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Deciding What to Charge, or How Much Product to Dispense

January 14, 2016 Updated on 2016-01-14 11:25:45 by

Two of the most common questions we hear from new clients is “How much should I charge per vend?” or “How many pieces of candy X should I give out each time?” The answers to these questions are directly related to one another, and there are 2 different methods to find the answers.

Method 1: Using the “Count”

This method can be used if you know the “count” of the product you will be dispensing, and it is relatively easy to find the number of pieces that come out of the machine at one time. The count is a number used by gum and candy manufacturers, which indicates the number of pieces in an industry standardized case. If you do not know the count, or the product is very small, try Method 2 instead.

To start off with, figure out how much each piece of product cost you. Here is an example using 5800 count gum:

Cost of a case: $100.00

Cost of Shipping: $25.00

Total Cost: $125.00

Number of Pieces per Case: 5800

Cost per Piece: $125.00/5800 = $0.02

Based on this, we can now figure out how many pieces of gum we could dispense for different coin denominations:

If we give out 2 pieces, cost of goods (COG) will be 4 cents, so net profit will be 21 cents per 25 cent vend.

If we give out 3 pieces, COG will be 6 cents, so net profit will be 19 cents per 25 cent vend.

If we give out 4 pieces, COG will be 8 cents, so net profit will be 17 cents per 25 cent vend.

If we give out 8 pieces, COG will be 16 cents, so net profit could be 9 cents per 25 cent vend, or 34 cents per 50 cent vend.

Etc,

Note: Keep in mind that this doesn’t include other costs, such as transportation, insurance etc.

One additional consideration is client satisfaction. The best way to ensure that your machine is used on a regular basis, is to make the clients happy, giving them a reason to return. It is important to find a balance between maximizing profits and providing your customer with enough product to make him or her feel satisfied with the purchase.

The numbers used in this calculation are entirely fictional, and are used for the purpose of demonstration only.

 

Method 2: Using Product Weight

To use this method, you will need a scale that can work in small increments, such as a kitchen scale.

To start off with, figure out how much each gram of product cost you. Here is an example using pressed candy:

Cost of a case: $100.00

Cost of Shipping: $25.00

Total Cost: $125.00

Total Weight per Case: 10 kg

Cost per Gram: $125.00/10000g = $0.0125

Based on this, we can now figure out how many grams we could dispense for different coin denominations:

If we give out 2 grams, cost of goods (COG) will be 2.5 cents, so net profit will be 22.5 cents per 25 cent vend.

If we give out 4 grams, COG will be 5 cents, so net profit will be 20 cents per 25 cent vend.

If we give out 8 grams, COG will be 10 cents, so net profit could be 15 cents per 25 cent vend, or 40 cents per 50 cent vend.

If we give out 16 grams, COG will be 20 cents, so net profit could be 30 cents per 50 cent vend.

Etc,

Note: Keep in mind that this doesn’t include other costs, such as transportation, insurance etc.

One additional consideration is client satisfaction. The best way to ensure that your machine is used on a regular basis, is to make the clients happy, giving them a reason to return. It is important to find a balance between maximizing profits and providing your customer with enough product to make him or her feel satisfied with the purchase.

The numbers used in this calculation are entirely fictional, and are used for the purpose of demonstration only.

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