Vending machines can provide a variety of functions for customers.
Because of its availability to entry-level entrepreneurs and the customer desire for the capacity to purchase things quickly and easily in an on-the-go world, having a vending machine, or a network of vending machines, has become one of the most appealing businesses endeavors recently.
The vending machine business can be hugely profitable, but it is just like any other industry in that you must put in the effort to succeed.
The specific cost of doing business in the vending machine industry will be determined largely by the type of machine(s) you select and the number of devices you run.
Cost of Vending Machines
One time costs
The cost of a vending machine varies on the different specifications the owner is looking for.
It depends on the size of the machine, the built quality, the number of items to be displayed, whether the machine is refrigerated or not, and also on whether it is operated by coin, cash, or cashless mechanism.
A coin-operated Sanitary Napkin Vending Machine would cost from ₹5,000 to ₹10,000. An Automatic Coffee Vending Machine would be worth under ₹1,00,000 and a refrigerated, cash-accepting vending machine with a variety of items to be displayed would range anywhere over ₹1,25,000.
Also, There are various types of vending machines are available. So you can choose the right vending machine for yourself.
2. Vinyl or branding
Sporting your Vending Machine Business on the machines isn’t as expensive as it sounds. You can make minimalist, customized logo vinyl for less than ₹1000.
In reality, the branding costs can become insignificant if the space is used for advertising. Vending Machine advertisements can generate substantial revenue for the business-owner which would easily cover the branding cost within one cycle.
Since vending machines are heavy and bulky machines, their cost of transportation can be pretty hefty. If the machine is ordered from an overseas manufacturer, the cost of transportation can be as much as the cost of the machine itself, if not more.
However, this aspect of investment shouldn’t be a deal-breaker because of the abundance of local vending machine manufacturers like Wendor. Besides, many online sellers of vending machines offer free delivery in select cities in India.
1. Online system cost
This expense is optional, based on whether the business owner is looking for an app-based online system for their business brand. Developing an app can cost more than ₹3,00,000 and wouldn’t be as profitable if the business owner isn’t looking to expand the vending machine business to a very large scale.
For a local, average-scale vending machine business with low investment and high returns, it would be more profitable to use a pre-existing software. Vending machine manufacturers like Wendor have developed their own user-friendly apps that make the process of running a vending machine business smooth and hassle-free.
2. Per transaction cost (zero for UPI)
Transaction cost refers to the charges that the bank incurs on both, the buyer and the seller, for use of its services such as card payments and net banking. Credit cards usually charge around 4% transaction fees. Unlike Net Banking, there are no additional costs for carrying out transactions through UPIs.
Buying items for sale in bulk also need storage space. This can cut into the profits as a recurring cost. A way to eliminate this cost entirely could be to purchase wholesale products at the time of replenishing the vending machines.
This method would not be suitable for most business owners since the profit is mainly dependent on the profit margin, which is only profitable when bought in bulk.
You can read our article on How To Manage Your Vending Business With Full Peace Of Mind to get a much better idea about managing a vending machine business.
Purchasing the products, replenishing the vending machines, and collecting the cash are time and energy-consuming tasks. A business-owner of multiple vending machines will have to hire an employee to carry out all of these tasks.
Even if you are doing these activities by yourself, it is important to take account of your labor into the business cost.
4. Transportation of goods
Recurring transportation costs are incurred at two levels. The first is to transport the wholesale purchase of goods to the warehouse. The second is the transportation cost of refilling individual machines every time they run out of items.
Having an app-based vending machine system that lets you know when and which items the vending machine has run out of, a lot of time and transportation costs can be saved, increasing the gross profit.
5. Repair and Maintain (lesser than people think)
The best way to save up on repair and maintenance charges is to invest in a vending machine where the manufacturer takes care of the maintenance.
As for repairs, the only part of a vending machine that is prone to damage is the keypad or the touch screen which can get worn with use. These parts can easily be replaced, and can even fall under warranty.
To know in detail about the types of Vending Machines, You can check out our page on – Browse vending machines.
The ROI on a Vending Machine
ROI stands for Return On Investment from a business. In simpler words, it is the net profit, compared to the total cost of investment. A higher ROI reflects greater efficiency of the business since the business would pay for itself in a shorter time.
On average, a vending machine business has an ROI of about 20%, annually. This means that the profits would exceed the initial investment in 4 years.
Since vending machines have a lifespan of 12 to 24 years, the business would make at least a three-fold profit on the investment, excluding any improvements or additions to the business.
Variable costs Vs Fixed cost
Fixed cost refers to the cost that remains constant. In the context of vending machine business, the rent of the location and power consumed by the vending machine would be the fixed cost that does not change with the fluctuation in sales.
Variable costs in a vending machine business would be the wholesale purchase (which could increase with an increase in the sales) and the transportation cost for driving to the vending machines (which would increase with the increase in the frequency of restocking).
Number Of Machines Required To Break Even
Every profitable business reaches a break-even point. This is the point when the total fixed cost (investment) becomes equal to the gross profit.
A profitable vending machine business has an ROI of about 20%, annually. This means that the profits would exceed the initial investment in 5 years.
More machines do not always mean greater profit because the investment is so large it still takes time to reach the break-even point.
Gross Profit From Each Machine
The amount of money a vending machine business makes relies on a number of things, such as the location of the machine, the machine’s items, expenses that occur on a regular basis in the business.
Net profit is not the same as gross profit. The business owner must reduce the expenses of the business from the gross profit to calculate vending machine profits. The profit is whatever is left over after business expenses are deducted.
Wendor provides limitless possibilities for aspiring entrepreneurs seeking both freedom and opportunity as they enter the vending industry.
Wendor has also partnered with local retailers, educational organisations, and healthcare facilities to provide excellent quality vending machine solutions and outstanding aftercare support.
Our experienced staff aims to provide consumer-focused, smart, and efficient solutions, backed by years of industry experience.
Discover more about Smart Vending solutions at Wendor.in to learn more about starting a business with the least amount of money upfront.
Frequently Asked Questions
Q: A refurbished or used vending machine is better than a new vending machine?
A: Generally, refurbished or used vending machines can be purchased at a lower price than investing in a brand new one. However, older machines lack the technology that the new machines provide. From this point of view, refurbished vending machines will grow obsolete much sooner.
A mid-way could be to purchase a used vending machine and upgrade it with a new-age solution like Wendor Touch.
Q: Where to buy vending machines from?
A: Choosing the ideal vending machine company to source your machines needs to be a well-thought process. Partnering with a company goes beyond just the one-time purchase of vending machines.
The companies have an important role to play during the installation of the equipment as well as checking back on the machines for timely servicing and other repair needs. Some companies have a no-cost servicing policy while others have warranties on specific parts of their vending machines.
Since vending machines are heavy and bulky machines, their cost of transportation can be pretty hefty. If the machine is ordered from an overseas manufacturer, the cost of transportation can be as much as the cost of the machine itself, if not more. Local vending machine manufacturers like Wendor.in offer a wide variety of options to choose from.
Q: Can I rent a Vending machine?
The cost of the vending machines itself eats up a huge chunk of investment. For someone who is running low on investment capacity, a more viable business option would be to rent vending machines from the manufacturer or another business owner.
Although the profits are shared, the business owner can gain a greater advantage by setting up more vending machines. Renting a vending machine ensures fewer, but immediate returns.