binary1000
Premium
join:2005-10-04
White Lake, MI
| ROI
I have more questions ...
I've been reading these posts for months now and I am wondering how some of you are calculating ROI. I see postings about folks buying $1300 900Mhz gear to get around trees, etc. and people spending a lot of time trying to get a link to work, etc.
When you folks do all this work, buy all this custom equipment, spend all this time trying to get links to work, how do you bill the customer and what do you charge them extra per month? Surely you can't justify doing all that work at normal install fees and buy special equipment for a $30/mo user since the payback could be a few years or more.
How do you all bill for the harder installs and how much do you mark up the additional equipment needed to make a link work so that you can get a reasonable payback time? |
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John Galt
Premium
join:2004-09-30
Oceanside, OR | You left out the 40 hour days....
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A is A |
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bcbuie
join:2005-07-20
| reply to binary1000
If you have to spend cash to buy all the customer equipment, then yes letting the customer pay $30/month or $40/month for the equipment would kill your business.
But most businesses should be able to get a business line of credit, or even use a personal home equity loan. As long as the customer is paying more per month than you are to pay off the loan then you come out ahead, in addition to the profit on the service.
The 900MHZ CPE is in the $300 - $600 range (depending on brand and type), not $1300.00.
We do it this way; we give the customer two choices. They can pay $X/month with no contract and they can buy the equipment outright at our cost. Or, they can sign a 2-year contract for $X-$15/month, + roughly $20/month for the equipment. If they break the contract before 2 years they have to pay a cancellation fee and return the equipment. At the end of the 2-year period they own the equipment and are paying $15/month less than if they didn't sign a contract. So they not only get to finance the equipment over 2 years but they also save money on the service in the long run.
Not the only way to do it, just one way to skin a cat. The idea is to give people an incentive to sign the contract.
Ben |
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pdg2
join:2005-10-19
Waterford, MI
| Since $600 of equipment isn't covered in 24 months at $20/month, I assume the remaining $120 is paid for when the equipment is installed? + an install fee to cover the time cost as well? Otherwise it seems like even with the monthly fee the GROSS profit on one user over 12 months at $30/mo is $360 - $120 = $240 - infrastructure costs of say 20%, to net possibly $198 per year on a user? And we haven't even counted the personal time to get the account running.
Granted, if the user cancels you get the gear back less the costs to dismantle it, but you are paying carrying costs on the equipment balance all that time.
I just did an Excel budget. With 122 users in 17 months it shows NET monthly figures (on just the residential users) of $3387 with:
$32.95/user + $199 install fee
less
$240 cost for CPE and install
$633/mo for monthly recurring support costs
$32.95 x 122 = $4019 - $633 = $3387
but for every new user that gets installed, we lose $41 + install costs, which takes about 3 months of the sub fee to pay off.
So it seems like one really needs to get to over 300 users to make this into a real business. |
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bcbuie
join:2005-07-20
| reply to binary1000
I was using $20/month for the lower cost CPE (we use indoor CPE that run $450). In general we take our total equipment costs, add 10% (5% simple interest for 2 years), and then divide by 24. We have different equipment costs for indoor installs, outdoor installs, and "advanced installs".
We don't eat any money, trust me.
Also, there is no way we are are talking $30/month. You are correct, if you are in a market where that kind of price point is necessary then the business model doesn't work out well. We aren't in that kind of market.
Ben |
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VariableARK
join:2003-03-17
USA | reply to binary1000
and you dont use 900mhz everywhere, use 2.4 where you can. |
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John Galt
Premium
join:2004-09-30
Oceanside, OR
| reply to binary1000
Spreadsheet and discussion...
»www.wispreviews.com/viewtopic.php?t=56
»www.cwlab.com/financial/WISP-Fin···tail.xls
This is from a few years ago, but is still valid. The equipment costs have changed a bit...
I reworked this spreadsheet many times, and cut it "to-the-bone" for a four tower system servicing 400 subs.
It still requires $80,000 capitalization plus a $120,000 credit line. This is for 900 MHz gear ($500 CPE/install cost) in a tree-dense area and presumes that I get all 400 subs on-line in four months. That's why I made the comment about "40 hour days"...
$99 installs...we own the gear.
And it requires that I have a truck/van, all the tools, paid for and no burden to the company other than gas/insurance.
The CPE costs are the killer...
As bcbuie pointed out there are ways to manipulate this, but expect to pay with a "firehose" and get your returns with an "eyedropper". This isn't a business for the faint-of-heart. It isn't a question of "throw up some gear" and wait for the big checks to start rolling in...The good news is that you can recover your initial capitalization in about 36 months and start making a real profit.
Check out the spreadsheets...
YMMV...!
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A is A |
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Semaphore
Premium
join:2003-11-18
Arnprior On. | reply to binary1000
If it was a real money maker there'd be a lot more folks doin it
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www.gozoom.ca |
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superdog
I Need A Drink
Premium,MVM
join:2001-07-13
Lebanon, PA
 ·WaveCrazy.Net
| said by Semaphore  :If it was a real money maker there'd be a lot more folks doin it Whats money?? . Oh, I know!, that's what people make when they work a job from 9 to 5 and punch a clock!:D. I just may make some of that one day!;)
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»www.wavecrazy.net Join WISPA today! »www.wispa.org/ |
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wispman
join:2004-12-21
USA | I must be dyslexic because I thought it was 5-9???? |
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shamanfk
join:2001-03-12
Fort Kent, ME
| reply to binary1000
You have to support your WISP before it can support you.
We use 2.4 gear, waited until CPE prices and bandwidth costs dropped,,started with borrow AP, Antenna..
Had customers lined up and installed 22 the first month, which covered our ongoing bandwidth costs.
We left the customers house with an install fee roughly equal to the CPE cost and 1 months bandwidth (breakeven).
however, we retained ownership of all equipment and should they discontinue our service, we get the equipment and re-install for another install fee.
The first nine months we used all cash flow to build out to 75 customers,,, upgraded our equipment, We are soon to hit 100 customers.
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Success is getting what you want; Happiness is wanting what you get. |
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Semaphore
Premium
join:2003-11-18
Arnprior On.
| reply to binary1000
As Shaman says; If you want to get rich quick forget it. This is about long term recurring income... and you really have to want to do it for the 'fun' of it, 'cause yer gonna work yer ass off. Tim said it well before - there's times when you feel like a 'God' for bringing broadband to the masses, and then there's time you feel like a tool for not being able to get something 'simple' to work.... BTW I work about 14-16 hours a day between my real job and my WISP.
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www.gozoom.ca |
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PersComp
Premium
join:2005-08-17
Cayce, SC
| said by Semaphore :.... BTW I work about 14-16 hours a day between my real job and my WISP. Ditto! I just hope my wife can tolerate my long days until I can get on the other side of the ROI schedule! |
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superdog
I Need A Drink
Premium,MVM
join:2001-07-13
Lebanon, PA
·WaveCrazy.Net
| said by PersComp :Ditto! I just hope my wife can tolerate my long days until I can get on the other side of the ROI schedule! Good luck!. It takes a lot of hard work to be able to see the "light at the end of the tunnel". You may want to get her to help?. If she picks up an interest in what You are doing?, it makes it a LOT easier than telling bold face lies to her!:D
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»www.wavecrazy.net Join WISPA today! »www.wispa.org/ |
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Semaphore
Premium
join:2003-11-18
Arnprior On. | HAHAHAHAHA.....She's my finance department
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www.gozoom.ca |
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PersComp
Premium
join:2005-08-17
Cayce, SC
| reply to superdog
said by superdog :said by PersComp :Ditto! I just hope my wife can tolerate my long days until I can get on the other side of the ROI schedule! Good luck!. If she picks up an interest in what You are doing?, it makes it a LOT easier than telling bold face lies to her!:D LMAO!!! Like Semaphore, mine takes care of the "office"....come to think of it, she hasn't sent me a paycheck in quite some time!!:( I am trying to reel her in slow. If I over commit her, she kind of freaks out. So, I just try to be as available for her as I can and pull late nights when she goes to bed early. She has some interest, but um...er...ahem.... is not a good....shall we say "direction taker" when the directions come from me. She'll ask questions, but thinks I'm stupid or wrong if she doesn't like the answer I give her....or is that just a wife thing in general?!?!? No offense intended for any lady WISPers out there!! Please, no flaming  |
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Chele
join:2003-07-23
| reply to binary1000
"but um...er...ahem.... is not a good....shall we say "direction taker" when the directions come from me."
This is covered in page #2103, section L, subsection #34 in the "I DO" manual. Please don't tell me you threw your copy away! If you did, well, you're screwed:)
It helps if you keep her involved and take her opinions in consideration, but regardless, it's tough. Because in all honesty, I don't know if I would be as understanding as she has if the shoe was on the other foot! |
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DaDogs
Semper Vigilantis
Premium
join:2004-02-28
Deltaville, VA
| reply to PersComp
said by PersComp : She has some interest, but um...er...ahem.... is not a good....shall we say "direction taker" when the directions come from me. She'll ask questions, but thinks I'm stupid or wrong if she doesn't like the answer I give her....or is that just a wife thing in general?!?!? That is a "human" thing in general. My wife doesn't think I am an idiot, she knows it in every fiber of her being. When she gets too far out of line with it I remind her that I was smart enough to marry here and she was dumb enough to marry me. 
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How can I improve my WiFi signal? |
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PersComp
Premium
join:2005-08-17
Cayce, SC
| said by DaDogs :said by PersComp : She has some interest, but um...er...ahem.... is not a good....shall we say "direction taker" when the directions come from me. She'll ask questions, but thinks I'm stupid or wrong if she doesn't like the answer I give her....or is that just a wife thing in general?!?!? That is a "human" thing in general. My wife doesn't think I am an idiot, she knows it in every fiber of her being. When she gets too far out of line with it I remind her that I was smart enough to marry here and she was dumb enough to marry me. LMFAO..... I will stick that one away. That will come in VERRRY handy one day. Damn, I hope I use it well!!!
btw...it's 7:30 on a Sat.... so cheers!!!:D |
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PersComp
Premium
join:2005-08-17
Cayce, SC
| reply to Chele
said by Chele :"but um...er...ahem.... is not a good....shall we say "direction taker" when the directions come from me." This is covered in page #2103, section L, subsection #34 in the "I DO" manual. Please don't tell me you threw your copy away! If you did, well, you're screwed:) It helps if you keep her involved and take her opinions in consideration, but regardless, it's tough. Because in all honesty, I don't know if I would be as understanding as she has if the shoe was on the other foot! Oh, I know... I say that with all due respect for her. She didn't sign up for these long hours when we met, so I understand her frustrations...
She's a wonderful woman that just thinks I am borderline lunatic sometimes...... but since she's hot, I let her think what she wants!!!!:D  |
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