Been receiving a couple of emails lately (mostly from OFWs but there’s one from a Chinese/Taiwanese company) asking if there’s still some good business to be made with internet cafes in the Philippines. From accounts of friends and people who’ve been into the net cafe business as well as what we’re seeing in every mall and street alley, there’s some mixed reaction.
Five years ago, the prospects were better; way better. I myself was thinking of opening up one back then. My excitement was immediately doused after doing the math.
Just like any other brick and mortar businesses, there are so many extraneous factors that’ll affect your likelihood of success in the internet cafe industry:
- Location. Pick a good spot and you’ll hit a gold mine. Pick the wrong one and kiss your money goodbye.
- Competition. Most business-minded people think of competition as a race to charge the lowest prices in order to win customers. While it’s good for the customers, exceeding the lower boundaries can drive you and your competitors to bankruptcy. One cannot expect to recover a Php500,000 investment if hourly rentals go down to as low as Php10. It goes without saying that in this industry, there are no customer loyalty; just cheaper rentals.
- Quality/Consistency of Broadband Connectivity. For places that don’t have many options for bandwidth providers, this could spell trouble if your only source of connectivity conks out more frequently than you get brown-outs in your area. A backup DSL might be a good solution but many consider the extra cost to be not worth it.
- Software Licensing. Many people who go into the net cafe business don’t factor in the cost of software licensing in their capital. Either they think they can get away with a few pirated copies or go open-source full-time. Still, there’s the class of ever-popular network games like Starcraft, WoW and CS which cost an arm and a leg to get a per-PC license. Maybe that’s why MMPORG pay-to-play model is more popular in this side of the globe.
- Expected ROI. While previous half-decade old records saw a return-of-investment in just over a year, lower rentals due to fierce competition and over-saturation of net cafes have driven the ROI further back to as long as 3 years (that’s if you’re lucky enough). To sustain a business that long and derive your income from that sole business could easily drain you of energy and personal savings.
There’s also the question of how many PC units should a net cafe operate in order to realize profit. A friend, who runs a net cafe for about 3 years now, says you need at least 15 units to survive and get decent income. Does that mean others operating below that number are doomed to fail in the long run?
However, the growth and expansion of Netopia’s franchise around the country says there’s still good money to be made from the internet cafe business. Does that mean people wanting to venture into that industry should look into franchising? What do you think — given the opportunity and capital, do you feel a net cafe business in the Philippines is still a lucrative one?
Me and my husband need extra income. We currently have internet cafe but it is not making money please help us how to do blogging. Thanks
to rj:
punta ka odesk
www.odesk.com
correction: *i also want to learn and earn decently.
to all earning thru blogging please tell me how to do it. i also want to learn decently.. this is my email: joef****@****.***
could somebody tell me how to earn from blogging? i have plenty of time simply because i am jobless. help please…
maganda lang ung bisnes na to if:
1. sarili mo ung place(hindi ka nagre-rent)
2. kaw din nagbabantay
3. marunong kasa computer
the tricks kc is how could you 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. i hope nakatulong ung enlightenment ko as one of the cafe owner
internet cafe is a good business ryt now.pero dapat aware ka sa mga competetors mo. dapat may strategy ka pano mang huli ng attention ng mga customer. I have my own cafe here in cagayan de oro. but yun nga d maiwasan ung mga maymasisira na mga units specialy kung aabot na ng 2 years yung mga pc. Mas makaka tipid if u know about computers / troubleshoots. di ka maiisahan ng mga technician. dami na kc manloloko ngayun. mahal pa ng singil.
ERRATUM: P5k per person pla ung sa salary not P7.5k/pax…
Depende yan sa me ari.. kung marunong ang me ari, definitely kiCLICK yan.
Una sa lahat e ung location mo. i prefer sa ubelt area. Ubelt is one of the most perfect locations to establish net cafes. though marami kang ka competensya, di problema ang market sa sobrang dami ng tao d2 lalo na mga estudyante na mahilig tumambay at maglaro ng kompyuter. haha. If not naman in ubelt areas, let say sa mga residential areas, medyo limited ang market mo d2. so mas stiff ang competion d2. kelangan mo d2 magisip ng mga matitinding stratehiya like promos to students and everything. hehehe. bsta kung limited ang market mo, magisip ka ng paraan pra sau mapunta ang mga tao. this is why i prefer locations on ubelt areas or other areas near schools. Try spotting din ung mga areas na may mga existing shops na and see kung maraming market sa place na yun. Kung ok, pde mo tapatan ung existing shops dun.
If you already have the perfect location, next is to choose what units/PCs you’ll need. Basically, tignan mo kung ano ba hilig or madalas gawin ng magiging market or customers mo. i bet, mostly games yan.. either on-line or lan games though there are some parin naman who go to cafes to surf the net, chat, research, typing (ms office) etc.. So i suggest u invest on units with specs na pang games. and mostly din, units with these specs are also good for surfing, chatting typing etc. if u know someone na mahilig maglaro ng computer, try asking for an advice from him or her kung ano ba units ang preferred nya kasi most likely, ang mga customers mo e katulad din nya. if you like playing games, this will be easier for you kc alam mo tumingin ng magagandang specs or units for gaming.
next is your broadband or dsl connection. i see some cafes kung san tinitipid nila ung dsl/broadband connection. i mean they choose cheap dsl/broadband plans. i see some cafes with 512kbps connection.. remember that the nature of your business is providing net services to your customers which is gaming or net surfing. so you have to satisfy your customers needs and how would you satisfy gamers and surfers kung mabagal connection mo..try investing on higher plans.. usually, a 5 mpbs plan is good for 15-20 units. if u’re planning to establish with more than 15-20 units, try investing on higher plans. don’t worry about investing too much cost on this as this will be one of ur main sangkap on making your net cafe a boom one. trust me. investing on the quality of your product or service is a key to making your business a boom. me ganun! hahaha!
next is designing your place. remember that a place with a good ambience may practically attract market or customers. again this depends on who your customers will be.. gamers ba or surfers. but as i have said, most likely gamers yan. sometimes kc mgkaiba ang preference ng mga gamers and surfers when it comes to ambience. some net surfers may prefer a place na ndi msyado maingay. some gamers naman prefer place na masaya. so ok lng for them na maingay basta masaya. for sound trip, most surfers prefer soft music.. most gamers naman prefer loud music like hiphop, rnb, rock etc.. ika nga ni andrew, prang disco daw. hehehe. when it comes to lightnings naman, most surfers would prefer bright places.. bsta ung maliwanag pra makita nla kung ano ginagwa nila. hehe. most gamers naman prefer, dim light.. ung iba kc d2 na naninirahan. hehe. so they need some place that would let themselves relax kahit puyat puyat sila sa kalalaro. hehehe. basta try to balance between these two type of customers. but i would suggest prioritize more on gamers. i would say 80-90% for gamers and 10-20% for surfers when prioritizing. Try to invest as well on air-conditioners as people now a days prefer cold climate places sa sobrang init ng panahon ngayon. This may be the reason why you see cafes na wlang masyadong tao/customer, kulang sa aircon.. Bsta try to maintain a lively place and try to know what preferences do your customers have. Try also visiting some successful cafes u know just to get a tip on how you’ll arrange and design your place.
next are the people who will operate your business. first of all, get someone whom you can trust kc for those who have busy lives, you may not be able to monitor your cafe all the time. so try to get someone whom you can really trust. i suggest a relative or a close friend of yours. but please try to find time to visit your shop to at least check the status of your cafe and see what needs to be done. in choosing your manpower, try to get someone who has the basic knowledge on how to operate a PC. not necessarily someone who knows the technical side on operating a PC. i suggest someone whose interest is on computers especially games, kc as i’ve said most probably your customers will be gamers. and please try to find time to teach your employees, not only on how to operate a computer but also on how to deal with your customers. turuan mo clang pangalagaan mga customers nyo. encourage them to be as friendly as they are to your customers. and since most of your customers will be teenagers or young ones, try to get someone who’s also a young one.hehe. pra madali syang makibagay or more so, makibarkada sa mga customers nyo. as they’ve said, the location, units, high-speed connections are not enough to make your cafe click. samahan mo din ng pakikisama sa mga customers mo. one more thing is how to take care of your own employees. alagaan mo wag lng mga customers mo kundi pati mga emplyado mo rin. give them what they really deserve such as sweldos and benefits nila. this is a big motivation on letting your employees give quality service and satisfaction to your customers. if they are treated right, magtratrabaho cla ng maayos and try to remember that our goal here is to satisfy our customers so try to motivate your employees to give your customers satisfaction.
So these are basically what you’ll need to consider before establishing your own cafe. The location, the units, the dsl/broadband connection, employees and of course your dedication to really put up this kind of negosyo.
For details naman regarding the estimated amount of investment and the usual costs/expenses of a cafe…
Upon establishing (for a 15-unit cafe):
units = P300,000 (15 units or P20k/unit)
renovation and other expenses = P200,000
TOTAL INVESTMENT = P500,000
—–
Monthly expenses:
monthly rent (place) = P15,000
dsl/broadband = P10,000
electricity bill = P20,000
monthly people salary = P10,000 (2 pax or P7.5k/pax but please provide their meals free)
other/ misc. expenses = P10,000
TOTAL MONTHLY EXP = P65,000
—–
Monthly cash-in (P15.00 per hour rate; 15 units; 15hours/day consumption):
P15.00*15units = P225.00/unit/hour
P225.00*15hours = P3,375/day
P3,375*30days = P101,250/month
—–
Monthly NET INCOME = P101,250-P65,000 = P36,250
—–
ROI = P500,000 / P36,250 monthly net income = 13 months
—–
Amounts you’ll get may vary depending on how you are going to handle your cafe. But if you’ll be able to consider what i’ve noted a while ago, then most likely you’ll get these amounts or even higher if you’re really a good one.
Please note that amounts noted above are just estimates and unit prices above are the prices about a couple of months ago.. and prices do really changes so i don’t know kung pareho padin sa ngaun.
remember to enjoy all the time. kahit pa mlaki kinikita mo, di ka naman masaya.. ala rin.. useless ang buhay. hahehe. good luck. I hope nakatulong ako to those aspiring cafe owners there..
I’ve already posted on another similar topic as this on yugatech and awaiting responses from viewers there, but I’ll post again here.
For all the shops out there now that are either, especially the successful ones, are you using pirated software?
Having to pay for those licenses for an OS really sets you back (if you make a profit at all) on getting your investment money back. Not to mention if you are constantly trying to keep up with the new games coming out. You all do know that when you buy a game that game is for one PC only, right?
So, is everyone here legit with their software? How strict is the government with enforcement of this antipiracy thing? I know they enforce it but I don’t know to what degree. Do they go after small shops (like what most of the people here are hoping to start or are already in), or do they really only focus on big companies?
Here are a couple links to consider:
http://www.papt.org.ph/
http://www.papt.org.ph/news.aspx?id=2&news_id=76&paging=6
Sure you can run a free OS like Ubuntu, but guess what, many of the popular games don’t run on Linux based OS (Ubuntu is Linux for those who don’t know). And as many of you may have noticed, it is the gamers that are the most loyal customers that keep coming back. They are your “cash cow”. I’d be interested to hear of any web-browsing only i-cafes running successfully today.
Any feedback on this would be helpful. I want to try out this business, but there are so many costs, can I compete against others that use pirated software?
@menie
Hello Menie, I am a bit confuse of what you mean about 150,000.00. Is that your capital or your target profit? If you mean that’s your target profit, I would say you cannot gain it with 6 units only. If that is your capital; it is probably good for 10 to 15 units depending on your specifications. The average electric bill of ten units is more or less 7,000 including 1 air-con. The salary of employee depends on what region you belong but as a start up you can have one of your relatives, to at least lower your salary cost.
for more info you can email me at iti****@****.***
May IC ako dito sa Bulacan. Masasabi kong kumikita din naman kahit kaunti. ang mahirap lang, eh yung nangungupahan. upa ko per month is 4.4k. Ngayon, ita try kong dagdagan ang units ko kasi malakas naman dito eh. sayang pa nga kasi di ko na maacomodate yung iba kasi walang bakante lalo na pag hapon. pag nag click, medo makakabawi ako sa upa.
BTW, dito nako natutulog sa shop ko. Sa mga tga Marilao dyan, pahingi naman ng feedback kung madami bang IC anywhere dyan? balak ko kasi mag expand at target ko talaga eh sa mga probinsiya pero yung malalapit lang.
TNX!
hi!!
i have plan this kind of business internet cafe,,my plan profit is 150,000.00 tama lng ba???
cguro mga 6 units lng muna,,,,,dito sa amin wla pa internet cafe dito,,,please advice me if how much mababyaran ang electric bill then 1 employee lng muna!!! tnx,, i need ur attention to give me ADVICE!!! GOD bless
yes
Internet cafe is the same from other businesses, in order to succeed you must stand out from the crowd. The very important thing to consider if you are venturing in this kind business is the place. Your site must be visible and accessible, the ideal is near the college schools. Then being the owner you must have at least advance knowledge about computer or technology as a whole or you are interested and eager to learn. You must keep your self up to date of tech news, new software so that you will be the first one to offer new services. Your shop must offer complete services from printing, scanning, desktop publishing, burning, music download, bluetooth, infrared and other unique services such as photoshop & autocad these will make your shop a one stop Internet Cafe. Update your software and hardware when needed.If you do all of these if you will not stand out, you will at least remain competitive.
WHY MANY HAVE FAIL?
Many have fail because they don’t love their I-cafe business they just want to earn from it. They are afraid to invest on upgrades which is a must to remain in the business. Some are just happy on their computer rental sales without offering other services. I am not saying it’s bad but it’s no good either. Rental sales is just one part of the I-cafe, with today’s very tight competition you won’t really profit from that alone.
To Andrew,
dude! thanks for all the information! Im planning to put-up net cafe and this is very helpful, most especially yung mga figures na binigay mo. Though meron akong few questions to ask, hopefully you take time to answer (thanks in advance).. how much is your average electricity consumption and yung salary ng 2 employees mo? Ilang horse power yung aircon mo at gano kalaki yung place mo? again.. thanks in advance.
To ALL.. Thanks sa lahat ng input!
God Bless!!
thanks ashrah…ask ko lng my wallhack kb sa sf? pahingi nmn ako kailangan ko kc ung wlang virus lng ha? tx ito pla e mail ko victor28****@****.*** tnx
ganun din ako 7 or 8 ako open den mtatapos ng 12mn bale dlawa kme ng kapatid ko bantay sa shop shifting hati kme oras. location ko dto sa isabela..,
ashrah…salamat sa reply mo…my tanung pa pla ako, anung oras pla ang open time mo at closing time mo? kc ako 8am to 12mn pareho tyo wla din ako aircon kc nag sisimula plang kc ako,thanks….saan pla location mo? ako cavite.
to Lukas, ahm sa first month ko nka 2000+ ako sa bill ng kuryente ko, ngaung new bill ko 1900+ matipid kz wla pa ako aircon ehehe! presko sa place nmin ksi mapino.. gamit ko lang orbit fan and exhaust fan kya super tipid. 15 per hr ko sa PC rent ko.., basta maluwang space comp shop mo di maxado mainit di na need ng aircon. makakatipid kpa pag LCD na monitor mo. Godbless sa Business