Free on Loan Coffee Machines: What are they all about?

There are a number of different rental packages available for coffee machines and one of the oldest, formerly, most popular rental structure was a Free on Loan Coffee Machine. In this post, I will discuss the good, the bad and the ugly of free on loan packages and when you should and shouldn’t elect to go for such a package.

What is a Free on Loan Coffee Machine Rental:

A free on loan coffee machine rental is one in which the profit from the coffee sales is used to offset any rental of the coffee machine. When renting a coffee machine there are two things that a customer pays for each month in a traditional rental:

1. The rental of the machine
2. The coffee and coffee related products for the machine (milk, sugar and hot chocolate) in the case of a vending machine.

In a free on loan package, a customer usually needs to commit to a certain amount of product each month in order to obtain a zero rental package.

Example:

On a traditional rental structure a customer would spend R500 per month on the rental of the machine and R2000 on coffee and coffee related products on a monthly basis. Signing up for a free on loan or free rental machine would mean that you would commit to use R2000 of product per month and for this commitment you would essentially be given a discount of R500 to cover the rental charge that would traditionally exist.

When a free rental option is a good option:

Free rental options are good when:

• You can consume the required amount of coffee on a monthly basis – You don’t want to get a “free coffee machine” only to pay for coffee that you can’t consume. Ideally you would test out how much coffee you can comfortably go through on a monthly basis first, before committing to a free on loan package.

• You are sure that you will like the coffee supplied to you on a monthly period – Coffee is a lot about preference. What you don’t want is to be forced to drink a coffee brand that you don’t enjoy every day just to get a free rental. Again you want to test the coffee out before committing to a free rental coffee machine.

• You have the ability to change structures should the time come that it is no longer working for you- Over the years I’ve seen many companies unfortunately need to downsize. You want to make sure that you have the option to change your rental package at any time if your circumstances do change.

Conclusion:

When the circumstances are right, a free on loan coffee machine can be the most cost effective and best way to rent a coffee machine. Just take heed of the potential “challenges” mentioned above before committing to a long term contract.