Something on your mind? Want to give us feedback on something in particular or everything in general? Tell us how we are doing!
#6210 by MadCityGuy
Fri Apr 10, 2009 6:17 am
It would be really nice if Ooma would offer a one-time payment option for Premier service. I realize that Premier used to be bundled with the Ooma at a higher price, and separating it allowed Ooma to sell the basic Ooma service at a price point that was much easier to market. However, the great advantage of Ooma is that you don't have to pay recurring service charges. I'd consider buying premier (with a second line) if it were available for an additional one-time payment similar to the price of the basic Ooma service (around $200 or so), but I really want to avoid recurring charges.
#6216 by oomg
Fri Apr 10, 2009 7:43 am
MadCityGuy wrote:It would be really nice if Ooma would offer a one-time payment option for Premier service. I realize that Premier used to be bundled with the Ooma at a higher price, and separating it allowed Ooma to sell the basic Ooma service at a price point that was much easier to market. However, the great advantage of Ooma is that you don't have to pay recurring service charges. I'd consider buying premier (with a second line) if it were available for an additional one-time payment similar to the price of the basic Ooma service (around $200 or so), but I really want to avoid recurring charges.


Sending one payment per year is just short of a quantum leap beyond my ATnT experience... particularly since ooma does it without any ups and extras. And, I don't doubt that sometime down the road the price might be more than $100 per year for the Premier service since ooma's costs are not likely fixed forever. However, I fully expect that ooma's price structure will be every bit as competitive as it is today. Remember the story about the goose with the golden egg.
#6230 by MadCityGuy
Fri Apr 10, 2009 9:33 am
oomg wrote:Sending one payment per year is just short of a quantum leap beyond my ATnT experience... particularly since ooma does it without any ups and extras. And, I don't doubt that sometime down the road the price might be more than $100 per year for the Premier service since ooma's costs are not likely fixed forever. However, I fully expect that ooma's price structure will be every bit as competitive as it is today. Remember the story about the goose with the golden egg.

The really attractive thing about Ooma is the lack of recurring charges, be it once a month or once a year. If Ooma offered an option of a one-time payment, as long as it's reasonable I'd likely pay it and Ooma would get that extra income from me which they won't get with the current scheme. The other advantage of the one-time fee is that Ooma gets payment up front and they don't have to share any of this income with distributors or retailers.

I think Ooma was very smart to separate out basic service from "premier" service and it definitely resulted in more subscribers, but they reached people with the concept of a one-time payment. I really believe Ooma would do well to have a similar no-recurring-fees offer for Premier. But that's just my opinion.
#6232 by lohertz
Fri Apr 10, 2009 9:36 am
I would assume Ooma's cost ARE mostly fixed.

Just like an ISP, there main cost is Fixed. Ooma and ISP's only need to have enough infrastructure (servers, etc) to handle the peak demands.

The amount of engineers and support staff is incremental relative to the amount of users/subscribers. 10,000 users = x servers, y engineers and z support.

While the Hub, scout and Telo follow a mfg cost structure, it turns a small profit margin, so that is out of the equation. i.e. it doesnt cost Ooma any more $$ to mfg.
#6240 by oomg
Fri Apr 10, 2009 10:30 am
lohertz wrote:I would assume Ooma's cost ARE mostly fixed.

Just like an ISP, there main cost is Fixed. Ooma and ISP's only need to have enough infrastructure (servers, etc) to handle the peak demands.

The amount of engineers and support staff is incremental relative to the amount of users/subscribers. 10,000 users = x servers, y engineers and z support.

While the Hub, scout and Telo follow a mfg cost structure, it turns a small profit margin, so that is out of the equation. i.e. it doesnt cost Ooma any more $$ to mfg.


Continuing or additional system maintenance and tech support will likely add some incremental variable costs to the mix. Also the company has to amortize and recover their R&D costs, otherwise there would be no incentive for the development or refinement of various features that the subscribers want. Not to mention, I have no problem with ooma making a profit and paying their executives and staff salary and bonuses that are to be expected, particularly where the endeavor has been successful.

If ooma were to offer a lifetime subscription, I would consider it, but still, $100 per year... that's less than the price of a good meal with a couple drinks at most nice restaurants.

oomg
#6282 by Magus
Fri Apr 10, 2009 10:52 pm
The net present value of a perpetual annual payment of $100 is $1,000 if Ooma can put the money in the bank and get 10% interest; $2,000 for 5%. Assuming Ooma will outlast all of us, and with no change in the annual cost of Premier, this is how much they would have to charge.

Likewise, assuming 5% interest, the $200 we pay for the equipment is the equivalent of a perpetual annual installment of $10.
#6289 by MadCityGuy
Sat Apr 11, 2009 7:24 am
The REAL question is how much income would Ooma gain or lose by offering a one-time option. If 5% of Ooma cusomters buy Premier on a monthly/annual basis but 20% of Ooma cusomters would buy Premier if it were offered with a one-time payment option then Ooma may be losing some pretty serious business. I also wonder whether people paying recurring charges continue indefinitely or decide after a year or two that they really don't need that second line?

Remember that my proposal was that Ooma offer an alternate payment option to a service they already offer. I did not say that Ooma should stop offering monthly or annual payment options. I think the idea of a one-time option makes sense in this market (current Ooma cusomters) because Ooma attracted these customers based on the concept of a one-time payment for service.

In telecommunications services the greatest costs are in moves/adds/changes and Ooma has a way to minimize or recover these costs. Ooma doesn't have to support last-mile wiring - we as customers buy our Internet service from other companies. The vast majority of Ooma's ongoing costs are spread fairly evenly across the population of Ooma customers. I suspect that Ooma's incremental ongoing cost of Premier service is very low because Ooma is already supporting the same customers for the Ooma basic service.

Finally, when we buy an Ooma system from Costco (or Best Buy or J&R or wherever), part of that retail cost goes to the retailer and, presumably, other distribution costs. That means that Ooma maybe gets $150 from the $220 that someone pays for their system at Costco. (I obviously don't know the real numbers, it could be as low as $100). Subtract from that the manufacturing, packaging and marketing costs and Ooma doesn't really make that much off each base system sold. However, the income from Ooma Premier mostly profit to Ooma which is why Ooma should sell as much Premier as they can.

If I were running Ooma I would try to find out the financial impact of NOT covering porting costs as part of Premier (make everyone who wants a number ported pay the $40 charge) AND offering a one-time payment option of $200 to $250 for lifetime Premier service.
#6292 by number9
Sat Apr 11, 2009 7:37 am
MadCityGuy wrote:If I were running Ooma I would try to find out the financial impact of NOT covering porting costs as part of Premier (make everyone who wants a number ported pay the $40 charge) AND offering a one-time payment option of $200 to $250 for lifetime Premier service.


They will have to make up for the lost revenue in other area's. The attractive part of premier service is the porting fee is built in. I think that $200- 250.00 is a bit low for lifetime service. I think Tivo's life time subscription was $500? They no longer offer this option. The company has to make money and stay in business or we all end with plastic bricks. A life time premier subscription will be losing proposition for ooma.
Just my two cents.
#6294 by murphy
Sat Apr 11, 2009 8:04 am
number9 wrote:I think Tivo's life time subscription was $500? They no longer offer this option.


Sure they do. I just added lifetime to my TiVo S3 for $299.00.

Who is online

Users browsing this forum: No registered users and 6 guests