What is the "total cost" of renting coffee machines or coffee vending machines?
When looking for a coffee machine or office coffee vending machine, you'll find that there are as many different pricing structures as there are suppliers. You'll get the "we'll supply you with a free machine" or "low monthly rental" offer right through to "we're not the cheapest, but you'll get great service" lines.
So how do you decide? It really isn't too difficult when you look at it logically, so here's how to do it.
First let's unpack the "free machine" offer. Well unless it's stolen or the manufacturer decided to go out of business, it isn't actually "free". Someone has to pay for it...and that's ultimately you! So look past this and examine the "total cost of ownership" by asking the following:
1. Do I have to buy my coffee and other consumables from your company?
If you are looking at "the machine is placed free of charge" offers, you'll invariably be required to buy consumables from that company. If you compare prices with those say in Makro or Spar...you'll notice quite a big premium on consumables supplied by the "machine-is-free" company. This is understandable because the supplier needs to cover the cost of the supposedly "free" coffee machine.
2. What is the cost of a cup of coffee?
So the next step, if the machine is free or has a low rental, is to determine what you actually pay for a cup of coffee. It may be a free or low rental machine...but paying R4 for a cup of coffee is certainly not the best deal! Let's do an exercise. Two quotes are received:
Quote 1: Free coffee vending machine and you have to buy consumables from the supplier. When you do a cost of ingredients per cup calculation you find that the 2g of coffee, 7g of sugar and 9g of milk creamer will cost you R2 per cup or the pod or capsule costs you R2 per cup.
Quote 2: R800 rental/month for the coffee vending machine (let's assume the same type, reliability, functionality etc) and you can buy consumables anywhere. When you do a cost of ingredients per cup calculation you find that the 2g of coffee, 7g of sugar and 9g of milk creamer will cost you R1 per cup.
Well, it becomes clear that after 500 cups on Quote 2, you'll be saving more money than in Quote 1...even though the machine in Quote 1 is free! In this example, 500 cups in a company working 21 days a week = 23 cups/day = 8 people drinking 3 cups each a day.
If your company has 20 people then Quote 1 will ACTUALLY costs you:
R2/cup x 20 people x 3 cups/person/day x 21 days/month = R2521-00
Quote 2 in the same company will cost you:
R1/cup x 20 people x 3 cups/person/day x 21 days/month = R1260 for drinks + R800 for machine= R2060-00
Quite a difference!!!
3. How much must I buy each month?
If you are obliged to buy consumables from the supplier of your machine, whether placed as a "free" machine or not, find out if there is a minimum amount you have to spend. Again, suppliers who offer rentals at "special" rates, must reclaim their lost profit somehow. Having you rent an office coffee vending machine for R300 per month when it costs the supplier R800 per month, means that the R500 difference has to be reclaimed from consumables or maintenance charges. You'll be asked to buy a minimum amount...or will be billed on a minimum number of cups...whether you drink them or not.
4. Is there an additional maintenance cost?
A coffee machine, like any mechanical device, can break down. Will you be required to pay for repairs or will the supplier include that cost in their monthly rental? If you are paying nothing for the machine, chances are that you'll be required to pay a "call-out" fee and/or a replacement part fee. If you have opted for an "all-in" rental, then there are no additional costs, but yes, your monthly rental will be higher because "someone" has to pay for the replacement of that lightening damaged circuit board!
5. What machine am I getting?
Do car hire companies rent all their cars at the same prices? No, there are different models with different features for different prices. You are not going to buy or rent a BMW 7 Series at the same price as a Kia Picanto...and the same is true of coffee machines and office coffee vending machines.
So it might be free or it might have a lower monthly rental, but is it what you need? Coffee machines differ in the types of ingredients they accept, the number of drink choices and the number of drinks a machine is designed to make per day. You aren't going to take the Kia Picanto through Africa when it's a Toyota 4x4 Landcruiser you need, so why would you accept a home coffee machine in an office of 50 people ?
Sure, the monthly rental on a R3000 coffee machine will be lower than that on a R10000, coffee vending machine, but are you going to get black coffee, white coffee, cappuccino coffee, hot chocolate, tea, and on board sugar selection...and how long will the machine last when the usual domestic machine average of 2000 cups/annum is drawn off in the first month in the office?
6. That old favourite...service!
So it is what you want…and it is the right price...but...you are about to enter a 36 month marriage, so are you convinced you'll get the quality and the service? This is a tough one because every supplier is going to be the perfect partner during the "dating" phase.
Check out other articles in this series to get a sense of how to assess the likelihood of your supplier delivering on their promises - look at things like years in business, client references, number of staff etc. You'll want to know they'll be there when you need them!
So there you have it...first impressions can be deceiving. You need to look deeper than the offer to find out what you'll really be getting for your money. It's worth the effort!
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