November 24, 2008 at 14:47Inflation in home networks.
The phenomenon of home networks does not need to be described, a rather low entry threshold, high profitability and demand for Internet access services have brought success and prosperity to this business. However, a weak knowledge of economic intricacies has led many networks to an interesting phenomenon in the network. This phenomenon is called hidden inflation.
A bit of theory: So, how does the depreciation of money happen in the home network? When a client deposits money into the home network, the administration opens a user’s personal account. As long as the user has money in the account, as long as he has the Internet, we have a simple money-service formula. It looks logical and correct. Have money give a service.
Now let's see from the point of view of the network owners. They have 2 main tasks - to get the maximum profit and get the maximum number of users.
As a rule, the second of the tasks is taken as a basis, so that the first task is indirectly performed.
What is being done for this?
Firstly, it is necessary to connect new users, and secondly, squeeze money out of existing ones as much as possible.
We will analyze each separately.
To attract new users, all sorts of marketing features are used. The most common are bonus accruals to the client's account when connecting. Since each new user costs a certain amount of money, in the theoretical part there are just no difficulties: the
cost of a new client = advertising money + account bonus.
However, in practice, the competition sometimes goes too far, providers are forced to increasingly increase bonus money and lower the threshold for connecting a user to the network.
All this leads to the fact that a large amount of virtual money appears on the network that is not provided with real services or money. Usually they are attributed to a short-term loss in profit, usually expecting more profit from the user in the long run, which is the main mistake.
To raise ARPU (Eng. Average revenue [ˈrevɪnju:] per user, average revenue per user) - an indicator used by telecommunications companies and meaning average revenue (usually per month) per subscriber) from the connected users use the same practice accrual of bonuses. These are bonuses for loyalty, bonuses for a large account balance, bonuses for reconnecting to a more expensive package, etc.
Like any state, the owner of a home network, roughly speaking with bonuses, begins to make his money (uncontrolled issue of money), which are provided only with future profit, with all the problems that arise from this.
Thus, we get a vicious system, on the one hand, the administration keeps prices at a certain level, moreover, cheaper over time (more and more services are offered for the same money), on the other hand, the company's internal cash flow swells due to bonuses. So we get inflation.
This type of inflation has a hidden view. This was used in the days of the USSR, when there is money, but there is nothing to buy. The accumulated bonuses lying on the accounts of users are not provided with real payments or services, the flow of real money is reduced, because users pay for the service with bonuses.
The flow of new bonuses with new customers, not only does not improve the situation, but exacerbates it.
There is nowhere to spend bonuses, bonuses clog user accounts, users do not carry money. And so in a circle, spinning inflation in a spiral.
An increase in new connections and stimulation of consumption by connected users sooner or later leads to the problem of the normal provision of the basic service, leading to its utmost utility. Day after day, the entire system begins to feel the discomfort of working on the network (brakes, lags), which leads to the subsequent flight of users to less loaded providers, who in turn offer more bonuses (race of marketoid shares)
So the owner digs himself a financial crisis of a local scale.
As a rule, this is where the administrative economy begins.
The owner is simply forced to resort to manual flow control.
It divides the user's account into two accounts:
- the real one that pays for the main service
- the bonus one that pays for all additional services and options.
Such severe restrictions lead to the fact that the average user begins to get lost in the conditions of work with the network, the tricks of the marketoids cease to work for him.
As a result, the user either pays real money for the main service and does not work with bonus accounts, thereby increasing them in his account, or goes to the provider where the conditions are more clear and transparent to him.
Actually, this is the conclusion, dear owners of home networks - do not chop the branch on which you sit. Learn to survive not by emission, but by providing high quality and transparent working conditions with the network. It's time to get out of the Stone Age built by marketers.
Stocks that eat future profits are evil.
A bit of theory: So, how does the depreciation of money happen in the home network? When a client deposits money into the home network, the administration opens a user’s personal account. As long as the user has money in the account, as long as he has the Internet, we have a simple money-service formula. It looks logical and correct. Have money give a service.
Инфля́ция (лат. Inflatio — вздутие) — процесс обесценивания денег, в результате которого на одинаковую сумму денег через некоторое время можно купить меньший объем товаров и услуг. На практике это выражается в увеличении цен.
Скрытая инфляция - инфляция, возникающая вследствие товарного дефицита, сопровождающегося стремлением государственных органов удержать цены на прежнем уровне.Now let's see from the point of view of the network owners. They have 2 main tasks - to get the maximum profit and get the maximum number of users.
As a rule, the second of the tasks is taken as a basis, so that the first task is indirectly performed.
What is being done for this?
Firstly, it is necessary to connect new users, and secondly, squeeze money out of existing ones as much as possible.
We will analyze each separately.
To attract new users, all sorts of marketing features are used. The most common are bonus accruals to the client's account when connecting. Since each new user costs a certain amount of money, in the theoretical part there are just no difficulties: the
cost of a new client = advertising money + account bonus.
However, in practice, the competition sometimes goes too far, providers are forced to increasingly increase bonus money and lower the threshold for connecting a user to the network.
All this leads to the fact that a large amount of virtual money appears on the network that is not provided with real services or money. Usually they are attributed to a short-term loss in profit, usually expecting more profit from the user in the long run, which is the main mistake.
To raise ARPU (Eng. Average revenue [ˈrevɪnju:] per user, average revenue per user) - an indicator used by telecommunications companies and meaning average revenue (usually per month) per subscriber) from the connected users use the same practice accrual of bonuses. These are bonuses for loyalty, bonuses for a large account balance, bonuses for reconnecting to a more expensive package, etc.
Like any state, the owner of a home network, roughly speaking with bonuses, begins to make his money (uncontrolled issue of money), which are provided only with future profit, with all the problems that arise from this.
Thus, we get a vicious system, on the one hand, the administration keeps prices at a certain level, moreover, cheaper over time (more and more services are offered for the same money), on the other hand, the company's internal cash flow swells due to bonuses. So we get inflation.
This type of inflation has a hidden view. This was used in the days of the USSR, when there is money, but there is nothing to buy. The accumulated bonuses lying on the accounts of users are not provided with real payments or services, the flow of real money is reduced, because users pay for the service with bonuses.
The flow of new bonuses with new customers, not only does not improve the situation, but exacerbates it.
There is nowhere to spend bonuses, bonuses clog user accounts, users do not carry money. And so in a circle, spinning inflation in a spiral.
An increase in new connections and stimulation of consumption by connected users sooner or later leads to the problem of the normal provision of the basic service, leading to its utmost utility. Day after day, the entire system begins to feel the discomfort of working on the network (brakes, lags), which leads to the subsequent flight of users to less loaded providers, who in turn offer more bonuses (race of marketoid shares)
So the owner digs himself a financial crisis of a local scale.
As a rule, this is where the administrative economy begins.
The owner is simply forced to resort to manual flow control.
It divides the user's account into two accounts:
- the real one that pays for the main service
- the bonus one that pays for all additional services and options.
Such severe restrictions lead to the fact that the average user begins to get lost in the conditions of work with the network, the tricks of the marketoids cease to work for him.
As a result, the user either pays real money for the main service and does not work with bonus accounts, thereby increasing them in his account, or goes to the provider where the conditions are more clear and transparent to him.
Actually, this is the conclusion, dear owners of home networks - do not chop the branch on which you sit. Learn to survive not by emission, but by providing high quality and transparent working conditions with the network. It's time to get out of the Stone Age built by marketers.
Stocks that eat future profits are evil.