MoneyStock
The company fridge and what it really costs you
A company fridge or rack is not free. You pay in electricity, floor space and shelf rules. Price all five costs before you say yes, with a worked example.
Pricing a free unit, in five moves
- 1Read the meter, not the offerOne week with it and one week without gives you the electricity in rupees, not in worry.
- 2Price the floor it stands onWhat those few square feet earn today, minus whatever you can genuinely move elsewhere.
- 3Count the shelf you are giving upOnly their goods go inside. Whatever you kept there loses its place, and its sales.
- 4Add the order that rides alongAnything above what you already sell is your own cash, sitting in your store room.
- 5Set the total against what it will sellIf the unit clears all five costs, take it. If it does not, ask for a different spot or say no.
A company fridge or rack is not a gift. It is a rental you pay in electricity, floor space and shelf rules, and the rent is never written down anywhere. Before you say yes, put a rupee figure on all five costs and set it against what the unit will really sell. Sometimes it earns well. Sometimes it does not.
What the company is really buying from you
The company man shows you a photograph on his phone and says the unit costs you nothing. He is telling the truth about the price. He is not telling you what he is buying, because he does not think of it as buying.
He is buying four things: a piece of your floor, a position in your shop and usually the best one, the right to decide what goes inside it, and a standing order every month. In return you get a machine you did not pay for and a line you did not have to buy up front.
That can be a fair swap, and often it is. The trouble is that only one side of the table has done the arithmetic. He knows what the unit cost his company and how much it must sell to pay for itself. You have never worked out what your floor earns or what your meter will read. So you agree to a deal you have not priced.
Pricing it is not hard. It is five lines and twenty minutes.
The five costs nobody puts a number on
Electricity. A chiller runs day and night, and in hot weather it works harder. The cost arrives every month whether the unit sold anything or not. Do not guess it. Read your meter the evening before the unit is switched on, read it a week later at the same hour, and set that week beside an ordinary one. The difference, times four, times your rate per unit, is your monthly cost. A rack has no motor, so this line is a zero for it.
Floor space. Every shop has a best spot and a worst spot. Work out what that space earns today: what stood there, what it sold in a month, what margin you kept. Then be honest about how much of it you can move elsewhere. If the goods sell from the back wall, the cost is only the drop. If they go into the store room, the cost is all of it.
The exclusivity rule. Almost every agreement says only their goods go inside. If you already keep a faster line cold, or one with a better margin, that line loses its place. Count it plainly: bottles or packets a week, times your margin, times four. This one surprises people, because it never arrives as a bill. It arrives as sales you no longer make.
The minimum order. The unit usually comes tied to a monthly order. If it is smaller than what you already sell, it costs you nothing. If it is bigger, the difference piles up in your store room month after month, and that is your cash sitting in it, not theirs. On anything with a date printed on it, the pile also ages. Dead stock that arrived free is still dead stock.
Your own labour. Filling it, wiping it, straightening the packets, counting for the company man. Twenty minutes a day sounds like nothing. Put your helper's hourly cost against it and you have a monthly figure. It belongs beside rent on the list that decides how much your shop has to sell before you earn.
What the unit gives back, and it is real
Now fill in the other column honestly, because plenty of these offers are good.
A cold shelf in hot weather brings people to your door who would not otherwise have walked in. A man who stops for a cold bottle very often leaves with cigarettes and a top-up as well. You cannot measure that to the rupee, but you can watch it happen at your counter for a week.
A unit also does work you were doing badly. A tall rack turns a heap of packets on the floor into a display a customer can reach, and from the street a branded unit makes a small shop look like it is doing well. If you were buying a rack anyway, a free one with conditions may beat the one you pay Rs 14,000 for. A chiller of your own is Rs 60,000, and somebody else has now put it in your shop.
The question is never whether these deals are good or bad. It is whether the good column beats the cost column in your shop.
Two shops, one offer, two answers
Say the same drinks company makes the same offer to two shopkeepers on the same road.
Imran runs a general store on a busy corner near a bus stop. The company puts a two-door chiller by his door: their drinks only, twelve crates a month, and he pays the electricity.
He reads his meter for a fortnight and gets his answer: about 150 extra units a month, and at Rs 38 a unit that is Rs 5,700. The chiller stands where a rack of cooking oil used to be; he moves most of it to the back wall, keeps most of the sales, and puts the loss at Rs 800. His juice line, now cold at the back instead of the front, moves slower: Rs 600. Twenty minutes a day at what his helper costs him is Rs 700.
Against that, the chiller sells around 50 bottles a day at Rs 11 of margin: Rs 16,500 in a month.
One month with a company chiller, worked out
Only an example. Put your own meter reading, your own margin and your own minimum order into the same lines.
Rs 8,700 a month, and he has not counted the man who came for a cold bottle and left with cigarettes. For Imran this is not close. He should sign.
Waqar's shop is two hundred yards down the same road, and a biscuit company offers him a tall branded rack. No motor, so no electricity. Free, their packets only, and an order of Rs 9,000 a month.
The rack goes in the window, because that is where the company man wants it and Waqar does not think to argue. The window held his school stationery and small household goods, earning about Rs 3,000 of margin a month from people who saw them from the street. Against the back wall the same goods bring Rs 1,000. He is down Rs 2,000 before a packet is sold.
Then he counts what the rack sells: four packets a week at Rs 9 of margin, about Rs 150 a month. Ten minutes a day dusting is Rs 350. And a Rs 9,000 order against Rs 2,000 of sales means Rs 7,000 of biscuits into his store room every month, each with a date printed on it.
Same method, same afternoon, and his answer is minus Rs 2,200 a month plus a growing pile that will not keep. Waqar should say no, or ask for the rack to stand elsewhere.
When to take the unit, and when to walk away
One offer, two shops, and the arithmetic decided it. Not the word free.
Ask these questions before you sign
The man who brings the unit is a salesman with a target. He is not lying to you; he simply will not volunteer what you do not ask about. So ask, and write his answers on the same page.
Eight questions to ask before the unit comes off the truck
- Who repairs it when it stops, and within how many days?
- Who pays for that repair, and who pays if it dies for good?
- Is there a deposit, and what exactly brings it back to me?
- What is the minimum order in plain words, and what happens in a slow month?
- May I keep anything of my own inside it?
- How long does the agreement run, and how does either side end it?
- Who pays if it is stolen or damaged inside my shop?
- How much notice do I get before you take it away?
Two matter more than the rest. The repair question decides what happens the week your chiller stops in hot weather with Rs 4,000 of drinks inside it. If they take ten days, you need to know beforehand. And the minimum-order question decides whether you are stocking a line or tied to one supplier on his terms.
If the answer to any of them is "don't worry about that", you have your answer to the whole offer.
Write it down the day it arrives, and plan for the day it goes
The man who brought the unit will be in another job within a year. His replacement will know nothing about what was agreed, and the paper you signed sits in an office you never see. Whatever is not written in your own book does not exist.
On the day it arrives, write down the date, the serial number stamped on the back or inside the door, the deposit and its receipt number, the minimum order as he stated it, what you may and may not keep inside, and the man's name and phone number. Photograph the unit and any paper you were handed. Four minutes, and it settles every argument later.
Then plan for the exit, because every one of these units leaves eventually. The company changes its plan, your area gets a different distributor, or you fall short three months running. When it goes, a hole opens in your best position, and whatever you sold out of that unit stops selling the same day.
So keep one rule. Never let a company unit hold a line you cannot restock yourself. If your only cold shelf is theirs, the day it leaves you have none. Keep your own small fridge running at the back even when it holds very little. And if you are adding a whole new line on the strength of somebody else's rack, own a way to go on selling it. Get the deposit back in writing before the unit is on his truck.
Turning the guesses into numbers you can read
All of this is arithmetic you can do on the back of a bill. Most shopkeepers never do it because none of the numbers are written down anywhere.
In Wasoolo the electricity goes in as an expense every month, so the cost of the unit is a recorded figure and not a feeling about a bill that grew. The deposit goes in the same way. Because every product carries the buy rate you gave it, the margin coming out of that unit is a number you read rather than estimate, and the profit view sets it beside what the rest of the shop earned. The supplier account shows what their minimum order tied up over six months, which is usually the line that decides a rack.
Wasoolo is 100% free to download. Whether or not you use it, do the sum before the unit comes through your door, not two years later when the pile in your store room has a date that has passed.
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Common questions
Is a free company fridge ever actually free?
No, and it is not meant to be. You pay in electricity, floor space, shelf rules and your own time. That does not make it a bad offer, only a deal that has to be priced.
How do I work out what the fridge adds to my electricity bill?
Read the meter the evening before it is switched on and again a week later at the same hour, then compare that week with a normal one. Multiply the difference by four and by your rate per unit.
The company wants the unit in my window. Should I agree?
Only if what goes inside will out-earn what stands in the window today. The window is the most valuable space you own. Offer a different spot; a salesman with a target will usually take a wall.
What if I cannot meet the minimum order in a slow month?
Ask exactly that before you sign and get the answer in plain words. Usually nothing happens for one month and the unit is at risk after three. If the minimum is bigger than what you honestly sell, treat the difference as stock you are buying.
Can I keep my own goods inside a company fridge?
Almost always no, and the company man will check. Assume the whole inside belongs to their line and price the offer on that basis. If you need a cold shelf for your own goods, keep a small unit.
They took the unit back with no warning. What should I do?
Fill the space the same week, even with something ordinary, because an empty best spot costs you every day. Then chase the deposit using the date, the unit number and the name you wrote down.
Not sure whether the offer on your counter is worth taking? Send us a message with the space it will take and what it is meant to sell, and we will work the month out with you.