At Php4/hour, will the net cafe business go bust?

According to Alleba.com/blog, wifi access in Davao City is free. Could this be a reason for the cheap rental? I mean, if other people could get it for free, why would I charge a high price?

i really dont know if that 4/hr business strategy will work. but they way i see it, i guess these internet shop owners get their profit from printing jobs, snacks available at their counter, e-load, internet dial-up card sale, ragnarok cards sale, etc. bottomline here is, madami pa silang mga extras para kumita.

Abe, meron palang 10 or 15/hr sabi ng pamangkin ko nasa buendia ave. the catch is: online timeis 12midnite til 6AM. at kahit ganitong oras, puno pa rin daw ang shop.

the last time i was in davao to surf… which was 6 years ago (!!!), the rate was still P20. WTF? ganun na lang kamura ngayon?

mapapamura ka sa mura!

Yeah, I confirmed that. Nong nasa Cagayan De Oro ako last few weeks ago, one of the computer cafe that I rented charged me only Php 9 per hour.

Here’s something I learned from Davaoenos and from the people from the companies I’ve work for who went to Davao.

“The farther you go away from Imperial Manila, the cheaper life becomes.”

Cebu Internet I was told by many colleagues (who are Cebuanos) goes for as low as PhP8 ~ PhP10.00 per hour.

In Davao (as I’ve said above), even goes below PhP4.00. There is a very strong Internet Cafe in Davao that offer PhP1.00 of Internet usage per hour. Imagine that.

Here in Imperial Manila, the lowest I’ve seen for non-members is PhP10.00 per hour. For members, PhP7.00 per hour.

Major factors affecting the prices are:
1) ISP charging
2) Number of computers
3) Space rental costs (so if you own your space the cheaper you can charge)
4) Local lot/land costs and taxes
5) Electricity
6) How you acquired your computers
7) What’s the purpose of the businessman/men?
8) Location, Location, and Location!!

So in Davao, they can charge for as low as PhP1.00 per hour, because most of the factors are already cheap.

Imagine this also:
When the 1st LAN Gaming computer rentals in the country opened, the charging was PhP30.00 per hour. No internet back then, just pure LAN Party.

That was way back in 1992 if I’m not mistaken, I was only 10 years old then (the old days, yehba! kicking the arses of those college students bwahahaha).

But now, average “Internet” gaming is ranging between PhP15.00 ~ PhP25.00.

Think about it, how much is PhP30.00 back in 1992 compared to the PhP30.00 today in 2006?

Way back then, they are earning “huge”. Today, they are earning “big”. In my opinion, Imperial Manila’s INternet Cafe rentals can really charge cheap – they DONT want to do it. Who would right?

“At the end of the day, it’s all about business and making money.”

;)

PLDT’s gimmick is for those who don’t have “money”. Even with that low cost of rentals, it’s only a dream if you can’t even start out your own ;)

It’s possible. I forgot to mention, I conducted different case studies in different locations here in Imperial Manila. In our place (along Evangelista St. Bangkal, Makati), we can go as low as PhP13.00 / hour. We are corner of a major road and side street. Near INC, near AMA Makati and Don Bosco, residential and commercial area.

But it’s only a dream for me as I don’t have the money to pull it out. :p

Aw, come on, mga uto uto talaga kayo. Walang internet cafe sa DAVAO na umaabot sa Php 4.00 noh!!! Gawa gawa kayu dyan, meron nga city ordinance na bawal bumaba sa Php 20.00 /hr ang rate, pero meron din pasaway na umaabot Php 10, at malakas ang raiding sa mga internet cafe sa amin ngayon, (based on experience…) so if ever bumaba masyado rate, niraraid agad.

PS – meron noon 5 Php per hour, pero ni raid agad at nagsira. In my entire life, as a computer science student and gaming adik, chismis lang yan na umaabot ng 4 Php/hr dito sa amin. 15.hr standard rate dito.

just wanna ask if there is a law na bawal magtayo ng internet cafe business sa tabi mismo ng isa pang internet cafe, as in magkatabi talaga?

Internet Cafe has 100 units for gaming and 20 units for Internet

Rate P8 7AM to 12MN Gaming
Rate x Units
P8 x 100 = P800 per hour
P800 x 15 hours = P12,000

Why 15 hours only? take it 2 hours that the computer was vacant

Rate P4 12MN to 7 AM Gaming
Rate x Units
P4 x 100 = P400 per hour
P400 x 6 = P2,400

Rate P15 Internet Users
Rate x Units
P15 x 20 = P300
P300 x 15 Hours = P4,500 a day

Only 15 hours for the Internet Users

P12,000 + P2,400 + P4,500 = P18,900

P18,900 a day, thats a 24 hours, that doesnt include the printing, refreshments and other stuffs.

These people uses Energy Saver for there electricity.

More likely a P20-P25k a day.
P20k x 30 days = P600k a month
Range from P600k to P750k a month
Even if they will have a P500k expenses for a month. P250k is still good money.

Just a sample computation on costing sa operation ng Internet cafe, for reference.

I am not an accountant so some items migth be debatable i.e. how to compute the ROI and Depreciation. However most of the figures are based on my experience.

Monthly Power Consumption:
Based on Meralco Calculator
Assumption: Café with 10 PC, 1 Printer, 2 HP ACU, 2 Fans, 3 CFL

Equipment Qty Cost
Computers 10 Php 7,746.00
Printer 1 602.46
ACU 2 Hp 1 5,400.36
Orbit fan 2 550.82
10W CFL 3 103.29
Total Php 14,402.93

Monthly Operating Expenses
Electricity Php 14,402.93
Space rental (30 sq.m) 7,000.00
DSL Service + Phone (PLDT) 5,600.00
Water 300.00
Operator’s Salary 6,000.00
Personnal Salary 6,000.00
Taxes, Permits, etc. 1,000.00
Depreciation 5,000.00
Return of Investement 5,000.00
Total Php 50,302.93
Notes:
1. 10 PC @ Php 18,000/Unit – Straigth Depreciation amortized 36 months (3 years)
180,000/36 months = 5,000.00 month depreciation

2. Return od Investment – Amortized 36 months
5,000 * 36 months = 180,000 in 3 years

Hourly Operating Expenses
No. of Units 10 Units
Operating Hours/Day 12 Hrs
Gross Operational Hours/Day 120 Hrs
Gross Operational Hours/Month (28 Days) 3360 Hrs

50 % Occupancy is equivalent to 1680 Hrs
75 % Occupancy is equivalent to 2520 Hrs
100 % Occupancy is equivalent to 3360 Hrs

To get the hour operating expenses, divide the month expenses by the occupancy hours

50% Occupancy i.e. 6 hours full pack=Php 29.94/hr.
75% Occupancy i.e. 9 hours full pack=Php 19.96/hr.
100% Occupancy i.e. 12 hours full pack=Php 14.97/hr.

These rates do not include any profit margin yet!!!
By charging PhP 20.00/Hr
At 50% occupancy you loose approx Php 9.94/hour or PhP 16702.93/month
At 70% occupancy you only earn approx Php 0.04/hour or PhP 97.07/month
At 100% occupancy you earn approx Php 5.03/hour or PhP 16897.07/month
Is you shop filled 100% of the time????

Gross Sales –
Computer Rental 20/Hr 25/Hr
Daily Gross Sales Rental only
50% Occupancy 1,200.00 1,500.00
60% Occupancy 1,440.00 1,800.00
70% Occupancy 1,680.00 2,100.00
80% Occupancy 1,920.00 2,400.00

Monthly Gross Sales – Rental only
50% Occupancy 36,000.00 45,000.00
60% Occupancy 43,200.00 54,000.00
70% Occupancy 50,400.00 63,000.00
80% Occupancy 57,600.00 72,000.00

Difference in Gross Sales
50% Occupancy 9,000.00
60% Occupancy 10,800.00
70% Occupancy 12,600.00
80% Occupancy 14,400.00

Inkjet Printing cost 5% coverage
Ink – Refill 0.25
Ink – Original 1.00
Paper – letter size, Subs 24 0.30
Electricity 0.20
Printer Maintenance/Depreciation 0.10
Average cost per print 1.23

Gross Sales – Printing 3.00/Page 5.00/Page
Daily Net Sales
Printing only 50 prints/day 88.75 188.75

100 prints/day 177.50 377.50

200 prints/day 355.00 755.00

Monthly Net Sales – Printing only
50 prints/day 2,662.50 5,662.50
100 prints/day 5,325.00 11,325.00
200 prints/day 10,650.00 22,650.00

Difference in Net Sales
50 prints/day 3,000.00
100 prints/day 6,000.00
200 prints/day 12,000.00

Bottom Line: We stand to lose a minimum of PhP 12,000.00 Per Month by pricing our services (rental and printing)down.

Usually people forget to differentiate between their profit and salary. Also, there is usually no provision for Depreciation or ROI. On electric bill the only way to reduce cost is to use LCD’s, there is approx a difference of 60w-30W between an LCD and a CRT.

Suicide nang maituturing to.

We are planning to have COOP, and regulate a standard rate for every LANSHOPs. Para maiwasan yung ganitong scenario. Most of the time, yung mga nag lalagay lang nga ganung prices eh either, counterfeit yung OS, or illegal yung kuryente. Sooner or later, mahuhuli din yan kung aaksyunan ng authority, lalo na yung PAPT, at OMB( sana, hindi ningas-kugon) Kung maisasasra yung mga ganyang shop, maibabalik natin yung tamang pricing sa market. Yang mga “Kolorum” lang naman ang nagpapagulo sa pricing since mas mababa sila mag offer. Kaya tuloy pati mga legit, napipilitang mag baba, which is sobrang UNFAIR. Kung mag-tutulungan tayong i resolve ang problema dito, hopefully, maibabalik natin sa tamang presyo ang internet shops/cafes sa market. “WALANG IMPOSIBLE KUNG NAGKAKAISA.” ” Kung tulong-tulong, lahat susulong!”

So I guess we should start questioning our neighboring shop;s softwares. Most esp the games. Check the OMB/PAPT(Philippine against piracy team)website para mabisita nila yung mga katabi niyo.