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we save them valuable time by allow- ing their employees to purchase food without ever leaving their facility. Who was the frst vending company to offer money for their service? And how did commissions go from 5 per- cent to 50 percent? Which, of course, leads to the big question for operators, how does one make money at these high commission rate accounts? History of commissions Here's what happened. Company B, in looking for more accounts, went into a location that had com- pany A and decided that he could get the account by doing something different. He wasn't going to offer better pricing or newer equipment, and company A was doing a great job in servicing the account, so he decided to offer the account money for replacing company A in the form of a percentage of sales. He may have offered just 5 percent but now the foodgates had opened and that sce- nario simply kept repeating itself over and over with the percentage amount always increasing. In the quest for more and more accounts, someone fnally got stupid and started throwing amounts of 30, 40 and even higher percentages until they fnally looked at their proft and loss statement and saw that they were losing money. "REALLY?" So now, what could they do? Well they decided to become creative, they could still promise 40 percent commission, but would show the account sales numbers that were much less. They could pretend to be paying 40 percent but what they were really paying was a much lower percent of the actual sales, but hey, who would know? Birth of the R factor This is how we came to the inven- tion and implementation of the "R" factor (Reduction in Sales). In simple math, on a $5,000 per month Let's talk COMMISSIONS By Dominic Finelli, Contributing Editor For better or worse, commissions have been part of the vending industry for years. Despite high percentages, open communication with locations can help small vending operators afford them – when necessary. H Commission rates vary widely, but making a business case to the location can help. ow many industries compete to pay their clients a percentage of what they sell? We supply the equip- ment and the product, keep their machines clean and stocked while passing on none of the cost, yet we pay them money for that privilege. One could argue that they give us access to their employees. However, iStockPhoto 24 Automatic Merchandiser VendingMarketWatch.com April 2014 ADVICE TAILORED TO THE 1 TO 4 ROUTE OPERATION S M A L L O P autm_24-25_0414SmallOp_F.indd 24 3/26/14 9:50 AM