| The valuation of vending machine equipment is | | | | 5. Operational value: Vending machines on location |
| based on several factors: | | | | develop cash flow; they produce cash for your |
| 1. Storage value | | | | operation. The amount of cash generated |
| 2. Collector's value | | | | depends upon the location, but if placed properly, |
| 3. Scrap value | | | | one can expect positive cash flow from vending |
| 4. Parts value | | | | machines. The operational value is the amount of |
| 5. Operational value | | | | single net cash flow that can be generated by the |
| 6. Market value | | | | vending machine in 9 months. Single net cash flow |
| In trying to value machines, each of these | | | | is the total revenue minus the cost of goods sold. |
| valuations is significant. | | | | Let's do the math: Account A: $400 per month |
| 1. Storage value: Machines in storage are generally | | | | gross sales |
| considered liabilities, and they cost you money | | | | $50 Cost of goods sold (100% margin) |
| each month. Even if you store the machines in | | | | Single net cash flow |
| your garage, they're taking space that could be | | | | 9 Months |
| used for something else (like your car), which | | | | Equipment Value |
| leaves them a liability. | | | | $400 - $200 = $200 x 9 months = $1800 |
| 2. Collector's value: If you have an extremely old | | | | equipment value |
| vending machine, you might have a piece of | | | | This formula is a quick guide to equipment |
| equipment that is collectable. The most notable | | | | placement. If you can accurately forecast your |
| examples are rounded top soda machines. These | | | | sales, you can determine how much to spend on |
| machines were made in the 1950s, and are | | | | equipment. Your goal should be to violate this |
| examples of the initial entry into the cold drink | | | | formula by spending less on your equipment. This |
| vending era. They were usually purchased by | | | | will make your accounts more profitable. |
| bottling companies and painted with a brand of | | | | 6. Market value: Market value is the amount of |
| soda (Coke, Pepsi, Crush, etc.). They were usually | | | | money you will pay for a machine in the open |
| single-selection (one flavor) and operated with | | | | market. Market value falls into two categories: |
| primitive coin acceptance. Snack machines are | | | | new and used. New values for vending machines |
| much the same; they were usually a mechanical | | | | are determined by the manufacturer and sales |
| vend process with primitive coin acceptance. To | | | | organization. Like all value, the value of new |
| be valuable, they need to be working and in | | | | vending machines depends on options, name |
| pristine condition. Few of these machines still exist; | | | | brand, warranty, reliability, standardization, |
| just because a machine is old does not mean it is | | | | versatility, and so forth. Not all vending machines |
| valuable. | | | | are created equal; some brands have features |
| 3. Scrap value: All old vending equipment has a | | | | that are superior to others, and it is critical that |
| scrap value, if nothing else. Scrap is the lowest | | | | the dealer stands behind that equipment and |
| value available and is calculated by weight. | | | | honors his warranties. Used equipment can be |
| Because vending machines are generally made of | | | | purchased several ways - through want ads, |
| steel, they're heavy. The scrap value of steel | | | | vending companies going out of business or |
| fluctuates frequently, based on world demand. | | | | updating equipment, and from dealers. Used |
| Scrap value is best figured by calling a local | | | | values are determined by many of the same |
| shredding facility that deals in scrap metal. Make | | | | factors, but also include the seller's motivation to |
| sure to figure in the cost of transportation, as this | | | | move the equipment. |
| figure can make it unprofitable to scrap machines. | | | | When choosing a vending machine dealer, |
| I personally use a local man who takes a truck | | | | remember that your dealer will become your |
| and trailer load (pickup with a flatbed trailer) to | | | | unofficial partner in the vending machine business. |
| the scrap yard; for his efforts, he keeps the | | | | A good dealer will have a solid business record |
| revenue. Unless the value of steel is extremely | | | | (dealers that have run vending machine companies |
| high, we do not generate revenue from this | | | | are preferred), should be honest, and have a list |
| process, but at no cost, we remove junk from | | | | of satisfied (and dissatisfied) customers you can |
| our facility. We do not "junk" a machine until we | | | | call. A quality dealer will carry several lines of new |
| have used all the available parts. | | | | equipment and have a service and refurbishment |
| 4. Parts value: Old vending equipment also has | | | | department for used equipment. Most quality |
| salvage value in the form of parts. The cost of | | | | dealers offer several levels of refurbished used |
| replacing individual parts from vending machines | | | | equipment to help you best meet your needs. |
| can often be recouped by scrapping parts from | | | | They usually have some type of financing |
| other machines. Replacement parts can be costly | | | | available, as well. Shop your rates and terms, |
| and requires time to obtain. If you have a | | | | because vending equipment is very difficult to |
| compromised machine, the parts value can far | | | | finance; ask your accountant for your best |
| exceed the machine value. Vend motors, | | | | finance solution. The dealer's service staff should |
| compressors, switches, computer boards, | | | | be available by telephone for quick suggestions on |
| changers, validators, spirals, coin chutes, glass, | | | | repair. They should have delivery services. |
| etc., are all available if you salvage the machine. | | | | Generally, a quality dealer has the ability to help |
| Our company has purchased machines (usually | | | | you with all facets of your business and should be |
| one that's been vandalized) intending to use it | | | | able to guide your decisions in an unbiased way. |
| strictly for parts. Repair parts are immediately | | | | Of course this all comes with a cost: most quality |
| available at a reduced cost. For example, snack | | | | dealers will be slightly more expensive than their |
| machines have 30 to 40 selections, which means | | | | competitors. |
| 30 to 40 vend motors and spirals. New vend | | | | Keep in mind, though, that you don't want to be |
| motors start at $10, spirals at $5 - so one | | | | "penny wise and pound foolish," as the old saying |
| machine yields $600 worth of motors and spirals. | | | | goes. The added initial cost of your equipment will |
| The glass is worth $50; trays are worth $15. | | | | be overcome by the added service you will |
| Nuts, bolts, specialty parts have some value. | | | | receive, and avoiding one simple mistake can |
| Changers and validators are worth $50 each. If | | | | generate thousands of dollars in added income. |
| you have the need, the parts value can add up | | | | Use your dealer as a source of information and |
| quickly. | | | | capitalize on that information. |