Vending Machine Business Calculator: Project Your Profits

How to Use the Vending Machine Business Calculator

I built the vending machine business calculator to help entrepreneurs evaluate the profit potential of starting a vending machine business. After interviewing successful vending machine operators and researching industry data, I created this tool to give you realistic projections based on your specific costs, location arrangements, and revenue streams.

This calculator takes into account the key variables that affect vending machine profitability, including number of machines, average vends per month, product pricing, cost of goods, location fees, and additional expenses. The results can help you determine if the business is worth persuing further.

Vending Machine Industry Overview

The vending machine industry is valued at $7.4 billion dollars in the United States according to IBIS World. These vending machines could contain everything from soda, snacks, chips, hand sanitizer, gum, fruit, and I've even seen trading cards and electronics being sold out of vending machines at some airports.

One of the most appealing aspects of the vending machine industry is that it's made up of thousands of independent operators, with no single entity owning more than 5% of the market. This creates a level playing field where small entrepreneurs can build profitable businesses by focusing on specific locations or product niches.

According to Jason Andrew of the Stark Numbers Podcast, "The average vending machine makes around $5k – $6k of profit per year (excluding labour). A machine costs about the same to buy brand new." This gives you a general idea of the potential return on investment, though actual results will vary based on location, product selection, and operational efficiency.

To help make this calculator better, I setup a virtual meeting with A.J. MacQuarrie, who founded a healthy vending machine company called KarmaBoxes. A.J. shared valuable insights about the vending machine business that I've incorporated into the default settings of this calculator.

According to A.J., a solid back-of-the-napkin revenue estimate for a vending location is:

• 10 – 25 vends per day, per vending machine (or 300 - 750 vends per month).
• Net profit of about $1.00 per transaction.
• $10 – $25 in net profit per day per location.

Based on these figures, A.J. provided these ball-park monthly net revenue you could use as an estimate:

• Single healthy vending machine: $300
• Five vending machines: $1,500
• Ten vending locations: $3,000

One key recommendation from A.J. is to start with at least 5 vending machines so that you can find at least one highly profitable location.

"I recommend that you start out with a minimum of 5 vending machines when you're starting a business. This gives you the opportunity to give this business a legitimate try and really gives you the sense of what operating this type of business will be like. If you start with the goal of at least 5 vending machines, you get a better chance of identifying a higher profit location that will encourage you to move ahead and continue growing the business."

A.J. also emphasized the flexibility of the vending machine business model. "You're not stuck and tied to one location. If it's like oh this area is not working well, let's drive down the block."

Regarding the time commitment required, A.J. pointed out that "I think the beauty of this business is that it is kind of a part-time business or it can be initially. You can get your feet wet with say ten vending machines. And if you have ten vending machines it's not going to take up too much of your time, maybe 10 - 14 hours per week."

Setting Prices for Vending Machine Items

When determining how much to charge for items in your vending machines, Naturals2Go, an unattended retail company, suggests following the industry standard of doubling the cost of vending machine items to ensure profit. So if a candy bar costs you $1 to stock, you would sell it for $2 in a vending machine.

While this 2X markup guidance is solid, it's important to check out the competition prices in your area to understand the local market. For example, I recently paid $6.00 for a 20 oz. Pepsi inside the Las Vegas Airport. Clearly, this vendor was able to go far beyond the 2X markup guideline because of the captive audience at this location.

Step-by-Step Guide to Using the Calculator

Step 1: Enter Basic Machine Information

Start by entering:

• Business Name (optional)
• Number of Vending Machines (default is 5, based on A.J. MacQuarrie's recommendation).
• Average Vends Per Month (default is 300, based on the conservative estimate from A.J. MacQuarrie).
• Average Sale Amount ($) - remember the 2X markup guideline.
• Average Cost per Item ($) - your wholesale cost.

Step 2: Select Location Arrangement

Choose the type of arrangement you have with property owners.

• No Fee - You place machines for free (ideal but rare for premium locations). Some property owners will actually allow you to place the vending machine for free as a benefit to staff or customers.
• Monthly Rental Fee - You pay a fixed monthly amount per machine. Basically, you pay rent to have a vending machine placed somewhere.
• Revenue Share - You pay a percentage of sales (typically around 10% - 20%) to the property owner in exchange for placing a machine.

Step 3: Advanced Options (Optional)

For a more precise analysis, enable Advanced Options to configure each vending machine individually.

• Enter location descriptions.
• Set machine-specific vend volumes.
• Customize pricing and costs for each machine.
• Set different location arrangements for each machine.

This feature is particularly useful if you have machines in varying locations with different performance levels. Because the reality is, you're going to end up with some high performers and low performers.

Step 4: Add Monthly Expenses

Enter your regular expenses. Typical monthly expenses for a vending business might include:

• Labor Costs (Jason Andrew suggests assuming about 1 hour per week per machine)
• Travel Expenses (fuel and vehicle maintenance)
• Additional costs (insurance, storage, admin fees, etc.)

Step 5: Calculate and Analyze Results

Click "Calculate Vending Machine Profits" to generate detailed financial projections.

• Monthly and annual revenue
• Detailed breakdown of costs
• Net profit calculations
• Profit per machine
• Estimated labor hours
• Visual charts showing performance metrics

You can copy the results to your clipboard or export them as a CSV file to include in a business plan.

Real-World Example: Starting with 5 Machines

This example aligns with A.J. MacQuarrie's estimate of about $1,500 monthly profit from five vending machines. While this may not seem like a huge amount of money, remember that this is a business you can start part-time or on the weekend with relatively low startup costs, and scale gradually as you identify profitable locations.

The Reality of Running a Vending Machine Business

While vending machines can provide a relatively passive income stream, it's important to understand the challenges of this business as well.

Time Investment

Jason Andrew of the Stark Numbers Podcast suggests you can assume a machine takes about 1 hour to maintain and stock per week. This means that with 5 machines, you're looking at approximately 20 hours per month of work keeping the machines full. Don't forget to include drive-time in your labor estimates too.

Location Challenges

Finding and securing profitable locations can be challenging. Many prime spots already have vending machines in place. You'll need to develop a sales approach and value proposition to sell property owners on giving your machines a try.

Machine Maintenance

Vending machines are mechanical devices that will occasionally malfunction. Budget for repairs and maintenance, especially if you purchase used machines to save on startup costs.

This vending machine profit calculator helps you decide whether or not to start this business. As with any real business, there will be challenges. But I also like how this is something that could be started on the side with a job and grown into a business that's pretty valuable.

Brett Lindenberg

Brett Lindenberg is the co-founder of BackofNapkin.co. Brett has interviewed hundreds of entrepreneurs, gathering their stories and extracting the insights behind successful startups big and small. His passion lies in making startup calculations accessible so every dreamer has the numbers they need to take the leap. At home, Brett enjoys life’s best calculations: quality time with his wife and two daughters.

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