Feb 1 Launch: Toll-Free Numbers, Online Faxing, Virtual Numbers

[VOIPoTim]

Tim, how are we coming with the residential pricing post?

Well there's definitely a tradeoff in terms of marketing vs how pricing is structured. I'm trying to see if I can find some middle ground. The problem is that our costs to comply with various new initiatives that the government may be require are not factored into pricing if they don't exist today. So it's hard to "include" all of them without being able to tell what's going to happen in the future.

To qualify this, one thing I do not support is changing pricing to accommodate for required changes for customers who are in a prepaid term. I think that's a risk we as a service provider take on if we choose to accept a prepayment. I also feel that if we accept prepayment, we should accept it all at once so there are not additional charges until the term renews unless there are international calls or other usage based services. This is how our billing system has been designed to handle things already.

I have seen a lot of posts with people looking for bottom line pricing though and am trying to find some middle ground.

Any ideas?

[usa2k]

... I'm trying to see if I can find some middle ground. ...

I have seen a lot of posts with people looking for bottom line pricing though and am trying to find some middle ground.

Any ideas?

The acid test may be what DSLR says.
They are tough on you guys! Thus, I understand hesitation.

Right here and now we are your test group.
(I see this thread is in the beta area - not alpha)
Somewhere on this site we can be a sounding board.
(Hopefully people can comment here and not leak unpublished info!)

Your safe, all-you-can-eat -price is $25 (Packet8/Vonage)
$20 plus fees is competitive (Packet8 stayed there a loooooooong time when new.)

I can remember when Vonage was $40. But the Bells were higher too.
Two lines at $25 plus fees (same adapter) would be a great deal

You are in the best position to say what is right.

I would hold off public number filtering until it is polished.
Hopefully voicemail is rock solid with message indicators or that will get you heat.
Outgoing CID/CNAM will be a must for reputation.
CID/CNAM and Phone Book to CNAM will be something to earn praise.

Forward to sip as we've seen will also be praise worthy
(Vonage dropped FreeWorldDialup to Vonage calling for fear of fraud.)

Prepay is a double edged sword for penny pincers gamble and cry loud when they don't get all they imagined. I am not a prepay person. You may want to hold off.

Disconnect fees are a double edged sword so you may want to charge for the adapter and let them keep it. If you do this too cheaply, then you will see people getting the adapter and leaving for other pastures. Especially the rebate near nothing type marketing.

Money-back trial period is never long enough. 60 days is better than the 30 or 15 days that have been marketed. 500 minutes was another restriction that seems fair. Within 60 days but over 500 minutes should only require the difference at a set per minute rate, so people can get a good test drive (make it $0.039 per minute for over 500.)

I fear the admin concerning adapters for Money-back returns.

[gbh2o]

Well there's definitely a tradeoff in terms of marketing vs how pricing is structured. I'm trying to see if I can find some middle ground. The problem is that our costs to comply with various new initiatives that the government may be require are not factored into pricing if they don't exist today. So it's hard to "include" all of them without being able to tell what's going to happen in the future.

To qualify this, one thing I do not support is changing pricing to accommodate for required changes for customers who are in a prepaid term. I think that's a risk we as a service provider take on if we choose to accept a prepayment. I also feel that if we accept prepayment, we should accept it all at once so there are not additional charges until the term renews unless there are international calls or other usage based services. This is how our billing system has been designed to handle things already.

I have seen a lot of posts with people looking for bottom line pricing though and am trying to find some middle ground.

Any ideas?

I think there are two issues here Tim. First is the issue of 'real' government mandated fees and taxes. Although the public moans and groans, I believe they generally understand that you must pass through any _new_ ones that are meant to be user paid. Second is the elusive "compliance fees" which are quite obviously what I call "oops and gouge" fees; oops, we screwed up in our cost calculations and planning phase and need to charge more to balance the books, or the let's see how much we can tighten the thumb screws on our customers with fees that only add to our bottom line without showing an actual price hike.

The first is the reality of government largess and the politicians need to grab every penny they can to keep the ship from sinking... we pretty much understand that to be beyond your control. The second issue is the one that gets caught between the public's teeth and _really_ irritates the hell out of them because they just can't get it out... the dreaded 'unfees'. Don't go there, just offer price plans that are fair to the customer and that reflect the actual cost you need to charge to do business without the 'unfees'. If you need to raise prices based on sound business practices, then do so when contracts end, monthly, quarterly, semiannually or annually as the case may be. Give fair notice, and no after the fact rate hikes.

The issue of prepayment is simply one of having a contract for services. Unless the contract allows for surcharges for things such as fluctuating fuel costs, then the contract should stand as it is written. If I enter a contract for 10000 gallons of #1 diesel at $x.xx/gal I expect to receive exactly that, regardless of any market fluctuations.

[RockyBB]

Any ideas?

It's so difficult being me, but as you asked I feel obligated to provide you with your pricing strategy. Too bad you've wasted so much time without consulting with me upfront.

First, you will not collect prepayments. You've stated in other messages that you're rolling in dough, so you don't need loans from your customers. Instead you will offer discounts for term commitments. No commitment, the price is $24.99/month. Commit for 1 year, get 10% off ... bill will be 90% of 24.99 = $22.49/month. Commit for 2 years, get 15% off ... bill will be 85% of 24.99 = $21.24/month. You will bill that every month. On each emailed invoice you will keep a running total of savings due to commitment. For the two year term example, the discount is 15% of 24.99 or $3.76. After 6 months, continuing the example, that running total adds up to $22.56. Your invoice will say "Congratulations! Your 2 year term plan so far has saved you $22.56. You earn a total of $90.24 when you complete the 18 months remaining in your plan." If someone cancels early, they pay you that savings back because they didn't earn the discount. The amount will be no surprise. Someone has problems early on, the penalty is relatively light. The longer someone stays, the tighter the handcuffs. At end of the term, discounts stop until customer recommits. Then the cycle starts again, but the 1 year renewals get their first month free; the 2 year renewals get their first two months free. Reward the loyal renewing customers. Of course, those free months populate the restarted cumulative savings amount! This monthly billing strategy also allows you to bill taxes as they get applied by jurisdictions and not have to eat them if some states start to require them. I never liked "bottom line pricing" because if Ernie's state charges tax and my state does not charge tax, you'll be using my money to pay Ernie's taxes. I'll agree that you should try to avoid the "surcharges" that are not passed through -- that will give you a true marketing differential against just about every other VOIP competitor...add on only "honest" taxes.

For market segmentation purposes, you might consider a "Titanium Plan" at the $24.99 price point, which includes 5,000 minutes of calling, with extra minutes at 4¢. Also a "Platinum Plan" at the $20.99 price point with 2,500 minutes of calling, with extra minutes at 3¢ each, and a "Gold Plan" at the $14.99 price point with 500 minutes of calling, with extra minutes at 3¢ each. Term discounts apply to the fixed plan charge, not to the usage charges. By staying out of the "unlimited" game, you'll be avoiding the 3rd World Dictionary Police (otherwise known as home based telemarketers and phone rooms) and scaring off the heavy users who you don't want anyway, and you'll have a compelling reason for subscribers to enroll their "friends and family" because VOIPO to VOIPO will not count against their allowance (like Verizon Wireless IN-NETWORK)! For heavy international users, offer a $5 monthly fee in return for a 5% discount on your international rates. Send all your Directory Assistance traffic to 1-800-YELLOW PAGES and advertise no extra charge for directory assistance calls.

I mentioned to your Brandon on a long phone call a bit ago that you should not be offering adapters that are not routers. Especially if you are going mass market, you don't want to ship out a PAP2 only to surprise grandma that she has to now buy a router -- talk about a "gotcha." I like the way that Vonage does it -- asking customers to identify what their network looks like and shipping the proper device. I don't know if you have the scale to offer multiple devices; if not, ship the combo unit only. As time goes on you'll have the need to replace defective adapters -- I like the idea of having returned units (after appropriate cleaning) be sent out as replacements -- so you'll need a steady supply of those, which you'll get by having a charge for canceling service and keeping the adapters.

This ain't pricing, but if you've made it this far I'll squeeze it in... For as long as I've been in telecom I've always been a one man cheerleading squad for call branding. After your customer dials a phone number, they should hear some appropriate electronic swoosh sound with a whispered "voipo" ... which will create some attachment to the brand (imagine the interest among resellers with their own branding!), while eating up post dial delay time. This should also be done for incoming calls to tollfree numbers that your customers sign up for. Of course, the control panel should have some hidden toggle on/off option to assuage the screamers.

[NY Tel Guy]

It's so difficult being me, but as you asked I feel obligated to provide you with your pricing strategy........ Of course, the control panel should have some hidden toggle on/off option to assuage the screamers.

Ahhhh, whadda you know.

[jmczeal]

I mentioned to your Brandon on a long phone call a bit ago that you should not be offering adapters that are not routers. Especially if you are going mass market, you don't want to ship out a PAP2 only to surprise grandma that she has to now buy a router -- talk about a "gotcha." I like the way that Vonage does it -- asking customers to identify what their network looks like and shipping the proper device. I don't know if you have the scale to offer multiple devices; if not, ship the combo unit only. As time goes on you'll have the need to replace defective adapters -- I like the idea of having returned units (after appropriate cleaning) be sent out as replacements -- so you'll need a steady supply of those, which you'll get by having a charge for canceling service and keeping the adapters.

You know what, I never really thought of that, but this is true. I guess I didn't notice since I already had dsl router I could connect to. But, you do have to come to that fact that there are multiple phones in different locations in one house. So, hooking each one up to an adapter, and keeping them connected to internet could be a challenge. I personally use a Linksys Voip Wifi Adapter Bridge (forgot the model number). If you have cordless telephones, wouldn't be a problem. But, if you want the whole house connected, how can that be arranged?

I tried the suggestion somewhere on the forum where you can connect the adapter to the phone line directly, and the whole house will use voipo. However, that test was unsuccessful.

[Brian]

For market segmentation purposes, you might consider a "Titanium Plan" at the $24.99 price point, which includes 5,000 minutes of calling, with extra minutes at 4¢. Also a "Platinum Plan" at the $20.99 price point with 2,500 minutes of calling, with extra minutes at 3¢ each, and a "Gold Plan" at the $14.99 price point with 500 minutes of calling, with extra minutes at 3¢ each. Term discounts apply to the fixed plan charge, not to the usage charges. By staying out of the "unlimited" game, you'll be avoiding the 3rd World Dictionary Police (otherwise known as home based telemarketers and phone rooms) and scaring off the heavy users who you don't want anyway, and you'll have a compelling reason for subscribers to enroll their "friends and family" because VOIPO to VOIPO will not count against their allowance (like Verizon Wireless IN-NETWORK)! For heavy international users, offer a $5 monthly fee in return for a 5% discount on your international rates. Send all your Directory Assistance traffic to 1-800-YELLOW PAGES and advertise no extra charge for directory assistance calls.

Rocky,

Although I think your concept here is great, the only problem is public perception. It's the reason all the cell companies offer "unlimited" texting, cable companies offer "unlimited" internet access, and other voip companies offer "unlimited" calling. Even though you can offer a 5,000 minute plan (and if you had an unlimited plan, it would be soft capped somewhere around here anyway), Joe User is going to look at that say say "Gee, Vonage gives me unlimited calls, VOIPo only gives me 5,000 minutes" - without thinking about what 5,000 minutes really means. So, as far as marketing, I think you'd be at a major disadvantage here, although realistically everyone would be a whole lot better.

[dswartz]

Rocky made some good points, although I disagree with the "don't give ATA that is not a router". How many people nowadays don't have broadband already? If they do, they already *have* a router! I have seen more bugs and confusion involved with someone trying to get a voip "router" working in an already existing broadband setup (does the voip "router" go in front of the existing one? behind it? how do you keep the real router from intefering with the voip one?) I think this is completely backwards!

[gbh2o]

Rocky,

Although I think your concept here is great, the only problem is public perception. It's the reason all the cell companies offer "unlimited" texting, cable companies offer "unlimited" internet access, and other voip companies offer "unlimited" calling. Even though you can offer a 5,000 minute plan (and if you had an unlimited plan, it would be soft capped somewhere around here anyway), Joe User is going to look at that say say "Gee, Vonage gives me unlimited calls, VOIPo only gives me 5,000 minutes" - without thinking about what 5,000 minutes really means. So, as far as marketing, I think you'd be at a major disadvantage here, although realistically everyone would be a whole lot better.

I think that RockyBB is presenting a great idea of keeping VOIPo above the game of lies. Perhaps an advertising campaign that would compare VOIPos 'generous' offerings with the hidden/true caps buried in competitors TOS or determined through customer or news reports. VoSPs seem slow to recognize that the market has been putting a fair amount of pressure on the cellular, cable and satellite industries to 'clarify' their terms and modify draconian terms... although AT&T seems a bit slow to do anything but add a bit of foggy fluff. Then there are those few, but growing, number of state AGs that are dragging service providers to court to get 'truth-in-marketing' for their citizens. The 'professor' at a chalk board [do those things still exist] of flip charts comparing competitors 'real' numbers to educate the public might work.

Of course, all those plans and price points would depend on whether inbound minutes are charged against that pool of minutes. I don't think they can realistically charge for them separately in the residential 'plan-type' market. So, I would think that the proposed pools are probably unrealistic for outbound-only at those 'platinum' and 'titanium' levels. Of course, I don't have access to the massive wholesale market and associated costs, so I can't speak authoritatively on what US/Canadian retail per-minute rate might be profitable! And I don't know the general usage patterns for average families, etc. MY 'impression' is that 1500 minutes outbound is an _average_ use for the smaller family, but that a teenager or two blow that number away quickly, with their use unfortunately primarily higher cost intrastate, when it can be tracked.

I would say that overage charges should only be high enough to encourage moving to a higher tier if appropriate based on consistent usage. A _reasonable_ overage rate for the occasional spike probably would be a feel-good point with your customers. They shouldn't live in fear of it; stuff happens!


Oh well, I can only guess what makes people happy, and what makes for reasonable profit without good information/data on which to base my suggestions. ;-)