The Best Pricing Strategies for Vending Machines
Table of Contents
Do you know what vending machines are? Today, vending machines are available for a wide variety of products and services. Many machines provide information that can monitor the supply and demand of specific items.
These machines can be found in public and private places, such as subway stations, businesses, schools, universities, hospitals, airports, etc. Their operating hours are exceptional: 24 hours a day and 7 days a week.
Vending machines are efficient. You do not need anyone to make the sale. Just insert the coin, select the product choice, and off you go! This ease is very successful nowadays; after all, it is enough to deal with several other machines. Why wouldn’t a machine that makes the consumer’s life easier be welcome?
Large companies are big fans of this innovative food machine. The employees’ productivity of a company with a vending machine can be increased; the sale of sandwiches, low-fat snacks sales, and coffee can be very well received so that the employees do not have to leave their offices for lunch. This way, trips to the street are reduced, and their productivity at work is increased.
After all, are vending industry machines new creations, or have they existed in the past? According to history, the emergence of the first vending machine is unusual. It took place around 512 b.C. in the work of Hero of Alexandria, an engineer, and mathematician in Roman Egypt. Holy water was the product sold by his machine, which was paid for by the deposit of coins.
Later, several portable models were developed with various uses, such as:
- 1615: European taverns used machines to sell tobacco;
- 1822: Richard Carlile developed a machine to distribute newspapers in the region where he lived;
- 1867: Simeon Denham patented a machine to dispense stamps, the first fully automatic vending machine.
Inventors, engineers, and scholars have worked hard to improve a technology that is so present to us. And this revolutionary machine will follow the evolution of humankind.
The Technological Evolution of Vending Machines and Their Demand
It is no surprise that the technological revolution has dramatically changed how we do our everyday tasks. Automation is one area where it is taking a big step forward. Look at simple things like intelligent lights, automatic residential gates, and automatic vacuum cleaners. These are clear examples of how we can have precise and optimized control of everyday tasks.
The sales sector has been included in these innovations. The reality is that this sector presents several significant evolutions capable of changing even consumer habits. In this sense, you need to pay special attention to vending industry machines.
According to “grand view search,” the global vending machine industry market was valued at $51.91 billion in 2021. It is expected to register a compound annual growth rate (CAGR) of 10.7% from 2022 to 2030[¹].
The benefits that vending machine industry present to consumers and vending business are wide-ranging. Eating low-fat vending snack purchases, sweets, and drinks are crucially easy for consumers. In addition, the business owner has greater control over sales data. With the most modern vending machines, it is possible to remotely observe how many items have already been sold.
This saves the entrepreneur a great deal of time. There is no need to randomly check whether the machine is full of products. Restocking is only necessary when the device signals that it is out of stock.
Suppose you need to gain experience in starting a vending machine business. In that case, studying some strategies for success in this business is necessary. One of the critical decisions for you is your product’s price.
In the consumer’s view, price increase is one of the main aspects in determining whether or not they will buy the vending machine product. If you price your product too low, you will not have a good profit margin to sustain your business. On the other hand, if you price your products too high, consumers may choose to avoid buying the product from your machine. Therefore, you must set a fair price to achieve good sales and profit margins.
Developing strategies in sales type of pricing levels is of paramount importance. Below we will analyze some steps that you can take:
Operating Expenses: It is necessary to look beyond the products sold. The operational expenses, such as maintenance and repairs of vending machines and vending machine operator must be observed. You need to confirm that the prices of the products are high enough to cover these expenses.
Payment Options: you need to decide on your vending machine’s payment options. You may immediately think that only cash should be accepted. Still, credit cards and mobile payments are top-rated these days. It is interesting to research
Market Supply and Demand Analysis: no matter what product you sell, you should always analyze the supply and demand for your product. You can charge a higher price when there is high demand for your products and low supply. Conversely, when there is insufficient demand and increased supply, you should lower the value of your products to cope with the competition.
Competition: As mentioned in the tip above, you need to know how to deal with competition. See if there are vending machines in your area, and see if their prices are competitive. You have to look at the competition to see their products and how good they are. Always pay attention to quality.
Cover Product Costs: It is essential to analyze the costs of each product. If there are shipping or packaging costs. This way, you can calculate if the price you set is high enough to cover these costs.
Analyze the Sales Demographic Location: an essential tip is to analyze the demographics of your customer base. Customers who are stricter on price tend to buy things at lower values. If this is the case, keep your costs lower to increase sales. On the other hand, if you notice that your customers need to be more discerning with high values, you can charge more for the products.
Profit Margins: you should consider making a profit margin markup. If you buy a product from your supplier for $3 and your profit margin is 100%, then you need to charge $6 for the product. So the profit margin you choose depends on several varieties, such as competition, quality of your products, periodic maintenance, etc. Always aim to keep a profit margin a little higher than necessary; this way, you will protect yourself from possible contingencies, such as increased maintenance costs.
Investment in New Technologies: investing in vending machines with a range of technological resources requires a more significant financial investment, resulting in greater efficiency and profitability in your business.
The latest vending machine software can analyze product sales by location and which product was sold. These modern vending machine industry can provide sales data, inventory data, and much more information. This data can serve you as a good business manager to remove items that are not as profitable or adjust product prices. It is also important to note the versatility of the equipment and its payment options, which should be as diverse as possible.
Your customer is increasingly looking for faster ways to pay. Payment by card readers or contactless payment systems is an excellent example of this investment. Payment can even be made through your customer’s SmartWatch, who, for security reasons, prefers not to take some money out of his pocket or wallet.
Variety: Each of your customers may prefer snacks from vending machines and drink machines. For this reason, the combination of products in your vending machine should be prominent. Besides drinks, healthful food, snacks, and other foods, other devices sell accessories for SmartPhones, such as cell phone chargers, headsets, and various technological equipment. In this sense, it is necessary to analyze your target audience. For example, a university vending machine company with specialized products would be very welcome.
Oscillate the price: besides these excellent strategies to succeed in the vending machine market, remember the basics: different test prices. The basics work here: if you see that sales prices increase when you lower prices, you need to set that price as a starting point. If you need clarification on pricing your product, you must observe how your customers respond to different prices. You can try lowering or raising product prices and tracking your customers’ responses.
In this article, we have seen that to be successful in fundraising with vending machines, we must maintain several fundamental strategies. How to keep the profit vending machines, ensure their efficiency, and always stay informed about the demand of your customers.
Paul Martinez is the founder of EcomSidekick.com. He is an expert in the areas of finance, real estate, eCommerce, traffic and conversion.
Join him on EcomSidekick.com to learn how to improve your financial life and excel in these areas. Before starting this media site, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.