Strategic Pricing for Profit

In this module, Mike shows exactly how to price every SKU to achieve over 50% gross margins. Pricing is your most powerful lever and can instantly double your profits if done right.

Start with the Stack: COGS, Fees & Rev Share

Your cost of goods (COGS) must stay under 30% of the vend price. Add 8–12% for cashless and SaaS fees. If you promised rev share, include 0–10%—but negotiate that last. Do your own fills early; outsource after 5–6 machines.

For example, Red Bull costs $1.85 and sells at $4.50. Even after fees, you keep ~59% margin. That’s solid green zone performance.

The 3-Step Formula: Cost, Multiple, Anchor

Mike’s no-spreadsheet method is simple.

1. Find your landed cost (Sam’s, Costco, or Vistar).

2. Apply the right multiple: drinks ×2, snacks ×2, premium water ×3–4.

3. Sanity check prices next to anchors like Celsius and Alani.

Price Pellegrino at $4 next to a $2.25 Coke. This positioning makes customers accept the premium without hesitation.

Margin Rockets: Four Simple Upgrades

Drinks have long shelf lives and can hit 200–400% markups. Impulse needs like tampons or toothpaste? 600–1,000% margins. Bundle deals like drink + protein bar save $0.50 but increase basket size.

Move high-margin items to eye level. Drop underperformers lower on the shelf. Merchandising changes = instant lift.

Monthly Tweaks & Flash Discounts

Run monthly reports. If a SKU has <10% sell-through, discount it 10% for 2 weeks. Let the machine auto-adjust the price. Use multi-buy deals to clear volume (e.g., 2 Sprites, $0.25 off each).

If an item drops below 30% margin or spoils often—it’s out.

Always match sticker and kiosk prices the same day to maintain customer trust.