Subscriber Asset Values - VoIP FAQs
What is the
asset value of each subscriber I
secure, should I wish to sell my
VoIP business and retire?
This is a
very good question. In addition to the cash flow
generated each month by building a large
subscriber base, there is an opportunity for a
second windfall should you wish to exit this
business by selling your subscriber base. Each
of your subscribers is an asset that can be
So what is the value of a subscriber?
The shortest answer is that it is worth whatever
someone is willing to pay. Companies become
larger by acquiring smaller companies and it
happens every day. Those that get into the
business early will be ripe for acquisition when
the larger companies come courting.
There are four key factors that determine the
value of a VoIP provider's subscriber base. Each
of these factors plays a very critical role in
Average Revenue Per User - ARPU is based
upon your retail price for service. A subscriber
base averaging $29.95/month is worth about three
times that of one that averages only
of Subscribers - The larger your subscriber
base, the more it is worth. It takes just as
much time and legal expense to acquire a
subscriber base of 100 as it does 100,000.
However, the value for the buyer is much greater
with a large subscriber base. For example, a
subscriber base of 1,000 is worth four times as
much as a subscriber base of 500. Imagine the
value of several thousand!
Expectancy - The subscriber average life
expectancy of a low-priced, low-quality VoIP
service is very short while the average life
expectancy of a high-end, high-quality
service is very long (it is too new now to know
how long). Average life expectancy is determined
by the branded reseller's ability to control
subscriber churn. If a buyer can expect to enjoy the revenue for a longer period of
time, the subscriber is obviously worth more. So
a subscriber base with a longer life expectancy
can increase the value by as much as six times
that of a low-priced, low-quality service.
Demand - The last critical factor is the
industry climate. If a VoIP provider has raised
the necessary funds to build a large base they can
achieve it far
quicker by buying out other providers then
if they secured the subscribers themselves. So if a
branded reseller is fortunate to find two buyers
willing to bid against each other, it can
dramatically impact the price they can secure
for their subscribers. And without a buyer, the
subscribers have no value other than the cash
flow to the owner. So the marketplace and the
timing of a sale can have a major impact on the
price you receive.
these four key factors in mind, it would not be
unreasonable to expect hundreds of dollars per
subscriber for a high-end, high-quality provider
with thousands of subscribers!
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