Making $1000 a Month Off of $10,000 Through Vending Machines

By | February 18, 2012

Say you only have $10,000 and are dead set on obtaining at least a $1,000 a month in passive income. Vending machines can be a great way to produce that kind of profit with minimal effort.

Investing in Vending Machines:

Operating a vending machine business requires you to maintain the vending machine, empty out the change, and restock the machine with drinks and snacks. In return, you can enjoy a healthy profit that runs itself day in and day out. As I talk about vending machines, you may be wondering how I learned about running and operating the machines without experience. How does one get started?? Well, I bought several ebooks online and talked to previous and current owners of vending machines. You can try to find vending operators through industry directories and set up informational interviews to determine if this is the type of business that you would want to get into.

 

During my quest to invest in vending machines, I was in contact with a retiring vending machine operator ready to sell his machines. At 65 years old, he and his wife operated close to a 1000 machines at one point before slowly selling off a number of them.

I was given the opportunity to purchase a couple of machines at reasonable prices. So how can you make a $1,000 a month off of $10,000? This is one way to do it.

While speaking to them about vending machine investments, this is what they offered to sell me (they gave me their average sales):

Stop 1:
Located in a Disability Building Offices
1 Soda Machine Vendo 511 (soda bottles)
1 Snack Machine AP7000
Average Monthly Sales $500-$600
Asking $3200 for machines and locations

Stop 2:
Located in a Bank
1 Soda Machine Dixie Narco (soda cans)
1 Snack Machine USI Lance
Average Monthly Sales $180-$250
Asking $1900 for machines and locations

Stop 3:
Located in a Manufacturing Warehouse office
1 Soda Machine Dixie Narco (soda cans)
1 Snack Machine AP6000
Average Monthly Sales $200-$300
Asking $1900 for machines and location

Stop 4:
Litho-Printshop
2 Soda Machines, a Dixie Narco 369 (cans) and a Dixie Narco 440 (cans)
1 Snack Machine AP7000
Average Monthly Sales $250-$325
Asking $2300 for the machines and location

Stop 5:
Apartment Complex
1 Soda Machine Vendo (cans)
Average Monthly Sales $50-$75
Asking $900 for the machine and location

Total Initial Investment in Vending Machines: $10,200
Total Average Monthly Sales: $1,180-$1,550

While averaging $1,180-$1,550 month, you must also consider the cost of the drinks and snakes in the machines (cost of goods). Buying in bulk would save you on cost, and shopping at places such as Costco would probably be worthwhile. The profit margins are also enormous as you sell snacks at 100%-400% of their cost. Say if you average $1,500 in sales a month, then your cost of goods will be around $480 or 32% of sales. Factor in gas, you may average a net income of around $800-900. With only $10,200 invested, that is a very good return on your investment ($10,800/$10,200= 105%). You will make your money back in a little less than a year.

Obviously location would be very important in this type of business and a high level of foot traffic would translate to a higher amount of sales. Another issue would be maintenance as machines may break and even vandalized. Instead of having a professional maintenance man fixing your machines every time there is a jam, you can save an enormous amount of money by learning how to fix the machines yourself (vending machine repairmen cost upwards of $150 an hour).

Although some may say that all the headaches of maintaining and restocking a vending machine may not be worth it, I think that if you create a system to run this business, then it will not be as hard as it seems. You can start checking each machine on a weekly basis and gradually spread out this time as you understand the daily traffic and replenishing rates. I hear that many soda machines only need to be checked once or twice a month, and snack machines every 2-3 weeks. A route that I mentioned above may only need to be checked twice a month. The profit margins are also enormous as you sell snacks at 100%-500% of their cost.

Aside from vending drinks and snacks, another new avenue is the DVD rental business. Redbox has become a huge success, although Netflix may certainly be nipping at its heels. Owning redbox machine at a high traffic location, would still be very profitable.

A quick video from a person who made his riches from vending machines

 

How to Make $1,100 From $10,000 With Dividends
Building Streams of Passive Income

16 thoughts on “Making $1000 a Month Off of $10,000 Through Vending Machines

  1. German

    Do you still have this business running? And if so how has it been after all?

  2. Bo jangles

    Your margins on soda and snacks are bullshit.

  3. Legends of Vending

    Product cost should be between 35 to 50 percent depending on the item..Not 20%..You are an idiot and your business prob has failed because of that….You were prob standing next to your machines so that when a customer bought something they had the option to hock a lugey down your throat..

    1. Lawrence Benwa

      20-25% Cost of Goods is easy to do. Not sure what Legends is talking about. Other than being just plain disgusting, Lengends of Vending is the idiot.

  4. cs

    Ha. 20-25% COGS is easy? Basically, you are saying that it is EASY to mark things up 4.5 times what they cost. Here is a general breakdown to what they would amount to.

    1 oz. bags of chips would cost roughly $1.10 per bag.

    LSS bags of chips would cost about $1.80 per bag.

    pastries would cost anywhere from $2.50 to as high as $4.00 per unit.

    Candy, at its current pricing, would cost about $3.00 PER BAR for the REGULAR SIZE.

    Cans of soda? Those would have to be sold for $1.35.

    Bottles of Soda? Around $4.00 per bottle.

    Cookies? Roughly $2.25 per unit.

    Sure, if you sold things at THOSE prices then the 20-25% COGS is possible. Unfortunately, anyone with common sense knows that your sales would fall down to absolutely nothing, you would get kicked out of the account, and you would never be able to make your $10,000 investment back.

    Oh, and another thing… making the statement that buying in bulk will help with costs. Sure, that’s true, but you have to gross WAY MORE than $1,500 per month to be able to buy anything in bulk. Even without a huge markup, buying things in bulk will lead to LOST PROFITS due to EXPIRED PRODUCTS.

    It is NOT very difficult to get to 50% COGS but this 20-25% thing is totally misleading. I can think of only TWO items that are marked up over 200%. Everything else is marked up between 60 and 100%. We have this thing around here called “competition” and if you mark your items too high, you will lose an account because someone underbid your prices.

    Yes, making $1,000 a month on a $10,200 investment is definitely a good return on your investment, but these made-up margins are total garbage.

    If anyone here can provide a legitimate example of a snack machine and a soda machine only using up 20-25% of the revenue in the form of COGS, then go for it. We will also assume that the machines never need repairs, products never actually expire, fuel is free, we never lose customers, refunds are never given, there is no other overhead expense, and upgrades are not needed.

    1. John

      cs, I think your examples fails to consider that this guy could be buying the products at a wholesale price as opposed to the current market prices the you and I are exposed to even do he does mention shopping at costco

      1. cs

        John, the examples that I gave were based off of WHOLESALE prices, not market prices. I simply took wholesale prices and multiplied them by 4.5 to show what the retail prices would need to be to maintain those 20-25% COGS. You can’t make your own prices up on wholesale goods, and no one will give you a break unless you are a MULTI million dollar vending company… and by multi million, I mean well over $10 million per year. Maybe you think that vending companies get things for next-to-nothing but that’s simply not true. I’m very aware of wholesale prices for vending machine goods as I operate a vending machine business. I also have an associate’s degree in business.

  5. UAnonymous Bamanonymous

    CS, How much profit do you make monthly and how many machines do you need to reach that goal.I’ve been thinking about running a vending biz but wanted to put in the right amount of research into it in order to make the best decisions.I would appreciate any advice you could give me.

    1. cs

      Look up a forum known as vendiscuss. You’ll be able to learn about real-world vending there. But to give you a quick answer to your question, expect to make 25-40% net profit depending on the size of your business, your efficiency, the quality of locations, the quality of the machines, and your price points. If you sell items for a high-enough price without having your competition underbid you and take your accounts, you can profit almost as much as 50%, but that’s pushing it.

      With that said, a realistic account such as a factory with 50 employees could easily do $200/week from snacks and soda alone. You just need to keep in mind that the better the account, the more competition that you’ll have, so you’ll have to either provide the best service or the best pricing. It’s hard to provide both. The crappy companies will offer a lower price and the account might prefer that and the better companies will want higher prices for their products and offer better equipment. It’s a give-and-take business and it’s certainly not a get-rich-quick scheme at all.

  6. d Joyce

    funny no one mentions rent to the location owner or percentage of sales to them lol

  7. Bat machine

    I’ve been in the vending business for years and I have zero locations whom I pay a commission to. I’ve found that most locations that I target these days don’t want a commission, they just want good service & good machines. They’ve been deprived and starved of these basic service needs for so long, most of the time they never bring up the subject of commissions (and neither do I!!).

    In my early days, I did have a handful of locations that I paid commissions to, but when I felt my route was at a good size, I began to slough off locations that I had to pay to do business with. My only exceptions to my self imposed rule are airports, hospitals, and college campuses.

    Yes, 45% – 55% profit margins for me. My business is small enough to benefit from coupons and taking advantage of sales at the big box grocery stores :):)

    1. ali

      thanks for the info. what is the average sales can you make pet machine if you are selling bottled water and soda ?

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