A final thing to consider is the purchasing option you choose. There are four main ways you can choose to pay for the vending machine you decide to go with:
- Purchase outright
1. Buy a Vending Machine Outright
Buying a vending machine outright is the most straightforward way of purchasing a vending machine, a one-time payment and the machine is instantly an asset to your business. However, the ability to purchase outright will depend on the cash flow of your business and the amount you wish to spend on your office vending machine. If you want a more high-end, expensive solution, it may be more cost-effective to spread the cost of your vending machine over a lease period.
Another factor to consider when purchasing outright is the responsibility of maintaining and servicing the vending machine which falls directly onto you as the owner. With other purchase options such as leasing and renting, this responsibility may be solely or partly on the supplier depending on your lease/rent agreement. You will need to factor in the potential costs of service call-out and breakdown costs when purchasing a vending machine outright. You do not want to start an office riot by not being able to repair a broken machine, leaving your staff under-caffeinated and hungry.
Choosing the right purchase option is critical, and will depend on your business type and available cash flow.
2. Lease a Vending Machine
If you cannot afford the initial outlay of buying one, then leasing a vending machine may be a better option for you. With this purchase option you usually have the possibility to own the machine when the lease comes to an end. Leasing agreements usually span over a 3-5 year period during which time the ownership of the vending machine remains with the supplier. This option allows you to spread the costs of the machine with manageable monthly payments. By choosing this option you are able to retain cash flow within your business for further investments. Lease payments may also be tax deductible unlike rental payments.
When searching for a lease, make sure you compare a range of different quotes to make sure you get the right package for you. It can be hard to directly compare quotes due to the differences in services and packages available so be aware that the cheapest quote may not always be the best for you.
It’s worth noting that leasing tends to end up costing more than buying outright due to interest rates being applied. It is nearly always cheaper to purchase a vending machine upfront. Lease rates will often depend on credit rating and lease agreements are usually subject to a credit check. If your credit history isn’t great or you’re a new start-up, then leasing may not be the best option for you.
3. Rent a Vending Machine
Another option is rental. Renting a vending machine can be a good option if you only wish to have a machine in place for a short amount of time, maybe while you’re waiting for a full kitchen to be installed. It can also be a good option if you don’t have the capital to purchase outright or adequate credit history to enter into a lease agreement. Rental prices are usually charged weekly making them a small manageable amount each week from around £8 to about £20 per week plus VAT. Rental is usually available on the larger machine types which serve drinks and snacks. Smaller machines may only be available to buy outright.
Other advantages to renting is that most of the servicing and maintenance responsibilities fall on the supplier so you don’t have to worry about paying for any services or call outs. However, this will vary from supplier to supplier so make sure you check that this cost is covered.
A downside of renting is that there isn’t the option to own the vending machine so the money you spend on renting the machine is leaving the business. However, some of these costs may be claimed back from profits from sales of stock. Renting does, however, give you a level of flexibility to change your vending machine with ease if the needs of your business change or you decide to expand and see a bigger machine.
4. Free-on-loan Vending Machines
There is also the option to have a free vending machine installed and stocked in your business. These type of agreement is called a “free-on-loan” agreement whereby the supplier will install and stock your vending machine for ‘free’. We say ‘free vending machine’ cautiously because, as you probably suspected, there is a catch: any profits made through sales of products goes back to the supplier. This means that although the vending machine is free and doesn’t cost you anything, it also doesn’t make you anything either.
There are also a number of limitations involved with free vending machines such as a minimal amount of employees you have in order to ensure sales levels are met and the range of products you will be able to offer. We recommend carefully reading the terms of any free-on-loan agreements to make sure there are no hidden clauses that catch you out.
Free vending machines can work well in institutions such as education centres or public spaces, where the emphasis is more on customer experience and meeting needs rather than making a profit. Or, a free vending machine could work in an organisation where the appeal of convenience for drinks/snacks is an essential part of the overall proposition, e.g. shared workspaces.