Zero Soda - The monetization

Now, let me talk about the business side. Zero Soda will strike deals with retail businesses that get foot traffic, e.g., grocery stores, to place the machine in their stores and to connect water lines and electricity to the Zero Soda machine. The soda machines only need to be filled with empty bottles, bottle caps, CO2 canisters, syrup, and other condensed flavorers. These will be replaced as needed by a stocker. Although Zero Soda works differently than normal soda machines, it still has about the same capacity in terms of bottles.

A typical soda machine can have 5 rows, 7 columns, and be 6 sodas deep or 210 sodas total. This means that a stocker will need to come to restock after around 200 bottles are dispensed. If half of the time people come with their own bottle and get it refilled, then the cost of restocking is amortized over 400 bottles. Assuming it takes the stocker an hour to go from the stocking/bottle cleaning location to the machine and back and the stocker is paid $20/hour, that’s five cents per bottle in labor cost.

The cost of syrup is around $35 for 5 gallons of syrup. That amounts to around 200 16-ounce bottles or 18 cents per bottle. That could be as low as 10 cents if the sodas were on the less sweet side. Compared to the syrup, the cost of CO2 is miniscule. In addition to soda, the machine could dispense Hint-like drinks. By their nature, the Hint-like beverages would use very little of the natural flavoring per bottle and could cost less than 10 cents per bottle.

The cost of normal glass soda bottles at scale is around ten to fifty cents. Zero Soda bottles will cost far more than normal, I expect between $1.50 and $2. These will be bottles that are extremely tough and chip and scratch resistant. Imagine a bottle made out of Gorilla Glass. Because they will be tough, they’ll have the possibility of being reused hundreds or thousands of times. One of the goals of the pricing scheme is to heavily incentivize customers to reuse the bottles.

The only other costs to consider are the electricity cost, water cost, space cost, and offsite bottle cleaning costs. The electricity and water cost will come out to be less than a penny per bottle. The cost of renting the space will be around $25 per month. If a machine sells 25 bottles a day, that would add 3 cents of cost to every bottle.

The total cost per bottle accounting for the syrup, labor, utilities, and space for the machine is 26 cents per bottle, just to fill it. In the case where the customer has the machine steam-clean and refill the bottle, Zero Soda could charge 50 cents for a 24 cent profit. If a bottle is returned (for $2 paid to the customer), washed off-site, and returned to the machine empty, I expect it would cost about 10 cents per bottle for the transport and washing. So, a returned bottle costs around $2.35 and sells for $3.50, which is a profit of $1.15, much better than the re-fill. The most profit comes from the first purchase, either $1.15 or $1.65, depending on the manufacturing cost of the bottles.