Chartered Financial Analyst specializing in retail operations and small business finance.
Find out how many items your vending machine needs to sell to be profitable. Enter any three variables—Monthly Fixed Costs, Avg. Price per Item, Avg. Cost per Item, or Breakeven Items—to solve for the fourth.
Vending Machine Breakeven Calculator
Vending Machine Breakeven Formula
The breakeven formula for a vending machine finds the number of items (Q) you must sell each month for your total sales to equal all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Price per Item (P):
P = (F / Q) + V
Solve for Avg. Cost per Item (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead (e.g., machine lease/payment, location commission/fee, insurance, software).
- Avg. Price per Item (P): The average retail price of an item you sell in the machine.
- Avg. Cost per Item (V): The average wholesale cost (Cost of Goods Sold) of an item you sell.
- Breakeven Items (Q): The total number of items you need to sell each month to reach $0 in profit.
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What is a Vending Machine Breakeven Point?
A **Vending Machine Breakeven Point** is the exact number of items (Q) you must sell from your machine each month to cover all your operating costs. This is the most important number to know when deciding if a location is profitable.
**Fixed Costs (F)** are your monthly expenses regardless of how many items you sell. This includes the machine’s lease or financing payment, the monthly fee or commission you pay to the location owner, business insurance, and any inventory management software fees.
**Variable Costs (V)** are the costs tied *directly* to each item sold. This is simply your wholesale cost for the product (Cost of Goods Sold or COGS). If you buy a candy bar for $0.75, your (V) is $0.75.
The **Contribution Margin** (P – V) is the profit from a single item that goes toward paying off your fixed costs. If you sell that candy bar for $1.50 (P) and it cost you $0.75 (V), your contribution margin is $0.75. This calculator finds how many $0.75 “profit chunks” you need to cover your total fixed costs.
How to Calculate Vending Machine Breakeven (Example)
Let’s calculate the breakeven point for a single vending machine in an office building.
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Identify Monthly Fixed Costs (F):
You pay the location owner a flat fee of $100/mo, and your machine lease is $50/mo. Your (F) is $150.
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Identify Avg. Price per Item (P):
You sell a mix of chips and sodas, and your average sale price is $1.50.
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Identify Avg. Cost per Item (V):
Your average wholesale cost for those items is $0.75.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per item: $1.50 (P) – $0.75 (V) = $0.75.
Next, divide the fixed costs by this margin:
Q = $150 / $0.75 = 200 -
Conclusion:
You must sell 200 items each month from this machine just to cover your costs. Every item sold after 200 is pure profit.
Frequently Asked Questions (FAQ)
If you pay the location a *percentage* of sales (e.g., 10%), that commission is a **Variable Cost (V)**, not a Fixed Cost. You would add it to your item’s wholesale cost. For example, `V = $0.75 (Wholesale) + ($1.50 * 10%) (Commission) = $0.75 + $0.15 = $0.90`.
Yes. You should estimate your total monthly cost for gas, vehicle maintenance, and your time spent restocking all your machines, and then divide that cost among your machines. Add this amount to your **Fixed Costs (F)** for each machine.
Spoilage (lost inventory) effectively raises your average variable cost. You should factor this in. If you lose 1 in every 100 items ($0.75 cost), that adds an average of `$0.75 / 100 = $0.0075` to every item’s (V).
Enter your (F) (e.g., $150), (V) (e.g., $0.75), and your target sales goal (Q) (e.g., 300 items/mo). Solve for (P): `P = ($150 / 300) + $0.75 = $0.50 + $0.75 = $1.25`. Your average price must be at least $1.25 to break even if you sell 300 items.