Marketplace

MARKETPLACE
NEWSLETTER
PAGE 9, AUGUST 30, 1974
FACT!
In a survey conducted a bit over a year ago to leani just what percentage, on an over-
all national average, operators considered as profit before taxes from gross income, the
very surprising figure of 1o% came to light. Considering the fact that, at the very same
time, the 100 largest corporations in this nation reported an average of 5.4% as profit
before taxes, this figure of 1Cf% is extremely heartening to one and all engaged in this
industry of coin automation.
During this survey the question was asked, "How much should or can the location owner
remove as expenses, such as for electric current used as well as rent for the space the
machine occupies?" Operators agreed locations could charge off as much as 1o% of their
share of their gross income for such expenses.
Taking the above into consideration, here are hard facts for operators:
,..
Gross income from machine•••••••••••••••••••••••••••••••••••••••S1.
Split 50/50, the location gets••••••••••••••••••••••••••••••••··' 50.00
..
Operator earns•••••••••••••••••••••••••••••••••••••••••••••••···' 50.00
Location deducts 1o% from his gross income for expenses ($5.00)
so that location's net profit before taxes amounts to ••••••••••• $ 45.00
Operator's 1Cf% net profit before taxes amounts to ••••••••••••••• $ 5.00
On proposed. basis of $10 "service charge" and more equitable 70/30 comm-
ission basis the following results:
Same gross income from machine••••••••••••••••••••••••••••••••••$100.00
Operator removes $10 off the top as "service charge"••••••••••••$ 10.00
This leaves gross balance of••••••••••••••••••••••••••••••••••••$ 90.00
Operator s~lits this balance on 70/30. Location gets 3o% or ••••• $ 27.00
..
•
Operator earns 7o% or ••••••••••••••••••••••••••••••••••••••••••• S 63.00
Operator adds $10 "service charge" onto his $63.00 to
eani total gross of •••••••••••••• $ 73.00
Location removes 1af, as expenses from his gross of $27.00
($2.70) and enjoys net profit before taxes of ••••••••••••• $ 24.30
Operator earns 1ofo profit on his s73.oo before taxes or ••••••••• $
7.30
(Al tho operator enjoyed 68.4% more gross than he did on 50/50 split, yet
he still earns 33.~ less profit before taxes than location does.)
TH INK