t know is that the great idea that they have to try to sneak a little money out of you is not such a new idea and has already been tried on vending machine operations business owners a million times in the past. Commissions can lead to lost accounts, just as placement fees can when a competitor offers a better plan.