The economics of vending machines
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The economics of vending machines
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Re: The economics of vending machines
#2Somewhat related :
Warren Buffett seemed to have an interest in such "low-cost" hustles[0] nearly 75 years ago and seemed to have done well with it:)
[0]https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-p...
Re: The economics of vending machines
#3This is a topic I know a fair amount about. For a brief while, I worked at a startup that made software to manage vending machines and handle digital payments, from the device stuck on the front, to accept credit cards.
Basically, the name of the game is location location location. It's very tough to find a good lucrative location to put your machine at. Why? Because there's likely already a machine in such location.
Also, it's a numbers game as many locations don't make that much profit per month. Therefore you have to have many machines, and getting 50-100 machines in great locations is no easy task.
Re: The economics of vending machines
#4The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money.
You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are.
250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unlikely given the number of machines.
Perhaps I'm way off though, since my perception is probably skewed by tech companies.
Re: The economics of vending machines
#5I would be also interested of costs. The article seems to have gross figures only.
Re: The economics of vending machines
#6And let's not forget that an iPhone is basically a vending machine in your pocket ...
Re: The economics of vending machines
#7I would be also interested of costs. The article seems to have gross figures only.
> All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit.
I was looking for the same, the above helped me to get an idea about the net income.
Re: The economics of vending machines
#8The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money. You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are. 250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unl…
You also need to find a place to put the machine. The article mentions paying up to a 25% comission to the owner of the place. Even if you somehow get amazing margins on the machine itself like 70% (assuming you refill the machine for free) it will turn into 45% margin after actually putting the machine down.
>We surveyed 23 vending machine owners with various-sized operations and found that the average operator in our sample owned 13 machines that gross $309 per machine per month.
Warning: napkin math.
$309 x 13 x 45% = $4017 x 45% = $1807.65 profit (excluding cost of machine)
It's just a side hustle. Even with higher margins you can never go above $4017 so it's never going to turn into a scalable business. Once you consider the cost of the machines of around $2k each (very low estimate) your first 14 months will net you nothing.
Re: The economics of vending machines
#9The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money. You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are. 250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unl…
It's good money for something accessible to almost anyone.
It doesn't require much capital, doesn't seem very regulated and needs no deeply specialised skills to get started. No franchise. No middleman or supplier lock-in. No fixed rental payments.
Easy to pull in friends & family labour if you need to scale, and if you miss restocking it's no biggie. Nobody yelling at you. Flexible hours. Rarely have to talk to people except about new sites.
Actually not that easy to think of things with all those properties.
Re: The economics of vending machines
#10The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money. You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are. 250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unl…
It's good money for something accessible to almost anyone. It doesn't require much capital, doesn't seem very regulated and needs no deeply specialised skills to get started. No franchise. No middleman or supplier lock-in. No fixed rental payments. Easy to pull in friends & family labour if you need to scale, and if you miss restocking it's no biggie. Nobody yelling at you. Flexible hours. Rarely have to talk to peop…
If anything you should be surprised such a thing is profitable, it's a textbook case of "the free market should have squeezed profits to zero".