How To Start a Vending Machine Business (2024)

In 1888, an American inventor named Thomas Adams introduced the first vending machines in New York City, selling his Tutti-Frutti chewing gum. Throughout the 20th century, new technologies emerged that allowed automatic vending machines to sell products like drinks and snacks.

Today, the vending machine market expands far beyond chips and soda, with machines now featuring a variety of products at airports, office buildings, shops, parks, libraries, and gyms. For example, Benefit Cosmetics sells beauty products from vending machines in airports and shopping centers.

As the vending machine market continues to thrive, entrepreneurs can explore ways to sell their products and reach new customers through vending machines.

Follow these steps to get started with your own vending machine business:

1. Perform market research

Market research is the process of gathering relevant information about consumer behavior and trends in the marketplace. Before starting your vending machine business, study the vending machine industry by assessing the competition in the area where you plan to operate your business.

What does the vending machine market look like in your area? What types of vending machine businesses are operating in the areas with the most foot traffic? Are there potential locations that don’t currently have vending machines? Answering these questions can help you determine the market demand for vending machines in your area. Analyze your competition to find gaps in the market.

2. Choose a product

Using your market research as reference, brainstorm product ideas that fill a need or solve a problem in your target market. For example, you might discover travelers at your local airport or bus stations would use a vending machine selling tech accessories like phone chargers or headphones, or that there’s a need for a vending machine at your local laundromat selling dryer sheets and fabric softener.

3. Set up your business

Write a business plan that outlines your company, defines your target audience, and explains how your offerings will add value to your customers. Decide on a business name and business structure (for example, an LLC or an S corp). Obtain any necessary licenses or permits for running a vending machine business in your area. Apply for an employer identification number (EIN) from the IRS, and set up a business bank account.

4. Buy a vending machine

Once you’ve determined what products you’re going to sell, consider your vending machine options. Machines typically cost between $2,000 and $10,000. Mechanical vending machines are the older machines typically used for drinks and snacks. There are also new machines with advanced features like touch screens and mobile payments. You can find a used machine through a marketplace online, buy directly from a wholesaler, or invest in a new machine directly from a manufacturer.

5. Find a location

Make a list of the areas where you believe your specific products could attract customers. Approach local businesses, corporations, or government entities that own areas where you’re considering placing vending machines. Look into public spaces like parks or pools, as well as commercial spaces like office buildings, apartment complexes, and shopping centers.

Once you find a location willing to let you set up your vending machines, negotiate terms with the property owners. (You’ll typically pay them between 5% and 25%, depending on the location). If you’re setting up a vending machine in a high traffic area, you’ll likely need to pay rent for your vending machine. Start with one location before investing in a whole fleet of vending machines.

6. Stock your inventory

Make sure your vending machines are well stocked with your products. If you’ve invested in a new vending machine, you can monitor your inventory levels remotely with a vending management system (VMS). If your vending machine is unable to integrate VMS software, you’ll need to set up a regular schedule for checking inventory levels in person to make sure you’re not missing out on sales with an empty machine. To keep your vending machines profitable, you’ll also need to monitor them to make sure there are no maintenance problems that need to be fixed to continue making sales.

7. Adjust your strategy

If your vending machine includes VMS software, you can monitor real-time sales analytics to gain better insights into how your machines are performing. Running a profitable vending machine business requires the adaptability to change your offerings based on what customers are buying. For example, imagine you’ve set up a vending machine selling office supplies in a popular business park—you notice that customers are buying more pens than ink cartridges, and you adjust your inventory accordingly.

8. Scale your business

As you monitor and maintain your vending machines, keep track of your profit margins. Price your products high enough to make money beyond what you’re spending on inventory and maintenance but low enough to remain competitive and valuable to your customers. Use a free profit margin calculator to determine the pricing of your products.

If your vending machine business is increasingly profitable, you can invest in more machines to place in multiple locations. With a smart strategy for scaling your business, you can grow from only a few vending machines to a whole fleet.

How much do vending machines cost?

Vending machines typically range from around $2,000 for a standard bulk vending machine to more than $10,000 for a smart vending machine with advanced features and a vending management system.

Beyond the cost of the vending machine itself, you’ll also need to budget for inventory, which can start with a few hundred dollars for cheaper items like toys or snacks and range all the way up to several thousand for more expensive items like electronics.

Additionally, consider the costs of getting permits to operate a vending machine business in your specific area as well as the expenses associated with maintenance over time, which will vary depending on the type of machine you purchase.

Pros and cons of a vending machine business

Vending machines offer a few unique advantages, but before you commit, make a plan to address the downsides.

Pros

Vending machine businesses involve a reasonable startup cost and flexible hours that allow you to choose your own schedule. Here is a quick breakdown of some of the potential benefits to launching your own vending machine company:

Minimal startup and overhead costs. Vending machine businesses generally require low startup costs, allowing merchants to run vending machines even without major upfront investment.

Flexible hours. You can manage vending machines on your own time, making this type of business an option for busy professionals who want to start a side hustle.

Scalability opportunities. As you monitor your profits from one vending machine, you can choose to scale at your own pace by buying more machines as you grow.

Cons

There are drawbacks with this business model, including the competition and the time it takes to maintain. Here are some of the downsides to consider:

Time commitment. Running your own vending machine business requires a time commitment to set up your business, buy and maintain vending machines, purchase and restock inventory, and manage relationships with property owners.

Competitive market. Depending on your specific market, you can face fierce competition with larger, more established companies who already have their machines in the busiest potential locations for vending machines.

Security concerns. Since vending machines operate in open spaces, they can be vulnerable to theft and vandalism.

How to start a vending machine business FAQ

How profitable is a vending machine?

The profitability of a vending machine business can vary widely based on the location of the vending machine and the type of products on offer, but on average a vending machine turns a profit of several thousand dollars per year.

How to find a location for a vending machine?

Research local businesses in your area that have high foot traffic, like office parks, universities, shopping centers, hotels, and gyms.

What can you sell in a vending machine?

You can sell a wide variety of products in vending machines, including tech accessories, office supplies, cosmetic products, apparel, toys, snacks, and drinks.