vending+machine+opportunity+register

New way to provide an existing product
 * Type**

Every weeknight evening thousands of Alabama students seek a location where they can study for exams or complete reading/class assignments. For many Alabama students, the destination of choice is Gorgas library. Those students who elect to study at Gorgas find quiet places to get their work done, but do not currently have any sources of quick, reliable energy to do so. Students who want a caffeine boost can buy coffee from the Java City coffee service on the first floor of Gorgas, but they are not allowed to take their coffee with them to their study locations. Instead of getting a quick boost of energy to keep studying, students have to interrupt their studying to purchase and drink coffee on the first floor of Gorgas, resulting in wasted time. My solution is to provide a vending machine in the lobby of Gorgas that sells 5-hour Energy drinks. Unlike Java City, which provides a source of energy that cannot be consumed in seconds and cannot be taken to other parts of the library, my vending machine provides students with an instant source of energy that takes seconds to drink and can be consumed discreetly anywhere in the library. Further, unlike coffee beverages that provide a caffeine boost for less than one hour, my product provides 5 hours of reliable energy. Students who want to purchase 5-hour Energy drinks currently have to go to Publix, which closes at 11pm and is a 15-minute walk from Gorgas. Students can study for hours without having to take a break for another energy boost.
 * Description**

Fixed costs, variable costs, and variable revenues. I found a 5-hour energy vending machine available for sale on eBay* for $650. The seller will ship the machine to me free of charge. This machine has a capacity of 104 bottles. In consideration of what a 5-hour Energy bottle costs at a local Publix and the convenience offered by my location and delivery system, I can probably charge $3 for a single bottle. I can buy 18 cases (12 bottles per case) of pomegranate flavored energy drinks for $315, which represents a variable cost of $1.46.
 * Assessment**

Customer Demand: Gorgas Library has between 300 to 500 people studying there after 10pm on most weeknights. At least 50 of these people would likely purchase one or more 5-hour Energy drinks on any given weeknight. In a given week from Sunday night to Thursday night, I should be able to sell 50 X 5 nights = 250 bottles. For a 15-week semester, I should be able to sell 15 X 250 = 3,750 bottles. My total revenues for a semester would be about $3/bottle X 3,750 bottles = $11,250. With a margin of around $1.50 per bottle, my gross profits would be $5,625. I would need to sell 434 bottles [ $650/($3 - $1.50) ] to reach break-even on my purchase of the vending machine, which means I would reach break-even in less than two weeks.

So with gross profits of $5,625 in one semester and combined fixed and initial variable costs of $1,400 ($650 for machine and $750 for first two weeks' inventory), my return on investment would be more than 300% [ (5,625 - 1,400)/1,400 ].


 * Source: @http://www.ebay.com/itm/5-hour-energy-vending-machine-/261152468477?pt=LH_DefaultDomain_0&hash=item3ccde66dfd
 * Source: @http://www.vkwholesale.com/5-hour-energy-wholesale-case-pomegranate-18-boxes.html