Cody conducted a two-week experiment to determine the earning potential of different types of vending machines by testing placement, product selection, and design.
He installed three machines: a premium healthy snack machine, a standard/unhealthy snack machine, and a children's toy claw machine (“Plush Bus”), each in locations with high foot traffic.
The experiment compared profitability, management effort, and scalability of each approach, addressing technical issues and marketing strategies along the way.
Results showed gross revenue of $695 in two weeks ($1,391/month) across all machines, with key insights into margins, payback period, and business potential.
Action Items
ASAP – Cody: Replace out-of-stock or malfunctioning plushies in the Plush Bus.
ASAP – Cody: Continue monitoring and adjusting the card readers and cash acceptors for all machines.
ASAP – Cody: Substitute healthy snacks into the underperforming standard machine; monitor sales and parental feedback.
Immediate – Cody: Drop prices on premium products in the healthy vending machine and test impact on sales.
Ongoing – Cody: Track inventory and replenish based on top sellers and customer demand.
Ongoing – Cody: Collaborate with gym owners to promote machines via email and on-site signage.
Machine Selection, Cost, and Placement
Selected three vending machines: healthy snacks ($2,200), standard snacks ($2,200), and a plush claw machine (“Plush Bus” - $850); Total investment was approx. $5,250.
Focused on strategic machine placement in high-traffic gyms and family activity centers, with site approvals obtained from relevant owners/managers.
Machine presentation, personalization (murals/design), and targeted product selection were used to increase appeal.
Product Strategy and Pricing
Healthy machine stocked with premium, hard-to-find products at a higher price point ($2+ per item), with initial 30% gross margin built in.
Standard (unhealthy) machine targeted volume sales of lower-cost snacks ($1–$3 per item) with similar target margins.
Plush Bus filled with a mix of generic and branded toys popular with children; machine difficulty adjusted to control win rates and profitability.
Technical and Operational Issues
Early technical challenges (broken card readers, nonfunctional cash acceptors) led to lost sales and required urgent repairs and hardware replacement.
Inventory shortages (especially for the Plush Bus) necessitated quick restocking from both online and local sources.
Machines required location-specific adaptation of both products and pricing, and occasional parental/customer feedback prompted product swaps.
Marketing and Promotion
Used bold, visually appealing design and targeted slogans to attract attention.
Leveraged gym owner partnerships to announce machines through email and signage.
Implemented limited-time offers and exclusivity messaging to drive sales and differentiate machines.
Adjusted pricing and promotional tactics (e.g., dropping prices, awareness advertising) in response to observed customer behavior.
Financial Results and Analysis
Jiu-Jitsu Gym: $87 in two weeks ($174/mo), with ~$52 monthly profit at 30% margin; would require 47 machines to hit $100K/yr.
Premium Gym: $313 in two weeks ($626/mo), with ~$188 monthly profit; 13 machines needed for $100K/yr.
Plush Bus: $295 in two weeks ($590/mo), with ~$177 monthly profit; 14 machines needed for $100K/yr.
Aggregate: $695 in two weeks ($1,391/mo or $16,680/yr). Investment payback estimated at ~5 months, with profitability starting after the first month or two.
Machines required approx. 2 hours/month each to manage, supporting a scalable side business model.
Decisions
Substitute healthy products in underperforming machine — Switched from unhealthy to healthier snacks after parental feedback and poor sales.
Drop prices on premium items — Lowered prices on high-end healthy snacks to stimulate demand.
Increase exclusivity messaging and on-site promotion — Added signage and leveraged email to boost machine awareness and sales.
Open Questions / Follow-Ups
Will lowering prices on the premium machine yield sustained higher sales volume?
How frequently will the plush and snack machines require restocking as customer habits stabilize?
Is there long-term demand for healthy and exclusive snack options in gym environments, or will novelty wear off?
What additional maintenance issues may arise with increased usage, and how will they affect profitability?