If you’re interested in starting a business, you must make sure you can make money first. After all, if the profit margin is too low or there isn’t enough demand, you’re setting yourself up for failure before you can even begin. Fortunately, vending machine companies are easy to start and require less capital than other businesses. However, is owning a vending machine profitable? Let’s look at the industry and break down individual factors that can affect the answer.

A Look at the Vending Machine Industry

In 2023, the global vending machine industry is expected to generate up to $42 billion, an increase of about 11 percent compared to 2022. The industry is seeing steady, consistent growth, and demand continues to rise.

But, while a rising tide may lift all boats, this level of growth is not universal, nor is it identical across markets, locations, and machine types. Also, while sales declined by almost half in 2020, they’re starting to rebound as the world returns to normal, creating a shift in demand regarding where machines are located and the contents inside.

So, to maximize your profitability, you must understand what drives consumer demand and motivates an average customer to visit and spend money at a vending machine. From there, success is inevitable, not theoretical.

Factors That Affect Your Profitability

On average, a vending machine has about a 20 percent profit margin. However, there are many factors and variables at play that can affect that percentage. Let’s break down each component and how to mitigate potential setbacks and obstacles.

Types of Products

Vending machines are becoming far more high-tech and adaptable to consumer demands. While snacks and beverages have always been mainstays, new devices offer hot foods (i.e., pizza), unique beverage options, and even freshly-prepared dishes. In some parts of the world, buying grocery items like fresh fish and vegetables from a vending machine is also normal.

Overall, snacks and sodas have the highest profit margin because they have a long shelf life and can be purchased in bulk. Other specialty items may cost more upfront, meaning you must either increase the markup for individual products or reduce your overall profit margin.

The shelf life of a product can also affect your profitability if you don’t have a high-traffic machine. No one wants to buy from a machine containing expired foods, so you could lose money in two ways – from unsellable products and refunds from angry customers.

Location

More than anything else, the location of your vending machine will dictate how much money you can expect to make from it. Fortunately, vending machines have relatively low overhead since you can restock them and keep them in good condition with minimal oversight. Overall, your location can affect your profitability in a few different ways, such as:

• Traffic – Areas with lots of foot traffic already are prime real estate for vending machines. Shopping malls, colleges, and resorts are all excellent examples.
• Competition – If other vending machines are nearby, you need to price your products competitively. Otherwise, why should someone spend an extra dollar at your machine if another sells the same product for less?
• Demand – Sometimes, high levels of foot traffic don’t translate to better sales. For example, if you’re selling beverages next to a restaurant, consumers may be less inclined to buy from your machine when they could get free refills next door. Conversely, if your machine is the only option for guests to get food or beverages, the high demand means you can charge more and increase your profit margin immediately.

Contract With Property Owner

One of the biggest challenges of running a vending machine business is finding stable locations for your machines. Generally, you must sign a contract with a property owner to maintain and restock the machine for a fee. The standard contract fee is between 10 and 25 percent of your sales.

Ideally, the percentage relates to the traffic and sales you can expect from the location. For example, property owners with a large, captive audience may demand a bigger cut because they know you’ll make a lot of money. Then, you have to set your prices accordingly, so you don’t eat into your profits too much.

Number of Machines

No one is ever going to get rich by managing a single machine. While you may only have one machine when you’re first starting, true success comes from owning and operating as many machines as possible. This way, your profit margin doesn’t depend on a single location but an average earnings rate from multiple spots.

One machine may average $10 or $50 per day, while another might rake in up to $100 or $150 per day. By aggregating the earnings from all machines, you can create a more stable and acceptable profit margin.

Overhead Costs

While vending machines don’t require as much infrastructure or overhead as other moneymaking opportunities, they still need basic services, such as:

• Restocking – You’ll likely handle this yourself but might also outsource the job to someone else. In this case, you need to consider labor costs when calculating your profit margin.
• Cleaning and Maintenance – If you buy high-quality new machines from a manufacturer, you can likely go months between service visits. However, used machines may require more maintenance, especially if they use complex parts. As far as cleaning goes, you want to keep the front of the machine looking immaculate and clean up any spills that may occur inside.

Start Making Passive Income with a Vending Machine Business!

Overall, ingenuity and perseverance make it easy to make a decent living via vending machines. Once you have locations, you can purchase the best machines from Vend-Co. Browse our products online and contact us when you’re ready to turn your dream of passive income into a reality!