Vending machines

Why stuff from a vending machine is usually more expensive than from a shop? It does not make sense, does it? One doesn't need to hire any assistant selling the goods one doesn't need to pay so much for rent. What is the point of putting a potential customer off by raising the price? And people go to queue in a shop instead of buying a drink or cigarettes from the machine round the corner!

Share this

"Why stuff from a vending

"Why stuff from a vending machine is usually more expensive than from a shop? It does not make sense, does it?"

It makes perfect sense.

Vending machines typically don't exist in a competitive marketplace and are convenient. I am quite sure my employer would not allow me to set up a competing vending machine and undercut him on Sun Chips. Its similar to a sporting event where the owner of the venue can maximize his profits by artificially inflating prices.

Do you really want to bother to leave your school or office to save $0.20 on a snickers? Most people put a high value on their time. Some are just lazy. Or someone making $8 per hour might make the rational decision to stay at work and save 15 mins on the clock (thus earning an extra two bucks) rather than head out for a snack to save $1. In some cases (like the sporting event example) the property owner will prohibit people from bringing in food and/or make it impractical to leave (by, say, implementing a no re-entry policy).

I actually find that the prices are about the same - the 20 oz bottle of Coke costs $1.25 in both the vending machine on my office floor and at the bodega on the corner. Neither is a good place to buy in bulk, which would be more cost effective.

I am quite sure my employer

I am quite sure my employer would not allow me to set up a competing vending machine and undercut him on Sun Chips.

Actually, I once had a coworker who ran a snack shop out of his cubicle, and he was undercutting the vending machines by quite a bit. There were originally some doubts as to whether management would allow it, but those went away after a high-ranking executive started shopping there.

Subjective Value

The only reason it wouldn't make sense is if you believe the value of things is based on the cost of producing them (including delivering them to the customer). If you believe that value is subjective, you can see other reasons for the price discrepancy (such as the ones Dr. Steve mentions).

The "subjective theory of value" is a pretty cool concept. If you haven't read about it before, an introduction with a short reading list is at mises.org.

Thanks for your comments

Thanks Mark for directing me to the "subjective theory of value". Dr. Steve gives a valid explanation. I completely follow that, but it is often not the case.

You are probably talking about the US, were things are still usually more normal than elsewhere.

In many European countries the discrepancies between the "shop prices" and "vending machine" ones are more pronounced (~10-12 DKK for a 0.5 L bottle of Coke in a supermarket, 14-16 DKK in machines or 24h shops). I find it easier to buy stuff in a kiosk on the way to work, cheaper and not more time consuming. Or when going to buy stuff for lunch (you don't always eat in a cantine). I'm sure there's more people doing the same in my institution. Thus, I'm sure the situation could be reverted in favour of the machines if they adjusted the prices, they could get more profit. There must be some artificial exogenic regulation about that. That was my whole point, although not expressed explicite. It is not a single case I'm talking about, maybe not enough yet to generalise like I did, but I have a suspicion that someone has put their hands on it to control the prices, here in EU it wouldn't surpise me.

And again.. Why should you buy in bulk at all if you could buy for a simillar price per single item in a machine? The machines definitely have a potential to outcompete the regular shops for some items (even the bulk offers), they are cheaper to run.

At last, why your boss (the owner, I assume) could not set up the machine himself, Dr. Steve? Without any threat of being undercut on anything...

Cheers

vending price's

people not in vending don't under stand that when you buy some thing from a vending machine the sales tax is in the price so if you buy a candy bar from a store you pay 85cents plus tax 7/9% so you will pay 95-to 1.00 for that candy bar that you only pay 75 to 85 cent's from a vending machine