Planet Antares Vending Tips: Impact Of Vending Commissions

A successful vending business is characterized by effective location of vending machines. After all, your equipment itself is your salesman. Commonly, you will have to pay commission to business owners to keep your machines. This may vary for different machines and locations.
Basically, the commission is the amount of money paid to companies from the revenue earned by vending machines. The standard rate is about 7 - 10% but it may vary from 3 – 50% for different locations. The commission is usually negotiated between the vending operator and business owners before signing the service agreement.

The average service contract has a validity of one year. After the expiry of such time period, it has to be renewed or canceled. Usually, the service contracts provide for automatic renewal of agreement at the end of a specific term.

With the increasing emphasis on cost reduction, vending operators may feel that vending commissions are a financial drain. However, the success of your vending business does not depend on this factor alone. It is more important to improve operational efficiency and business management rather than cutting commission rates. A good vending operator should make sure that the expected profits are sufficient to cover the ROA (Return On Assets) requirements. Then, the surplus profits can be allocated to the business owners as commission.

If commissions were to be entirely eliminated, the vending operators would get even lesser ROA than they earn after paying commission. This is due to the fact that a high level of profits would force vending operators to invest in other areas of the vending business, if not in commissions. This means that business owners would have to be offered new technology, updated equipment, attractive products, lower sales prices and other add-on services. All these factors could result in much more expenses and consequently, a lower ROA for the vending machine operators.

An alternate perspective can be much more effective in such a situation. Instead of cutting down, if you increase the vending commission for premises owners, you can actually increase your market share. This happens when you pay a higher commission in return for a certain increase in product prices. This helps in maintaining your profits as well as satisfying current and potential location owners.

Your vending machine sales may fall initially but they will soar once the customers have adjusted to the price change. Then, the Planet Antares Vending business proprietor will be more than happy to keep your machines and earn substantial profits as well. Remember that your business profitability depends on the product and machine selection, inventory control and technical service, rather than the commission rates. A well managed vending business can use commissions as a tool to earn higher returns.