A vending machine keeps less of each sale than it seems: a $1.75 bag of chips costs $1.09 once the product, the location's commission and the card fees come off, a 38% margin. Drinks keep a little more, fresh sandwiches much less because some expire unsold, and the location's commission, 10% in the example, is the second-biggest cost after the product. The route's van, driver and machine repairs come out of what's left. Margin = (price − cost) ÷ price. In the example below, a month of five lines brings $25,590 of sales and about $9,910 of gross profit, before the route's costs.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- A bag of chips: $1.09, sold for $1.75, 38%.
- The location's commission and card fees take about 14%.
- Drinks keep a little more than snacks.
- Fresh food keeps the least, after spoilage.
- TaroStack keeps every machine's stock counted as its own site. More below.
A bag of chips, costed
Gateway Vending, the made-up vending route in Columbus, Ohio, I use in these examples, pays each location 10% and about 4% in card fees:
| A $1.75 bag of chips | Cost |
|---|---|
| The chips | $0.84 |
| Card fees, 14% of $1.75 | $0.25 |
| Cost | $1.09 |
The route's year is in vending machine business plan, and unattended stores with a kiosk in micro market business plan.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Bag of chips | Snack machines | $1.75 | $1.09 | $0.67 | 38% |
| Candy bar | Snack machines | $1.75 | $1.05 | $0.70 | 40.3% |
| Bottled drink, 20 oz | Drink machines | $2.50 | $1.40 | $1.10 | 44% |
| Energy drink | Drink machines | $3.50 | $2.24 | $1.26 | 36% |
| Sandwich | Fresh food machines | $6.50 | $5.01 | $1.49 | 22.9% |
The sandwich keeps 22.9%, after 8% spoilage; the drink keeps 44%.
A month's numbers
A month for Gateway Vending:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Bag of chips, snack machines | 4,000 | $7,000 | $2,660 |
| Candy bar, snack machines | 2,000 | $3,500 | $1,410 |
| Bottled drink, 20 oz, drink machines | 4,000 | $10,000 | $4,400 |
| Energy drink, drink machines | 600 | $2,100 | $756 |
| Sandwich, fresh food machines | 460 | $2,990 | $685 |
| Month | $25,590 | $9,911 |
The drinks bring the most gross profit, and the chips come second. A location asking for 15% instead of 10% would cost about $1,300 a month across these lines, which is why the route moves machines that sell little rather than pay more for them. A bigger store's margins are in convenience store profit margin.
Get the calculator
Download the vending margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one cost per item. A warehouse club's prices move, a machine sells out of the top chip by Tuesday, and sandwiches expire in a quiet break room.
How TaroStack does it
TaroStack costs each item from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes snacks, drinks and sandwiches at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a item cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.