How Much Do Smoke Shops Make? 5 Factors

You’re in the business of making money.

Right? Even if you’re starting a smoke shop because you’re passionate about it, you still want to turn a profit and be successful. And running a successful smoke shop takes much more than stocking shelves with the latest premium cigars.

Before opening your smoke shop, consider everything you’ll need to manage it well and make a profit — from inventory management to maintaining a loyal customer base. What you’ll make depends on you.

So, how much do smoke shops make? Let’s find out.

How Much Do Smoke Shops Make? It Depends

There’s no one-size-fits-all figure when it comes to how much smoke shops make. But there are two ways we can look at it:

• The general consensus is that successful smoke shops can bring in a yearly revenue of $300,000.
• Profit margins vary, anywhere from 20 to 80 percent.

This means if you pull in $300,000, you could make a profit of anywhere between $60,000 and $240,000 — a big difference. Remember, revenue doesn’t account for expenses like rent, utilities, employee salaries, and the cost of goods sold (COGS).

Related Read: How Much Does It Cost To Open a Smoke Shop? 6 Factors That Impact Costs

Now, some smoke shops might make $1,000,000 per year. It all depends on size, location, store management, and other factors we’ll discuss in this article. While big numbers are enticing, they’re just the start of the story.

Factors Affecting Smoke Shop Income

The success of your smoke shop and how much revenue you’ll make depends on various factors, such as:

#1: Location and Demographics

Location, location, location — it’s a cliché for a reason. Where you set up your store directly impacts your revenue potential. 

When you first decide to open your smoke shop, you’ll write a business plan. Part of that plan should include researching your location and its demographics. If your smoke shop is set up in an urban area, opposite colleges and clubs, and you open all night — you can make a lot of money.

If your store is tucked away in a sleepy, suburban neighborhood, you’ll likely attract a different crowd and might make less revenue. However, shops in busy urban areas might have higher overheads.

Aside from location, think about the demographics. Are you catering to a younger, trendier crowd or an older, more affluent clientele? Their preferences, disposable income, and smoking habits could be worlds apart

Pro tip: A smoke shop point of sale (POS) system tracks customer data, including buying preferences and patterns. Use it to meet the needs of your unique customer base.

#2: Product Mix and Quality

Is it important to offer a variety of tobacco and vape products? Again, it depends. In urban areas, your customer base might be more diverse. You can offer the latest vape mods, premium cigars, and unique smoking accessories.

Related Read: What Do Smoke Shops Sell? 6 Items To Stock in Your Shop

Some ideas to consider:

• Premium cigars: If you cater to cigar aficionados, premium cigars are a must. Offer an array of cigar vitolas, lengths, ring gauges, and strengths to suit any preference.
• Humidors: Premium cigars need protection to preserve their flavor and quality. Desktop and travel humidors are good options.
• Vaping supplies: Think vape mods, pens, and POD systems that satisfy beginners and experts. Stock up on tanks, coils, batteries, chargers, and other hardware.
• Lighters and cutters: Quality cigars need quality cutters. Lighters can be personalized and make great gifts.
• Pipes and tobacco: You could stock an assortment of briar, corncob, and meerschaum tobacco pipes, and cleaners, brushes, and tool kits for maintenance. Flavored tobacco is popular but illegal in some states.

Again, the products you stock depend on your location and demographics. It’s also important to watch for trends and stay relevant.

Pro tip: Use your POS system to track sales and manage inventory. What’s selling well? What isn’t popular? Track everything and make informed decisions to increase sales and revenue.

#3: Inventory Management

Speaking of inventory, managing it poorly will lead to lost sales and revenue. Running out of your most popular products frustrates customers, and sitting on a mountain of unsold products will eat your profits. The gold is in the middle ground.

You want to balance having enough inventory to satisfy demand without overstocking — which ties up capital. Your customers can trust that you have what they need, and you can minimize waste — that’s the sweet spot.

Related Read: How To Keep Track of Smoke Shop Inventory: 8 Tools & Tips

With inventory management software, you can:

• Analyze sales to identify your top sellers and slow movers.
• Spot trends to see which products are gaining traction with customers.
• Add new products to your inventory and test them out.
• Reduce stockouts.

…and more.

Pro tip: Look for a POS system with inventory management software built in. You can then manage sales and inventory in one system, get reports on the metrics that matter, and increase revenue using data, not guesswork.

#4: Pricing Strategy

How will you price your products? You’re in a competitive industry. Price your products too high, and you risk driving customers away; too low, and you might be leaving money on the table. Nobody wins in a race to the bottom.

Related Read: 5 Retail Pricing Strategies To Sell More and Delight Customers

You need to find the sweet spot that attracts customers while still maintaining healthy profit margins. Again, location plays a role. You could charge more in an area with high demand — especially if you sell premium products.

Promotions, offers, and loyalty programs also affect your pricing strategy. 

A well-timed promotion can boost revenue, and loyalty programs are a great way to attract repeat customers. Like any consumer, tobacco and vape enthusiasts want to find a trustworthy smoke shop they can come back to time and again.

Pro tip: Top smoke shop POS systems monitor pricing trends and offer built-in tools for creating and managing promotions, loyalty programs, and other customer-centric initiatives.

#5: Customer Service

You’re in the business of serving people. Outstanding customer service could be the differentiator you need. Knowledgeable staff who care about your products and customers are gold.

Provide a welcoming atmosphere that encourages people to spend time in your store. Consider your layout. For example, create eye-catching displays to draw attention to your most popular products.

Related Read: Smoke Shop Decor: 5 Modern Smoke Shop Design Ideas

Aside from friendly staff and a welcoming atmosphere, find ways to anticipate your customers’ needs. Whether it’s remembering their favorite cigar brand or offering expert advice on the latest vaping gear, personal touches matter.

Pro tip: Use your POS system to get valuable insights into individual customer preferences, purchase histories, and buying patterns. Use that information to deliver personalized experiences that make your customers feel special.

Leverage Technology To Increase Smoke Shop Revenue

We’ve answered the question: How much do smoke shops make? As you can see, what you make depends on location, demographics, product selection, inventory management, customer service, and more. 

What can’t be underestimated is how much of a role technology plays in increasing your revenue. Particularly, a smoke shop POS system. With industry-specific technology, you can:

• Manage complex stock, including carton-pack inventory features.
• Track customer purchase history and preferences to inform loyalty programs.
• Utilize high-risk processing and age verification to help manage compliance.

…and more. You need a POS system that helps you navigate the challenges of the tobacco industry. What you make is directly impacted by how you manage your smoke shop. 

Cigars POS is designed specifically for smoke shops. You can modernize your smoke shop and drive revenue with reliable, fast, efficient support and an easy-to-learn system. See it in action yourself by scheduling a demo with our smoke shop experts today.