If you want your business to remain relevant, you have to keep investing in it. When will the investment have the most impact, and what should you be investing in?
Data indicates that fuel retailers who invest in upgrading their pumps experience an impressive return on investment, including an increase in profitability. For example, upgrading old fuel pumps with the Applause TV and EMV payment has resulted in real examples of investors earning $70,000 in incremental profit over the next three years. That’s enough earnings to cover the cost of purchasing and installing the new system within a short time.
The projection isn’t taking into consideration the cost-saving benefits of switching to a more effective pump system, either. The first step to figuring out whether upgrading your pumps will positively impact your business is to develop a cash flow model. It will allow you to compare the financial consequences of choosing to upgrade effectively.
An XZ Study
A hypothetical venture (XZ), which is considering upgrading its gas pumps to integrate EMV, will be used to illustrate the model. The circumstances surrounding our hypothetical venture are the following:
- More than two million fuel retailers in the U.S. are integrating EMV
- More than 50 percent of pumps will be EMV-capable by the end of the year
- Customers are becoming more likely to buy their fuel from EMV-capable fueling stations
- VISA will start fining and removing fueling stations from their network that are notorious for fraud
- By October 2020, fuel retailers will be held liable for card fraud at their pumps
Our hypothetical venture, XZ, can choose to do nothing, or acquire a pump upgrade, or wait until 2020. If XZ decides to do nothing, they will incur penalties and also face the risk of becoming liable for fraud at the pump.
Here’s are the projections if XZ chooses to upgrade now or wait until 2020.
Impact on sales
New pumps, like the Encore® Flexible Fuel Dispenser, are capable of speeding up the pumping process. The faster the sales, the more customers you can serve in a given period.
Integrating Applause TV into the pump will promote in-store products, leading to more customers making in-store purchases. The scenario guarantees an increase in sales at the pumps and in-store if XZ upgrades now.
Such sales won’t happen during the wait between now and 2020. If XZ doesn’t upgrade, the outcome will be significant losses in potential profit.
A new pump means a new warranty, which will cover repair and maintenance costs, too. New machines also have improved security features that minimize the risk and attending cost of vandalism, fuel theft, and payment skimming.
Upgrading now means enjoying these cost benefits at the earliest opportunity and maximizing profits. Waiting means enduring the financial leakages until 2020.
From the above illustration, delaying an upgrade will defer your access to the benefits of an upgrade, and enduring further losses. Upgrading at the earliest opportunity, though, can quickly result in increasing your fuel and in-store sales.
An upgrade enables you to boost the overall value of your fueling station by minimizing losses and increasing your earnings. For help selecting the most suitable fuel pump upgrade for your establishment, contact the experts at American Petroleum today.