One of my favorite passive income ideas was to actually start a Vending Machine business and develop it into a true passive income that requires very little of my time and the start up investment was minimal.
So How to create passive income with vending machines. The answer is very simple, start small and keep reinvesting until you can happily take out all the income. For any vending machine to be successful you will need to know what type of machines you want to use, where to buy them and how to find locations for them.
Vending machines are a great business, but are not the most profitable business out there. Depending on the location your vending machines will realistically earn you between $10 – $50 each profit. Seems a small income, but compound that from 5 or maybe 10 vending machines and it starts to look better and better, doesn’t it?
This type of business is a numbers game. The more machines in great locations the better the income. So how and where to start.
Well, first of all you need to know what vending machines types there are and also what works in your area. To find out what works in your area, you will just have to take a walk (or drive) and see the types of businesses that you have close by. If you have office buildings, chances are that they will have a staff room and they can make their own coffees, but if these buildings don’t have and shops nearby, then a can and snacks vending machine might work really well. If you have a lot of garages in your area, chances are that a coffee machine and even a snack machine might work a treat, as mechanics need too work in all sort of cold conditions, especially in the winter time.
If you have a lot of hair dressers in your area, then maybe a sweets vending machine might make you quite a nice income, as kids will always be attracted to them and parents will always try to keep the kids busy.
As you can see, you need to try to put yourself in the working man’s shoes and see how you can make that persons’ life easier with your vending machines. So as long as you can make that person’s life easier and make them more comfortable, the more money you will make, and the more welcoming they will be to the idea of placing one of your vending machines inside their business.
There are a lot of people online saying that you will need to offer a cut of your profits to the business owners and if that would be the case, it wouldn’t be profitable anymore. So don’t listen to all these people that only used a vending machine, and listen to somebody that actually owns a vending machine business.
The way I incentivise my customers is this. When I go to install any vending machine, I will show them how it works and offer 3-4 people for free a product from the machine, under the pretext that i am retesting the machine. This always puts me in a better light, and makes the business owners more friendly.
Also before Christmas, I go to the person that organizes the Christmas Night Out and give them $30-$40 and say that this is me giving back to them. This way my machines stay in the same locations for many years, in fact I have one vending machine that is been in the same location for 6 years and the owners have become friends of mine, and whenever other vending businesses come in and offer them a share of the profits, they tell them to jog on.
Types of Vending Machines
There are quite a few types of vending machines, and I will now show them and explain each and every one of them to you.
1. Candy Vending Machines or Gumball Machines
These machines usually sell gumballs or small sweets but can also sell small toys or stickers, and are usually aimed at children, as they are more inclined to be attracted by the bright colors and the treats within the machines.
The types of vending machines are coin operated and require no electricity, as they are manual. This means a coin is inserted in a slot and then a lever or a knob is turned. When turning the lever these machines drop the coin into the money collecting tray and also release a preset number or quantity of sweets or whatever the machine is loaded with.
The downside to these types of machines is that they are very light and if not placed in a good location, kids my push them down, or people might trip over them. Being lightweight, this also means that they are easy to steal, but most people put a chain around the leg of the machine to keep them secured.
The upside is that if you have one or more gumball machines in a good location with lots of kids, they can be considered a goldmine.
Also, the sweets can be bough in bulk and cost pennies. Usually profit margins on the products of these vending machines is between 100% and 200%.
Being a manual vending machine means that there are not many components, and if nothing gets jammed in the coin mechanism, they don’t ever break down. So maintenance costs are kept to a minimum.
2. Can and Snacks Vending Machines
These machines sell chilled canned drinks or snack or the combi machines that sell both cans and snacks, and are very well-placed in public areas, sporting areas but can be placed pretty much any location.
The types of vending machines are coin or banknote operated, but can also have card reading machines on them, making them pretty easy to use as they can pretty much accept any type of payment.
This type of machines require constant mains electricity and if they are equipped with a card reading terminal they require a phone line, an Ethernet connection or simply a WiFi signal to connect and authorize the sale.
The way these machines work is that a coin or bank note is inserted in the coin validator which ensures the authenticity of the coin or bank note, and also determines the value, and transforms it into machine credit. The customer can use it all to purchase drinks or after he purchased what s/he wanted, they can press the coin return button which dispenses the change.
The downside to these types of machines is that they are very heavy and are a nightmare to place in areas that require stair access or are in tight spaces. Also, these machines (unless specially made) are not to be placed in the open, and don’t really do well in cold and rain.
Because they can gather quite a fair amount of money, you might want to place them in areas where there are security cameras, or staff from the business you are installing them in.
Also, profits per item is usually between 20% and 30%, but although the margins are a lot smaller than sweets vending machines, they can be quite lucrative.
The upside is that one of these machines can take up to 400 products and that means that refilling can happen once a week or once every 2 weeks depending on location.
These types of machines usually require programming and servicing, but that can be quite cheap if you purchase a good machine from a reliable source.
The most common problem with them is usually the coin validator or the refrigeration unit, but local technicians usually fix the quite fast and cheap.
3. Condom and Personal Hygiene Vending Machines
These types of machines are quite common in rest rooms or hotels.
As most of them don’t require any mains power or are battery operated, they can be placed pretty much in any location, and are quite light.
Machines like these can sell condoms, male enhancing pills or feminine hygiene products. The margins on this type of products is usually quite small, between 10% and 20%.
Condom vending machines are good to have in your business to help you get in with a business, so that later on you can get cans and snacks vending machines in, as I found they are not really profitable.
The Downside to these machines is that they don’t take that many products, between 10 and 20 products per selection, and the prices are quite small.
The upside to having this type of vending machines is that they will be a steady income and people are very used to seeing them and using them.
4. Coffee Vending Machines
Coffeee Vending Machines can be quite lucrative especially if they are placed in waiting areas like bus stations, airports or train stations, as commuters would always enjoy a hot brew whilst waiting to get home or on their way to work.
Coffee Vending Machines come as 2 different types:
a. In Cup Vending Machines
This type are the ones where the product consists of ready filled cups with instant coffee and only the sugar gets added and hot water
b. Fresh Roast Vending Machines
These machines grind the coffee and mixes everything and does the brew and then fills up an empty cup.
The downside to these machines is that they require constant mains power and most of them also require water connections with purifying filters.
The servicing on these machines needs to be done almost daily or at least every 2 days, so having a machine installed quite far from where you live might be quite annoying and are quite fragile and tend to break down every few months.
The good side to owning a coffee vending machine is that the profit margin can be phenomenal. Let’s say that a coffee costs you $0.10 to buy and you sell it for $1 this means you are making a 900%profit per product.
Also, these machines can sell a large variety of coffee selections, but also soups and teas, so they are quite a good investment.
How Much Does a Vending Machine Cost
The price depend on what type of vending machine you are buying and also if they are new, refurbished or used.
Buying a brand new vending machine can be very expensive, but you can usually expect at least 2 years with no breakdowns, and if they were to happen they are usually covered by warranty.
Here are some average prices for vending machines. These can be higher or lower depending on where you live.
1. Sweets Vending Machines: Used $50 -$100 , Refurbished $100-$250 , New $400-$700
2. Can and Snacks Vending Machine: Used $400-$1000, Refurbished $1000-$2000, New $2000-$7000
3. Condom Vending Machines: Used $100-$200, Refurbished $200-$300, New $500-$1000
4. Coffee Vending Machines: Used $200-$700, Refurbished $700-$1200, New $1500-£3000
These prices are just a guidline and you might find that you can only get them cheaper or more expensive depending on the model, how old the machines are, what capabilities they have, etc.
Where to Buy A Vending Machine
When first starting your Vending Machine Business you might want to start off with searching ebay, amazon or your local craiglist and see what price ranges there are in your area.
I DON’T recommend you go for the cheapest in your budget as you will find that the cheaper the vending machines are the more problems they will have and the more it is going to cost you in the long run.
If possible always buy refurbished machines as they usually come with guarantees and that will make it a lot easier for you as a novice to learn how they operate and how to maintain them.
I would also NOT recommend buying your machines before having a location for them.
You might want to buy a coffee machine, but when you go looking for location a business owner wants a cans vending machine, then that means the money you just spent on your coffee machine will be dormant, and you will have to get money from somewhere else in order to get what your customer wants.
Always buy a machine after you have secured a location. Research beforehand all the details and have a list prepared of machines you can buy with dimensions and requirements and go location hunting, That is the best way to get your money to work for you in this business.
What To Look Out For When Buying a Vending Machine
Always test absolutely every button and every feature on any machine you are looking to buy.
For example if the vending machine you are looking to buy is a snack and cans vending machine, make sure every button works, you are shown how to program it and to put prices and also make sure all the spirals are turning properly and the machine doesn’t make any weird noises.
Also, another thing to check is that the refrigeration unit or the heater are working accordingly. Don’t worry about spending too much time testing it before you part with your hard-earned cash, as any seller will be confident that their machine work perfect or they should advertise it as spares or repair.
Stay away from tatty looking machines as business owners will not want an eyesore in their premises, and don’t buy a fixer upper as you don’t have any experience at this point with how to fix these machines, and some of them are very complicated.
The Most important part to test is the coin or banknote validator. Bring with you every possible type of coin or note that that machine can use and have 2-3 of each. As if these validators don’t work, you can’t make money, and they are complicated as they have a lot of sensors and are very intricate pieces of equipment.
How To Find Locations
This is the hard part.
I’m saying it’s the hard part as the isn’t an app or google search service for this. Finding a location for your vending machines requires legwork and talking to people.
Start by asking your friends and family if they know where you can place them. Just be honest and tell them that you are starting a vending machine business and ask them if they know anybody that owns a business and if they can introduce you to those business owners.
And then take it to the street. Just walk around you area and go into businesses and ask them if they would like a machine placed there free of charge. Explain you will clean, service and restock them weekly and also tell them that it would help their staff have a better morale as they don’t have to go too far to get a sugar rush.
I have found that garages are also good places to put vending machines, as people are always waiting on tires getting changed, their car being serviced, etc and sometimes they might like a snack or a cold drink while they are waiting.
Anywhere there are people you can place a vending machine.
Places like: Gyms, Garages, Office Buildings, Town Halls, Hair Dressers, Vets offices, etc.
The hardest part is getting started. So STOP procrastinating and get started with your Passive Income with Vending Machines, and a year from now remember this day when you actually got started.