Pete Davis wrote:
Here is an example of a ROI period ending.
I put in a $500/mo T1 and rent a $100/mo tower space. My fixed costs
I put in a $1000 AP and router, and buy 100 $200 CPE. I am now $21000
in the hole.
Each customer is paying me $50/mo. ($5000/mo total)
My ROI is 5 months, and my fixed cost per customer is $6 (upstream
bandwidth and tower rent), leaving me $32/mo ($3200) "after ROI" profit.
DOH! - Thats $44/mo/sub profits in my dreamworld wisp.
That's all fine and good if this is your hobby, and you are not trying
to make a living at this.
I just need 5 of these towers/AP's/model to pay for salaries, trucks,
replacement CPE, installers, tools, and trips to conventions and trade
I also need 3 more of these towers to pay interest on the bank note
from borrowing the original $21,000, which was more like $200,000 by
the time we over-spent, under planned, over estimated the demand,
underestimated the costs, overestimated the employees abilities to
work, underestimated the damage that lighting can cause, and so on and
I also need 7 more of these towers to offset the cost of not actually
installing 100 clients on day 1, and not getting $100 tower rent, not
getting 100 clients per AP, and not getting $200 CPE, and to offset
the deadbeats who write hot checks, paying the cell phone bill, buy
the fender when an antenna falls off of the roof during an install,
buy the insurance to pay for it next time, buy new PCs, put tires on
the trucks, change the oil, buying a mail server, buying another
server to remove the spam from the first mail server, buying spare
servers, routers, tools, and paying consultants when I cannot figure
Then I need another 14 towers to pay for the psychotherapist when go
nuts trying to manage 2900 subscribers, who are all bitching and
moaning because their PC has a virus, or their kid is downloading
porn, or maybe they are getting spam, or they can't get their
bittorrent client to download more than 500kbps.
I am not there yet. We are still working on getting tower number 7
online, and installing customer number 350'ish, and I am not on the
mood altering drugs... yet.
Eventually, there is a model there for making money in this business
somewhere between the hobby stage and the looney bin.
The ways to do that should be the same as any other business whether
you are selling internet, real estate, health care, computers, or donuts.
1: Time is money, so don't waste time or money.
2. Don't cut corners.
3. Don't piss off the customers.
Travis Johnson wrote:
There is no such thing as "average profit per sub after ROI period".
Let me give an example:
I lease all my CPE. It is a recurring monthly debt that will never go
away. Even after 3 years, when I own the CPE, there will be new CPE
that needs purchased... and thus new towers, new AP's, new backhauls,
new routers, new bandwidth, new whatever. Even if I move that paid
for CPE to a new customer on the edges of my network, there are still
costs mentioned above for that customer.
Maybe I'm not thinking the same as you, but I can never see an "after
ROI period". It never happens.
Tom DeReggi wrote:
I agree current profit is irrelevant, when considering company
totals during the early growth period.
But calcualted future Profit clearly is relevant, as far as how much
profit will be made per sub, and how soon.
Profitabilty can be misleading when jsut considering accounting
paperwork (profit loss / balance sheets)
I'll give an example:
Lets say a company gets an ROI in 1 year. And had 4 years of selling
subs. And by the 4th year, profit would be being made from each sub.
But then lets says a company had a 100% growth spurt in the 5th
year. And lets say there is a 1 year ROI, meaning 12 dollars needs
to be spent for ever new dollar that is made. Because the growth
rate of the company is so much higher in the later year, the
expendatures are far greater than the revenue comming in from the
samller customer base taken on the first 4 years. Thus, it appears
the company is losing money and not profiting.
When in actuallity, the company has record high success. All
pre-existing subs ARE 100% profitable, and lot of new growth has
been made to replicate the previous years successful model.
So yes, profitable books may mean a company is not growing and not
making new sales.
However, showing the average profit per sub, after the ROI period is
a VERY relevant bit of information. Its what defines the value of
the business model in my mind.
In other words:
Forcasted Profit margin based on current years proven track record.
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message ----- From: "Matt Liotta" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>; "WISPA General List" <email@example.com>
Sent: Tuesday, May 30, 2006 6:19 PM
Subject: Re: [WISPA] This is HUGE!
Profit is irrelevant for an early stage growth company.
Peter R. wrote:
Because number of subs is the measuring stick.
Revenue is more important; but profit is the most important.
Not many can speak to profit, so they measure in subs.
Matt Liotta wrote:
Not sure why the number of customers is even important when the
quality of customers can vary so wildly. I run into WISPs
regularly whose ARPU is barely above $100. At 1000 customers an
ARPU of $100 is only $1.2M per year. That's a lot of radios and a
lot of customers for very little revenue. Compare this to
CBeyond, which is an Atlanta-based CLEC that in recent time went
public. Today they have about 17,000 customers, but their ARPU is
$761. With just 1000 customers, an ARPU of $761 would be worth
$9.1M. Or to look at it a different way, with 17,000 customers an
ARPU of $100 would only be $20.4M compared with the $155.2M they
pull in now.
A WISP would be wise to raise their ARPU as opposed to the number
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