About a year ago, I wrote about the state of the internet cafe business in the Philippines and why it’s a seemingly losing battle. A couple of days ago, I mentioned that I started venturing into the Internet Cafe with a friend. I got emails asking why I thought the net cafe is still a viable business and here’s my take.
Again, I’ll refer you to the points I highlighted in my previous entry — location. If you believe that you have the right location then you’ll have a higher probability to succeed or even just getting back your investment in a short time.
Your goal here is to be able to recover enough of the initial capital in order to re-invest in upgrading your workstations in 2 or 3 years. Otherwise, you get left behind with older and slower PCs that you’ll lose customers (esp. gamers) to nearby competitors that offer better ones for the same rates.
The major driving force with my decision to going into the internet cafe business is different though. What I am looking into are parallel businesses that I can put on top of the net cafe business without incurring additional or too much overhead.
That way, all I need is for the revenues of the net cafe to at least cover rent, bills and wages. Whatever profits I am expecting will come from other side businesses.
What are possible side businesses that one can add on top of an internet cafe? Well, some of them are already being offered in most shops:
- Gaming cards for pay-for-play games (Level-Up, e-Games).
- Cellphone reloading for Smart, Globe and Sun Cellular.
- Photocopying, printing, scanning and CD/DVD burning services.
- Food and drinks.
- Photo-ID and photo printing.
- Custom cellphone uploads (ringtones, wallpapers, games, apps).
You can also offer outsourced services:
- Computer sales and repair services.
- Encoding/typing services.
- Digital Photo services (better than webcam quality Friendster photos).
- Card Design/Printing (calling cards, invites, certificates, custom greeting cards, etc.)
- Video conversion/authoring.
- Cellphone and electronics repair services.
If you add revenues from all these sources, they could be a significant amount on the returns. Of course, you only select the ones that your manpower can handle and your location. The rest can be outsourced. The ideas here are more applicable if you’re located in subdivisions or villages. You can look into totally unrelated combinations too — like a laundry shop and a net cafe, a video rental, a used book store, a car wash service or a 24-hour grocery.
The idea is to share the burden on the rent and bills which usually takes up majority of the operational costs.
been in the business for 2 yrs…yup it’s true upgrades and parallel businesses are definitely needed…”LOCATION”, students are the no.1 market for me….Couldn’t disagree more…..
Twitter: LoveNashyboy
says:
It’s how you manage the business. Especially the gaming freaks out there who doesn’t own any PC at home. (talking about taking advantage of the situation)
It’s a matter of marketing strategies, wit, and strategic location :0 cheers
when i was in college, i was thinking of linux-based (so no costs in getting windows, etcetera) small-time computer shops (no more than 5 computers) – however sponsored.. by ads..to pay the bills
although there is no market for it (esp. coz of gamers)
i also though perhaps, an added service might be something as simple as friendly customer service.. or whatever
however i don’t have the cash to start one.
[...] Is there hope in the Net Cafe Business? [...]
@leo martin
some comtuper retailers got pricelist on their web, kya pwede u compare at mga prices f knno mas mura.
i also own a small gaming-cafe,dhil s subrang adik s pc gaming e2 ang pinasok kng business after college grad..i started 4units(20k Php each) only at ngaun i already got 8units on 6 months operation, aq kc ndi ngrrent kc i own the place at lcd monitors ang gmit ko for low power consuptions at computer technician at mhrap kpag nd k mgaling s technical side s business n to dhil wlang ksawaang update at maintenance ang ggwin u, just always keep 120php minimum day income per unit sure mkakasurvive k.. basta aq kmkita n at enjoy ko p business ko.
Net cafes suffer from the same problem all Filipino biz endure: lack of purchasing power of the Filipino consumer. P15 per hour? P30? remember all computers in the Philippines have the same price or more than in the US or Taiwan or Singapore. (We import these computers).
Yet, the selling price of services (internet hourly rental) is not the same as in the countries mentioned above. That is why, the Net cafe industry as a whole is suffering and only a few exceptions are making money.
Do you take into account the opportunity cost of your labor as cafe owners (You dont give yourself a salary, do you? as a cafe owner?)
All businesses in the Philippines will improve if the purchasing power is increased (high salaries for parents, high allowance for students).
This is what I learned from reading the book Hyperwage Theory. Google it. it is very revealing. and if you are smart enough, you can get a free PDF copy of the book off the web.
Sa tingin ko, basta may online games, mabubuhay ang internet cafe.
Pero ayos naman yung kakilala kong may internet cafe na patok pa rin. Basta may magpapaencode, pascan, surfing, at paprint, mabubuhay sila. Siksikan pa nga sa cafe nila eh.
me and my husband are planning to put up a net cafe this year. but im not sure with the plan. thinking that there’s so many competitors around, im so confused. but maybe, we’ll try. thanks to all of u guys. your suggestions really a big help. godbless!
…i want to believe that net cafe business will stay longer. but, part of me is tellin’ that promoting online/lan games which is the main services of an i-cafe nowadays, makes me feel guilty that students may spend time and money for games and disregard some important stuff at school and at home. sad lang…
i’m in an internet cafe business for almost two years…sa july 18 na pala anni namin. maganda ang kita kaso lang if lahat ng daily expenses sa kita ng cafe kukunin mahihirapan ka talaga to survive and pay the bills.
we rent the space for 4,200 and 10 units lang kami. i added typing, printing, scanning, edting, CD/DVD burning and making wedding invitations para additional kita. i’m happy to read this post hahanap ako ng paraan to add those other services para pandagdag kita.
comtech-4 year course natapos ko last 2008 so advantage na rin kasi ako na bahala sa mga unit na may sira.
problema ko every month ang lahat ng bills lalo na ngayon may kakompetensiya kaming bagong cafe, mas marami ang units nila…
may awa ang Diyos
kakayanin ko ‘to but i guess i need to look for a job nalang para may backup kami to pay bills and maintenance… koloka!
add ko blog mo sa blog list ko huh? salamat
God bless everyone
My question is, how many internet cafes actually run pirated software and what (if anything) are authorities doing about it?
Are most i-cafes getting away with running pirated software? Paying for software licenses is an expensive endeavor. You are looking at a price range from P4,230 – P6,580 and higher depending on the OS you chose, and that’s just for a single license. Honestly, the alternative is to use open-source OS like Linux. But then you run into the problem that most games won’t play on that OS.
This brings us to the other software piracy problem. Are most of the games pirated too? My guess is yes. Yes yes, many of the online games are Free-to-Play. But for some of the “twitch” gamers out there, they want to play the offline LAN based games with their friends. Games like Left for Dead cost money.
So I wonder, for all those who said on here that they are planning on starting an internet cafe, is piracy part of your business plan?
my two cents!
the answer is yes and no.
yes if you have this:
1. sarili mo ung place(hindi ka nagre-rent)
2. kaw din nagbabantay
3. marunong kasa computer
no if you dont have this:
1. sarili mo ung place(hindi ka nagre-rent)
2. kaw din nagbabantay
3. marunong kasa computer
why…
the tricks kc is how could you able to sustain the pricewar, dahil eventually darating un kahit sabhin na konti pa lang kayo ay dadami din yan at darating ung point na magkakaroon ng price war at kung sino ang mababa ang operational cost ay sya mananalo at ung 3 points na sinabi ko sa taas at meron ka nun im sure ur da winner.
marami nalugi sa bisnes na to, kc dati ok pa ala masyado competition at mahal ang rates 30-40 pesos per hr kaya kahit magbayad ka ng rent at magpasweldo ng tao at technician ay ok lang malaki parin kita, pro ngaun ala na, marami na kalaban at mababa na rates 15/hr meron pa dyan 10-12/hr kaya hindi ka mabubuhay nun kng puro k gastos, i mean bayad sa rent, attendant at technician. marami ko kilala nag invest half million at hindi nabawi as in lugi, kasi nga nung una maganda pa malaki rates at ala masyado kalaban kaya malaki kita at nasilaw sa laki ng kita kaya ayun nagbagsak kagad ng malaki amount para lalo lumaki kita, ng magtagal dumami kalaban at nagkaroon ng pricewar hindi nakayanan at nagsara kasi sa laki ng gastos at lumiit bigla kita, so my advice is kung magveventure kasa bisnes na to dapat ay sideline lng(additional income) at wag mo asahan hanapbuhay dahil short term lang to at wala security, at kung meron kang 3points na sinasabi ko pwede maging long term.
yung location na sinasabi nila? im not sure! dahil kung saan ung maganda location andun stiff ang competition at kung meron kang 3points ko tyak panalo, so it goes down pa rin dun sa 3points! ung side bisnes na sinasabi nila is given na un kc kung ano pakulo mo ganun din maging pakulo ng kalaban mo later on
i hope this helps…
to larry:
rates here is very cheap dahil kagagawan din ng mga net cafe owner, kanya-kanya pababaan rates para humakut customer hangagang sa bumagsak! thats why!
kala nila kita na sila dahil bigla buhos customer ng magbaba un pala ilan araw lang dahil ung kalaban mas bumaba hangagang sa magkaroon pricewar ayun pare-pareho sila patay!
Was pondering if a low energy consuming rig + proper software could be beneficial to reducing operating costs:
Scenario A: ITX-based Atom mobo with IGP running on a 65watt power brick and an LCD monitor for web surfing and specific duties. GNU/Linux variants for even lower licensing cost.
Scenario B: Same as above except using an ITX mobo with NVidia ION chipset for gaming duties.
Scenario C: Same as A except using a 2+ cores and hopefully the upcoming ION2 for gaming
hello sa lahat. i am just new here magpa advice lang sana ako kasi i am planning to open an internet cafe with 10 units ang question ko ok lang ba walang license ang mga computers? kasi mahal ng license po.
is it ok ba nowadays to put up an internet cafe without a license sa mga program?
hope to have an answers soon…
internet cafe industry today is weak. Mababa na masyado ang rate 10/12 per hour/ ung iba pa nga 8 pesos pa. And if u are located sa downtown , masmalaki renta mo. hindi kakayanin ng rate mo. Sa renting of property pa lng patay ka na. then plus the utilities especially electricty. and also ung DSL. Our’s we pay 4k a month. average electric bill namin is 11k. monthly rentals is 19k.
The worst of all?. Expensive MS software. before you put up a business one of your first priorty must be ur software licenses. Another problem- those in the BIR office, their agents are usually boastful.
Yuo don’t have to buy Microsoft Windows license to have an internet cafe, use “Ubuntu” it’s better OS and its free.
good day,filipina ako at nakapangasawa ako ng greek,and2 ako sa cyprus ngayon,dme nagwowork dahil my 3 yrs old baby ako..plan ko umuwi to put up this internet cafe business…sarili kong pwesto at starting ng 6 units ng pc…location ko ay residential area..wala pa kme internet shop kz malapit dun kaya mejo maganda para dna pumunta sa downtown ang mga costumer..maganda ba tlga tumayo ng business na ito,plan ko din is internet cafe and restaurant…merienda foods lang or mga coffee drinks..pls advice me more…thanks..
IMO better go with the restaurant/cafe with internet kiosks as long as you can get a good location.
If you decide to opt for gaming pc setup you will need Windows licenses and game license (Warcraft III/DOTA) which will add cost.
Pros:
-tend to generate higher amount of customer (regular customer, gamer, casual surfer)
Cons:
-higher cost due to…
==software licenses
==requires higher spec’d pc parts for gaming
==higher electrical cost. Usually consumes 400~650 watts per kiosk
Opting for a pure websurfing only kiosk you can opt to use GNU/Linux based distribution since all you will need is a web browser(unfortunately Yahoo Messenger is not available under linux).
pros:
-cheaper to implement
==using GNU/Linux as an OS with Chrome or Firefox for browsing
==lower power consumption (especially when using Intel Atom based CPU). Usually consumes around 65~125watts for a single kiosk
==lower cost to build the pc since you can opt for a motherboard with integrated parts.
cons:
-limited patrons (casual surfers and non-gaming regulars only)
hi guys, just want to offer those who already have internet cafe to avail our FREE installation of QUICK ADS- online advertisment, this will help you earn EXTRA INCOME for your internet cafe’s, if you have any question, feel free to contact me at 0927-2300509 or 0933-4306414.
thank you…
hay…i own an internet shop for 3 years na…upgrade sana ko pcs…san ba may mga mura na videocard at memory card na pwede swap…thnak you…. all your messages about internet shops sobrang true
hay…help pow
upgrade sana ko pcs…san ba may mga mura na videocard at memory card na pwede swap…thnak you…. all your messages about internet shops sobrang true
Anybody here with an existing internet cafe in the U-belt area with at least 20 stations and who is looking for more capital for upgrade or expansion? May extra funds ako at naghahanap ako ng investment for extra income. Mukhang OK lahat ng sinasabi dito – kahit anong business naman will succeed or fail depending on a lot of factors. Interested pa din ako sa internet cafe kaya lang may full-time job ako so hanap ko partner na nag-ma-manage na talaga ng internet cafe nya at gustong ituloy yun pero syempre, kelangan willing na magka-partner na bago.
If interested, please email me at l8blmr@gmail.com.
Hello po advice naman po. We are planning mag put a ng 6-8 PC sa house namin. And me na rin ang mag manage overall ang problem is kapos ng budget if bibili kami ng license software. Marami bang nahuhuli sa mga internet shop kahit sa kalooblooban pa ng barangay? Thanks