I assume that you are not just starting out, so your numbers may be what
you are really looking at.
If you DON'T count CPE costs, mail servers, tower costs, equipment
depreciation, installation, debt service and lease payments, the costs
of a customer are only the upstream bandwidth costs ($500 T1 per 100
clients, maybe) and support staff and overhead for the staff. This
doesn't cover any costs associated with adding new subscribers, or any
CPE replacement
These aren't my numbers, but might look like what you might be looking at.
Rent: $1000/mo (including towers and office)
Salary: $6000/mo
cell phones: $500
Bandwidth: $2500
Van operating costs: $1000
========================
$11000 per month for 500 clients = $22/mo.
Thats about as high as I could see most of those costs running you for a
two man operation. Your area may demand higher (or lower) costs for
salaries and rent. Obviously, the more clients you have the cheaper
those costs are. If you have that same burn rate for 250 subscribers,
then the cost per customer will be $44/mo. If you can squeeze 1000 subs
out of that same overhead, then you are only spending $11/mo. Its really
about the economies of scale at some point. The bigger your subscriber
base, the lower your costs, and the higher your bottom line.
As far as the question about what to charge, start as high as you can
sell it until the installation waiting list gets under control. Its a
lot easier to move the price from $69/mo to $59 to $49 to $39 than to
try to take it the other direction.
You WILL lose money on the first several customers, until you have
enough recurring revenue to cover the recurring expenses, unless you can
start off with LOW overhead and add customers QUICKLY. Our 1st customer
cost us about $75,000 to get him on line. The next several were about
$1000 each, and we still had fixed recurring revenues of several hundred
dollars per month, with minimum income. As we learned to buy cheaper
CPE, do better and cheaper installs, and as we got enough clients to
cover the T1 costs and rent and salaries, it NOW costs us under $200
cash out of pocket to add a new client, and adds only about $7/mo to the
bottom line recurring costs, and $48 (average) monthly gross revenue.
Our second 300 subscribers will be MUCH cheaper and easier to add than
the 1st 300.
Pete Davis
NoDial.net
Mark Nash wrote:
My partner has done some quick analysis at COST PER CUSTOMER. This does not
include CPE hardware or one-time purchases...just monthly expenses that must
be covered by revenue from our customers. Items like fuel, insurance, tower
leases, bandwidth, billing & administration, support costs, cell phones,
etc. He came up with about $37 COST per subscriber.
I'm not really interested in how much we charge at this point...just coming
up with a valid calculation of COST.
Does $37 per subscriber seem right? I think it's high (I've only given it
about 15 minutes worth of thought).
This is something, of course, that everyone should be looking at, so I think
some discussion would be helpful.
Mark Nash
Network Engineer
UnwiredOnline.Net
350 Holly Street
Junction City, OR 97448
http://www.uwol.net
541-998-5555
541-998-5599 fax
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