Initial cost of starting a PPS program?

xenigo · 08-09-2005

I know a few of you know the answer to this

Let's say we offer $25 PPS. If $1 is taken for reserves on a $29.99 sale, then we end up with $24.49 after 15% processing fees.

So on a PPS loss of $.50 per sale, we'd be able to estimate the daily loss based on daily sales. Let's say daily $5 loss for a fledgling program. Monthly $150 loss.

I guess the only reason you'd need a chunk of cash in reserve would be to pay out affiliates immediately, instead of waiting the 3 week 3rd party processing lag time we usually have to wait to get paid.

In which case, you'd need $5250 to pay off those affiliates within that 3 week period, before you see the initial join revenue of $5142.

Month 2, after rebills... With 40% retention, you'd see $2938 in recurring revenue. New joins (accounting for 10% sales growth) would total $8250.

Month 3, after rebills... you'd see $5400 in recurring revenue. New joins would total $9075.

On, and on. Looks like the curve might hit the upside around the 12 month period perhaps? So my estimated reserve amount for a sales volume of 10 per day would be around $7k. This is in contrast to what I've seen some people state as "hundreds of thousands" being needed for backup.

08-09-2005	#1
xenigo Members Join Date: Aug 2005 Posts: 66	Initial cost of starting a PPS program? I know a few of you know the answer to this Let's say we offer $25 PPS. If $1 is taken for reserves on a $29.99 sale, then we end up with $24.49 after 15% processing fees. So on a PPS loss of $.50 per sale, we'd be able to estimate the daily loss based on daily sales. Let's say daily $5 loss for a fledgling program. Monthly $150 loss. I guess the only reason you'd need a chunk of cash in reserve would be to pay out affiliates immediately, instead of waiting the 3 week 3rd party processing lag time we usually have to wait to get paid. In which case, you'd need $5250 to pay off those affiliates within that 3 week period, before you see the initial join revenue of $5142. Month 2, after rebills... With 40% retention, you'd see $2938 in recurring revenue. New joins (accounting for 10% sales growth) would total $8250. Month 3, after rebills... you'd see $5400 in recurring revenue. New joins would total $9075. On, and on. Looks like the curve might hit the upside around the 12 month period perhaps? So my estimated reserve amount for a sales volume of 10 per day would be around $7k. This is in contrast to what I've seen some people state as "hundreds of thousands" being needed for backup.