At Php4/hour, will the net cafe business go bust?
An article on Inq7.net today points out to a booming internet cafe industry in Davao City. The business is so competitive that one only has to pay as low as 4 to 8 pesos an hour to surf the net.
Now, doesn’t Php4/hour spell the death of this lucrative business? Here in Makati, the cheapest I’ve ever seen is the one at the corner of Arnaiz Ave (Pasay Road) and Evangelista Street operated by Pempe Networks. They offer as low as Php8 per hour for prepaid members. Regular rate in the area is Php25/hour.
I’m no so sure if there’s still money to be made with an Php8 an hour rate much more the Php4 in Davao.
A regular PC would eat about 350 to 400 watts of electricity per hour right? That’s already around Php3 when you compute the current power rate of Php8.9 per kilowatt hour. Them you still have the air con, the lease of the place and the people to pay every fortnight.
I don’t think Php8 would even cut it. But yeah, everyone wants to compete for customers and the fastest and most effective way to attract them or retain them is by lowering your prices. But for what? At the cost of just breaking even? For how long?
So, will the bubble burst?