The vape industry is rapidly growing — with no signs of slowing down.
In fact, revenue is expected to reach $9.4 billion in 2025 and increase by 5.39% annually.
Those numbers are enough to get anyone excited about the potential. Still, it leaves a critical question: Are vape shops profitable in the long term?
Success largely depends on having the right strategy, and crafting one can be challenging. We’re here to clear the smoke and guide you through calculating costs, forecasting profits, and sharing must-know tips to increase earnings — all while managing those day-to-day expenses.
Crunching the Numbers: Are Vape Shops Profitable?
Thriving vape shops typically generate between $300,000–$500,000 annually, with profit margins hovering around 7% to 20%.
But this range isn’t one-size-fits-all — it largely depends on your location, target market, and how you manage your costs.
Want to figure out where you'll land? Start by calculating your expenses to get a real sense of whether or not your vape shop can turn a profit.
Calculating Your Costs
Start by mapping out your expenses so you can better understand if your vape shop can be in the black. Here's a quick rundown of typical costs:
- Location: Include costs for your physical space and any necessary renovations, whether you’re leasing or buying.
- Licenses, permits, and insurance: Comply with regulations for age-restricted products, which may require a tobacco retail license or additional insurance.
- Inventory: Consider both initial stock and ongoing inventory expenses.
- Technology: Use an industry-specific point of sale (POS) system to effectively manage transactions, inventory, and sales trends.
- Labor: Factor in wages for your team to keep the store running smoothly.
This isn’t an exhaustive list, so make sure to include all of your business’ expenses.
Related Read: A Quick Guide to Smoke Shop Profit Margins
Projecting Your Income
Once you've sorted out your costs, the next step is to forecast your income. Accurate projections help you spot peak sales periods and seasonal trends, and they alert you when cash flow isn't keeping pace, indicating a need for strategy changes.
Start by calculating daily sales and your average basket value (ABV) for a clear picture of your financial landscape.
Calculate Daily Sales and Average Basket Value
Begin by setting targets for how many sales you expect daily, weekly, and monthly, as well as the number of customers you plan to serve each day.
For a clearer picture, you can calculate your ABV by taking the total daily sales and dividing it by the number of transactions. For example, if you make $1,000 from 50 sales in a day, your ABV would be $20. This figure helps you spot sales trends so you can adjust your stock and marketing efforts accordingly.
Keep Tabs on Monthly Trends and Competition
Seasonality plays a significant role in your overall earnings, so understanding recurring patterns can help increase your vape store’s profitability. Take a deep dive into your sales data to see when business peaks and dips. If you see a jump around New Year’s, for example, gear up with inventory and relevant promotions around that time.
Keep an eye on competitors, too — if they raise prices during peak periods, decide whether matching or undercutting them works best for you. Consider bundling complementary items, like pairing a vape device with a popular e-juice and cleaning kit, for added value.
Also, pay attention to when they're running their promos — launching yours a week earlier could win over undecided buyers. These insights, plus any relevant data gathered from your POS system, can shape your strategic planning. But if you’re still stuck deciding your next move, the five tips below are a good starting point.
Related Read: The Ultimate Vape Shop Business Plan Checklist
5 Tips To Boost Vape Shop Profits
You've crunched the numbers on costs and profits, but you might still feel unsure about how to make sure your store consistently stands out from the competition. While location and target audience play a significant role, there's plenty of room for creativity — starting with diversifying your product offerings.
1. Expand Your Product Offerings
When the same old items aren't resonating with your customers, it’s time to mix in new inventory. Products containing cannabidiol (CBD), delta-8, and kratom are increasingly popular, so stocking more hard-to-find items in these categories will help your store stay top-of-mind for customers.
However, vape shops carrying these products require high-risk payment processing because these products are still heavily regulated. Fortunately, becoming a high-risk merchant doesn’t have to be a hassle. For an easy transition and the best deal on your payment processing fees, choose a POS system with integrated high-risk payment processing.
Related Read: How To Get Payment Processing for CBD: 5 Considerations
2. Offer Enticing Deals and Promotions
If you’re looking to boost your vape store’s profits, then well-crafted promotions and deals are a necessity. By regularly reviewing data from your POS system, you can pinpoint which deals actually pay off.
Here are some promotion ideas to consider:
- First-time purchase discount: Offer a welcome discount to new customers, like 10% off their first purchase, to start off on a good note and encourage them to return.
- Referral incentives: Encourage word-of-mouth by offering credits for successful referrals. For example, both the referring customer and their friend could get $5 towards their next purchase.
- Mix and match pricing: Create an offer where customers can pick any three e-juice flavors and receive a bundled price, such as $30 for three bottles instead of paying for each bottle individually.
- Birthday discounts: Send customers an email on their birthday with a discount code, like 15% off their next purchase that month.
While these initiatives are a strong starting point to help your vape business stand out, the key to maintaining long-term customer engagement goes beyond one-time promotions. A thoughtful customer loyalty program can create enduring relationships, making sure those initial spikes in interest lead to ongoing success.
3. Implement a Customer Loyalty Program
Did you know that most of the profit for your vape store comes from repeat customers? This is why it’s so important to keep shoppers coming back again and again.
A customer loyalty program has several benefits — it increases customer retention and engagement, of course, but it also provides data on buying habits, purchasing frequency, and product preferences. With these insights, you can fine-tune your offerings and develop more targeted marketing efforts that resonate with your customer base.
If you're uncertain about which loyalty program structure would suit your business best, consider these popular options:
- Point systems: Reward customers with points for each purchase, which they can redeem for discounts or free products.
- Tiered rewards: Offer increasing perks as customers reach certain spending thresholds, encouraging them to buy more to unlock better rewards.
- Exclusive member sales: Provide exclusive sales or discounts to members to make them feel appreciated and part of an exclusive community.
Whichever option you choose, your loyalty program lays the groundwork for deeper customer engagement. You can even take it a step further with custom-branded product bundles, a strategy that not only upsells, but reinforces your brand identity to all shoppers.
4. Create Custom-Branded Product Bundles
Branding is everything in a crowded vape store market. With countless brands competing for attention, carving out your identity through effective marketing and branding is key to standing out.
One way to achieve this is to use custom-branded product bundles that showcase your unique style and offerings. With Cigar POS' custom label printing, you can create appealing bundles that drive sales and reinforce your brand presence.
Remember: Tobacco advertising regulations can be tricky, so make sure your labels avoid promotional language or imagery that violates legal standards.
For example, you can curate a "Starter Kit Bundle" with a vape device, a selection of top-selling e-juices, and beginner-friendly accessories wrapped with custom labels that highlight your brand's distinct flair.
5. Host Community Events
Speaking of branding, what better way to get your brand out here than by hosting events and directly engaging with your community? Below are a few ideas to get you started:
- Cross-promote with local businesses: Collaborate with other businesses that complement your offerings — think cafés, tattoo parlors, or smoke shops. Not only does this expand your customer reach, but it creates a supportive network that can drive foot traffic to each other's stores.
- Host vaping competitions: Arrange cloud-chasing or flavor-blending competitions to engage your customer base. Offer prizes and feature top performers on your shop's social media as part of the promotion.
- Organize a charity drive: Dedicate a day to donating a portion of your sales to a local nonprofit, encouraging community participation and support.
Integrating events into your marketing strategy helps you gather feedback firsthand, spark word-of-mouth promotion, and tap into new customer segments. These meetups and collaborations solidify your role in the local vaping scene, taking your store from just a retail space to a communal hub.
Related Read: 5 Must-Have Vape Shop POS Features
Make Your Vape Shop More Profitable With Cigars POS
So, are vape shops profitable? The reality depends on your strategy, but there’s a lot you can do to set yourself up for success. By offering a wide range of products, setting up can’t-miss promotions, and using a loyalty program to keep customers coming back, you’re on the right path.
And you can make all of this more manageable with a specialized POS like Cigars POS, which includes all the tools you need — like age verification, detailed analytics, a built-in loyalty program, and high-risk processing — to handle the unique challenges of the vape industry.
Schedule a live demo with one of our vape experts today to see how Cigars POS can give your business the edge it deserves.
