Rurality or being underserved has rarely been an indicator on its own of whether someone will pay more for broadband. There are three more important factors.
1) Prospects individual Need. (for a specific purpose)
2) Wealth (The value they put on their times)
3) Value perceived of the service (What isthe advertised value of broadband by others, nobody wants to get ripped off out of principle)
A1) When someone owns their own home business with 4 or 5 computers, or someone is disabled and orders their medicine online, or etc, they are willing to pay more. I justified $500 a month for a T1, for two year when I was one of two people working in my home office, as it was my only choice, BUT BECAUSE I HAD A HIGH NEED. I could not do business without it. The two years before I had my home business, I also did not have choices, so Dial UP was acceptable based on my budget. I couldn't fathem paying over $20 a month. UNtil the day I realized how much money I was loosing in time online when trying to run a business. And realizing I could save $2000 a month working from home. I cleared $1500 by buying that $500 T1.
A2) When I serve wealthy neighborhoods, I get past the install fee problem in about two seconds, and don't discount it. So I go after those markets first. The bottom line is a lawyer, would easilly pay a $100 a month for a home connection if it means they can avoid one weekend trip a month to the office, when they value their time at $400 an hour. They loose more money squabbling about the cost in time than they do just paying it. PLus as a successful individual, they understand the value of professional service and support. They want the same high quality saervice they receive in their offices.
A3) When Cable and Verizon advertise $19 Broadband, thats what custoemrs think its worth. Its funny I actually had a television station, will 30 employees moving into a new office, call the other day and get upset, because he though he should pay only $30 a month for broadband, And I tried to charge him $150 for a 2 mbps service. Thats the value he put on it. Hes sees Cable offer 5mbps for $29. But whats ironic, is he doesn;t even know what a megabyte is. But he didn;t wantto buy form someone that he thought was tryingto take advantage of him, and rip him off. Its funny, when the only other option he could find came out to be $600 a month, all a sudden I didn't seem so unreasonable anymore. He wonders why he was put on the end of the install schedule. Peopel aren't naturally cheap. They get educated by the market and advertising to learn their perceptions. Whats even moe ironic, is the company, before they moved to the location, I learned paid closer to $800 a month for their T1. The person deligated to order the service, just wasn't privy to that information. Accounting took care of the bill because it was sent to them, they didn;lt know what it was for, and the previous tech guy did all the evaluation of their past provider choices. Its the ISP's responsibility to educate their prospects on their need, if you don't they won't understand how much they should pay, and can only go on what they hear and see on advertising, where the fine print is never seen.
So how much you want to charge for residential depends on your Marketing plan and target market. Do you want to take the whole market or a small sliver of specialized need market?
In my wealthy underserved markets, I charge $500 install fee, and I am under charging for what I could get. Its my home town, so I don't want to gouge my community members. $500 was a fair reasonable price based on what it cost me to deploy, which was more than I charged them for 900Gear, a quality install, and labor.
However, in main stream served suburbia, I get 95% hang up, after disclosing $300 install fee. However, the remaining 5%, are profitable to serve. So I hand pick.
Whats going to get exciting is mainstream residential wireless, because of low cost gear QUALITY gear like Trango broadband and Mikrotik.
Do you want to keep the price high and put money in your pocket to cover man hours, or lower your price, and increase your volume and market potential? Are you looking to be more profitable today while on a cash constraint, or are you well financed and looking for the maximum payoff, considering you may sell for high multiples, after you own the client base? That determines price.
I have found that the install fee is the deterent NOT the monthly fee.
If you are in an under served area and have no competition, your ownly task is to determine thevalue to your client base. Are they tech savy or not?
I find that just about anybody will pay $100 to get broadband installed. Without options in underservia, just about anyone will pay $250 to get broadband installed.
However, if in underserved, and high need and wealth, their only other choice is Satelite at $600-$1300 install and $89 a month, and its just a little faster then dial up, and you'll blow them away with support and performance. So why be cheaper?
My advise is to get as much upfront as possible when you can, because you never know what lies a head in the future, don't wait for your ROI if you don't have to. Don;t sell the equipment unless you have to.
What I will tell you is that in a served area, no matter how much need, $300 install fees will not win you residential clients.
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
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