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AP: Dollars Versus Percentages
 
For those of us who have been in the vending industry for many years, we are accustomed to looking at our profit and loss statements and our various costs as a percentage of sales. Remember when we offered can soda for 50 cents, candy for 40 cents, and chips were 25 cents? Even a salad sandwich was 75 cents. Our product cost was roughly 50 percent of the vend price. It was a “rule of thumb.”

We looked at and we still look at our product cost as a percentage of sales. If the candy bar cost us 30 cents, we minimally needed to get 60 cents for a price point back in those days.

The problem is that we cannot just look at percentage as a method of determining our vend price. We need to look at what the market will bear. A customer of mine recently told me, “you can’t take a percentage to the bank.” How true!

INCREASING PRODUCT DOLLAR MARGINS

If our quasi competitors, the convenience stores, can get $2.00 for a cup of coffee or $2.99 for a bag of beef jerky, why can’t we? Take a stroll through a convenience store and look closely at the items they are offering.

In some cases like coffee, our margins are and should be well above 50 percent. In other items, we may be able to get a good price that gives us good dollar margins, but we may not get the 50 percent margin.

We as an industry have had the mentality that people will not buy products from a vending machine if the product is priced over $1.00. This is part of the reason why we have the low profit margins today.
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