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Energize Your Vending! I Vending Basics At first glance, the vending business appears to be simple: Coins in, product out. In reality, the vending business is quite complex. By understanding the concerns and constraints of the vending operator, vending sites become informed and realistic partners. Vending is a for - profit business that requires an acceptable profit margin from each machine. Profitability is determined by sales price relative to the cost of: • Vended products • Waste (damaged, outdated or unsuccessful product that MM must be disposed) • Overhead (warehouse space, trucks, fuel, vending equipment, insurance) • Labor (route drivers, warehouse personnel, service technicians, office support, management) • Commissions to the vending site or other entity (such as sports programs in schools or the Commission on Services for the Blind in many government buildings.) Increased costs in any of these areas will negatively impact the operator's profit margin. If profits dwindle too much, the operator must adjust product mix, pricing, service schedule, and /or commissions. Sometimes, the operator determines that the best business decision is to remove vending machines from a particular site if sales are insufficient to maintain vending profitably. The following tips can help avoid such a scenario: • Tip 1: The amount of space allocated to Fit PickTM choices in a vending machine must balance the customers' wants with the product's sales potential and shelf life considerations. • Tip 2: A staggered approach to introducing Fit Pick works well. Dedicating a minimum of 25% to a maximum of 50% of total space to Fit PickTM supports the concept of individual choice while gradually introducing change to resistant customers. It is also more likely to maintain the vendor's sales at an acceptable business level. The ratio F7