ISP Sample Financials
In starting an ISP, the basic tasks you will want to consider are:
Securing funding for the project
Acquiring the equipment needed
Contracting for a backbone (Internet) connection
Contracting for telephone services (unless using wireless only)
Installing, configuring, and testing all equipment
Marketing and managing your ISP
How much revenue can an ISP generate?
Based on the success of other ISPs, in a city with 250,000 people an ISP with a fairly agressive advertising campaign should have 6,250 subscribers within 6 to 12 months. At this level, a 9-to-1 ratio (nine subscribers for every phone line) should provide a premium service with no busy signals. With this ratio, 696 phone lines will be needed (6250 subscribers divided by 9, rounded to the nearest 24 lines). At a subscription rate of $20 per month the revenue figures look like this:
Revenue
- from 6250 subscriptions $125,000
- from 500 domains hosted $10,000 $135,000
Telephone expense ($17,400)
(696 digital lines at $25 per line)
Backbone expense ($4,000)
Building rent or mortgage ($5,000)
Salaries ($30,000)
Payroll taxes ($2,295)
Advertising budget, per month ($19,500)
Miscellaneous monthly expenses ($13,500)
Equipment depreciation (based on ~$600k of equipment) ($16,666) ($108,361)
$26,639
Gross margin per month $319,668 annually
19.7% gross margin
The above values are consistent with our knowledge and experience, but every city and situation will be different.
A similar table can be found on the web site of another networking equipment manufacturer (Cisco). Their figures for an ISP in 1999 with 100,000 56k subscribers at $22 per month (plus a $25 installation fee) and 1000 high-speed (e.g., wireless) subscribers at $3000 per month (plus $2000 installation fee) look like this:
Revenue, first year $66,900,000
Total expenses, first year ($53,759,889)
$13,140,111
Gross margin dollars at end of first year $1,095,009 monthly
19.6% gross margin
These figures show about the same overall profitability.
ISP Sample Financials
In starting an ISP, the basic tasks you will want to consider are:
Securing funding for the project
Acquiring the equipment needed
Contracting for a backbone (Internet) connection
Contracting for telephone services (unless using wireless only)
Installing, configuring, and testing all equipment
Marketing and managing your ISP
How much revenue can an ISP generate?
Based on the success of other ISPs, in a city with 250,000 people an ISP with a fairly agressive advertising campaign should have 6,250 subscribers within 6 to 12 months. At this level, a 9-to-1 ratio (nine subscribers for every phone line) should provide a premium service with no busy signals. With this ratio, 696 phone lines will be needed (6250 subscribers divided by 9, rounded to the nearest 24 lines). At a subscription rate of $20 per month the revenue figures look like this:
Revenue
- from 6250 subscriptions $125,000
- from 500 domains hosted $10,000 $135,000
Telephone expense ($17,400)
(696 digital lines at $25 per line)
Backbone expense ($4,000)
Building rent or mortgage ($5,000)
Salaries ($30,000)
Payroll taxes ($2,295)
Advertising budget, per month ($19,500)
Miscellaneous monthly expenses ($13,500)
Equipment depreciation (based on ~$600k of equipment) ($16,666) ($108,361)
$26,639
Gross margin per month $319,668 annually
19.7% gross margin
The above values are consistent with our knowledge and experience, but every city and situation will be different.
A similar table can be found on the web site of another networking equipment manufacturer (Cisco). Their figures for an ISP in 1999 with 100,000 56k subscribers at $22 per month (plus a $25 installation fee) and 1000 high-speed (e.g., wireless) subscribers at $3000 per month (plus $2000 installation fee) look like this:
Revenue, first year $66,900,000
Total expenses, first year ($53,759,889)
$13,140,111
Gross margin dollars at end of first year $1,095,009 monthly
19.6% gross margin
These figures show about the same overall profitability.
ISP Sample Financials
In starting an ISP, the basic tasks you will want to consider are:
Securing funding for the project
Acquiring the equipment needed
Contracting for a backbone (Internet) connection
Contracting for telephone services (unless using wireless only)
Installing, configuring, and testing all equipment
Marketing and managing your ISP
How much revenue can an ISP generate?
Based on the success of other ISPs, in a city with 250,000 people an ISP with a fairly agressive advertising campaign should have 6,250 subscribers within 6 to 12 months. At this level, a 9-to-1 ratio (nine subscribers for every phone line) should provide a premium service with no busy signals. With this ratio, 696 phone lines will be needed (6250 subscribers divided by 9, rounded to the nearest 24 lines). At a subscription rate of $20 per month the revenue figures look like this:
Revenue
- from 6250 subscriptions $125,000
- from 500 domains hosted $10,000 $135,000
Telephone expense ($17,400)
(696 digital lines at $25 per line)
Backbone expense ($4,000)
Building rent or mortgage ($5,000)
Salaries ($30,000)
Payroll taxes ($2,295)
Advertising budget, per month ($19,500)
Miscellaneous monthly expenses ($13,500)
Equipment depreciation (based on ~$600k of equipment) ($16,666) ($108,361)
$26,639
Gross margin per month $319,668 annually
19.7% gross margin
The above values are consistent with our knowledge and experience, but every city and situation will be different.
A similar table can be found on the web site of another networking equipment manufacturer (Cisco). Their figures for an ISP in 1999 with 100,000 56k subscribers at $22 per month (plus a $25 installation fee) and 1000 high-speed (e.g., wireless) subscribers at $3000 per month (plus $2000 installation fee) look like this:
Revenue, first year $66,900,000
Total expenses, first year ($53,759,889)
$13,140,111
Gross margin dollars at end of first year $1,095,009 monthly
19.6% gross margin
These figures show about the same overall profitability.
No comments:
Post a Comment