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Comment by AQXt | Hacker News Reader

It might not be a good investment, according to the article:

- Many of the best locations — places with heavy foot traffic, or large worker populations — are already saturated with machines.

- Some owners have to make 100+ calls before landing a decent location. In the end, they often end up paying the owner a commission of 10%-25% of gross sales to drive home the deal.

- And these figures are pre-expenses. The business comes with its share of overhead costs. For starters, ~50% of revenue goes toward the cost of items that go in the machines.

- Most vendors have seen a 10-50% dip in revenue this year due to the stressors of the pandemic.

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Also not really addressed, what's the life span of a vending machine?

I know I've seen some ancient ones out there, but most seem pretty new. It says new ones are 3k, if it lasts five year that's sixty dollars a month.

Vending machines last way longer than 5 years; 25 years at least, the only thing is they require maintenance and repairs every once in a while, and the payment system may need to be swapped out depending on developments (e.g. accepting cards, contactless, phones, google/apple wallet, alipay, bitcoin, etc).

That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your interests.

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situation where you’re creating efficiency by specializing. What does the servicing company need you for? If all you do is own the machines, they can do that themselves without complicating their business at all.

You’re sourcing the location.

That works if you own the location, otherwise it isn’t anything the servicing company couldn’t do just as well. Plus they’re more likely to have relationships with property managers, office managers, etc. Double plus, your costs would include the servicing company’s profit margin. So by definition their costs are lower, which gives them room to offer location owners a better deal than you can.

there's no capital risk for the servicing company.

I get that there’s some value-add on the owner’s part by taking on the capital risk, but in this case it seems like it’s mostly an illusion. After all, the servicing company’s business (assuming they don’t own any of their own machines) is entirely dependent on having access to other people’s machines. Your risk might as well be theirs, plus they don’t have assets to leverage.

I think the difference here vs something like say owning a building and hiring a property management company is the negligible value of the machine compared to operating costs. The capital portion is such a small piece of the puzzle that just owning the capital and contracting out everything else isn’t going to be competitive. I think this is borne out by TFA, which doesn’t describe any owners working the way that parent suggests.

Yeah it seems like being a Lyft or Uber driver where your hourly pay ends up getting driven towards the minimum wage.

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