Monday, November 02, 2009

Knowing Your Numbers

Understanding True Costs True costs are an important calculation for pricing in order that services are not priced below the actual costs of providing those services. Recently, in discussions with quite a few ISPs, it was brought to my attention that the numbers they were using as a basis for pricing were incomplete. Here is an examination of factors that can influence the true costs of goods.
Costs to consider when calculating the true costs of providing DSL service
  • ATM
  • DSL circuit
  • taxes
  • IP Bandwidth
  • Router equipment lease
  • CPE
  • Installation of DSL circuit
  • Truck roll
  • Credit card charges
  • Bad debt (1.5 - 3%)
  • Billing ($1.50 - $3)
  • Customer Acquisition
  • Marketing, Advertising & Sales budget
  • Referral payments
  • Payroll for sales, customer service, admin, tech
  • Tech support costs including phones, PBX, desks, PCs
  • Mail server
  • USENET service
  • Collocation
  • Rent, electric, utilities
  • Backup Dial-up account
  • ATM circuit install
  • Profit margin
  • Back office (rent, office equipment, software, phones, utilities)
If you were pricing out wireless access, there are similar factors, plus:
  • insurance
  • tower climbing
  • tower rental
  • IP or connectivity to tower
  • radios & CPE
  • financing
  • truck roll
  • tools & extra equipment
Need someone to go over the numbers with you? Call RAD-INFO for a True Costs Tune-Up today at 813.963.5884. (This was originally printed on my website in 2004)

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