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.

Nickatilynx · 08-09-2005

Don't even try it.

You haven't a clue!!!

Where's the shave factored in?

;-)))

Dravyk · 08-09-2005

wibble

xenigo · 08-09-2005

Perhaps I haven't, but that's where I'm asking for clarification. Prove me wrong, Nick. I know most squeeze every ounce of revenue out of their traffic through pre-checked cross sells, upsells in the members area, entrance / exit consoles, including some less reputable tactics. But I'm not talking about doing anything sneaky, only conducting business above the board here.

Nickatilynx · 08-09-2005

Quote:

Originally Posted by xenigo

Perhaps I haven't, but that's where I'm asking for clarification. Prove me wrong, Nick. I know most squeeze every ounce of revenue out of their traffic through pre-checked cross sells, upsells in the members area, entrance / exit consoles, including some less reputable tactics. But I'm not talking about doing anything sneaky, only conducting business above the board here.

What!!!!!!!!!!!!!!!!!!!!!!!!!!

Oh my...

If you do not use every legal method at your disposal to increase your bottomline you are frankly a crap businessman.

A little tip...

Firstly at your level of 300 signups per month , you will get at least 20 joins that will not be atrributable to any affiliate...

xenigo · 08-09-2005

Quote:

Originally Posted by Nickatilynx

Firstly at your level of 300 signups per month , you will get at least 20 joins that will not be atrributable to any affiliate...

I'm aware of this phenomenon

So where else am I wrong? 20 extra joins works in my favor.

TheEnforcer · 08-09-2005

Oh.. BillPMB.. where are you??

There are all sorts of things one must consider.

Money to cover outages for your server and other unforseen stuff.
Processor issues where they hold/freeze your money or just don't pay you.
Your program becomes the darling of TGPers and your retention levels dson't nearly equal your projections and you need to outlay a shitload more than you thought..

and much more...

Lisa · 08-09-2005

Quote:

Originally Posted by TheEnforcer

Oh.. BillPMB.. where are you??

Bill is on a boat...he said something about Chesapeake Bay and Roanoke and some other places (I only remember the first 2 cos they feature in a book which is part of a series I love...lol).

I'll mail him re this thread...xenigo make sure you come back in a week or so...I'm pretty sure he'll have some words for you that will knock your socks off.

Nickatilynx · 08-09-2005

Ok....

LOL

You aren't taking into account , content , hosting etc etc

xenigo · 08-09-2005

Quote:

Originally Posted by Nickatilynx

You aren't taking into account , content , hosting etc etc

Yes, I've taken that into account. I'm only speaking in terms of how much it will cost to have enough in reserves to offer PPS payouts. Not anything additional like content. That is a seperate budget.

Trev · 08-09-2005

Quote:

Originally Posted by xenigo

Yes, I've taken that into account. I'm only speaking in terms of how much it will cost to have enough in reserves to offer PPS payouts. Not anything additional like content. That is a seperate budget.

I tried to setup my own program and it went and died, if you need to ask how much then you've not got enough!

xenigo · 08-09-2005

Quote:

Originally Posted by Trev

I tried to setup my own program and it went and died, if you need to ask how much then you've not got enough!

I need to ask how much because if I don't, I'd be a fool. Any smart businessman knows the costs associated with doing business, forwards and backwards.

I've got a program right now but it's flawed in some critical ways. I'm in the process of revising my plan so it will be successful.

Trev · 08-09-2005

Quote:

Originally Posted by xenigo

I need to ask how much because if I don't, I'd be a fool. Any smart businessman knows the costs associated with doing business, forwards and backwards.

I've got a program right now but it's flawed in some critical ways. I'm in the process of revising my plan so it will be successful.

Could you explain how it's flawed and the revisions you intend to make?

JR · 08-09-2005

Quote:

Originally Posted by xenigo

I need to ask how much because if I don't, I'd be a fool. Any smart businessman knows the costs associated with doing business, forwards and backwards.

I've got a program right now but it's flawed in some critical ways. I'm in the process of revising my plan so it will be successful.

you are looking at things backwards in my opinion. you are trying to figure things out based on what you might make, potential income and revenue, expenses and so on. thats a very naive approach to business. you should be asking the first and most important question. you should be asking yourself is "how much money am i willing to lose and how fast would i burn through WHEN everything goes wrong"... and then work forward from there and see if it makes any sense at all.

jmho.

Rolo · 08-09-2005

So you will pay $25 PPS on $29.99 signups? No $0-$5 trials?

Rolo · 08-09-2005

Also are you only taking credit cards? What about ACH, 900s etc.?

xenigo · 08-09-2005

Quote:

Originally Posted by Rolo

Also are you only taking credit cards? What about ACH, 900s etc.?

$6.99 trials, CC, ACH, Web900. Maybe cascading CCBill -> Epoch. Dunno yet exactly.

Nickatilynx · 08-09-2005

Fuck , you've got me , on signups thats all you'd need.

Unless you hook a whale and the next mor ning wake up to 327 signups lol

Nickatilynx · 08-09-2005

"""""Who's going to send you traffic if you don't have enough compelling content on your tour?"""""

I will send traffic all day to a site that has merely this on it..

"We cannot show the pictures of bitches being fucked by mules until you sign up , have your credit card ready and clik here to enter"

;-)))

HoneyBlond · 08-09-2005

Some of BillPMB numbers on a PPS program:

http://www.oprano.com/msgboard/showthread.php?t=37817

:-)

sarettah · 08-09-2005

Quote:

Originally Posted by HoneyBlond

Some of BillPMB numbers on a PPS program:

http://www.oprano.com/msgboard/showthread.php?t=37817

:-)

Hi HB

How you doing ?

That is a great thread, thanx for finding it. I have it bookmarked now

xenigo · 08-10-2005

I see what you guys are saying. From what I'm seeing, it depends on the immediate financial goals of the program. I'd like to have 3k active recurring members by the 1 year mark. The projections you guys are referencing far exceed that, and far exceed the amount of debt I'd take on to reach that goal.

Do my initial projections look close to what I'd incur with these goals?

Quote:

Originally Posted by JR

you are looking at things backwards in my opinion. you are trying to figure things out based on what you might make, potential income and revenue, expenses and so on. thats a very naive approach to business. you should be asking the first and most important question. you should be asking yourself is "how much money am i willing to lose and how fast would i burn through WHEN everything goes wrong"... and then work forward from there and see if it makes any sense at all.

jmho.

I hear where you're coming from JR, but I think you're nuts. I'm a little more calculated, and don't take risks without knowing the upside and downside. PPS definitely has a curve, but the depth of that curve has to do with what you're willing to lose. It can be controlled, and not burn out of control like the crazy inferno you're referring to. Then it can be increased as you grow, and scaled up.

JR · 08-10-2005

Quote:

Originally Posted by xenigo

I see what you guys are saying. From what I'm seeing, it depends on the immediate financial goals of the program. I'd like to have 3k active recurring members by the 1 year mark. The projections you guys are referencing far exceed that, and far exceed the amount of debt I'd take on to reach that goal.

Do my initial projections look close to what I'd incur with these goals?

I hear where you're coming from JR, but I think you're nuts. I'm a little more calculated, and don't take risks without knowing the upside and downside. PPS definitely has a curve, but the depth of that curve has to do with what you're willing to lose. It can be controlled, and not burn out of control like the crazy inferno you're referring to. Then it can be increased as you grow, and scaled up.

you think i am nuts. i think you are being naive. your "projections" are guesses and like all startups born from enthusiasm and optimism, they are going to be more optimistic than you ever dared to believe. i am not saying that it is not necessary to have some idea of what might happen and build some sort of forecast model with revenues and expenses - but it is still a guess.

this is the internet. you can't fully know what the upsides and downsides are until you have live sites and test and tweak them for a few months, test traffic, test different layouts/formats and designs and so on.

what i am saying is that the only thing you can absolutely control is how much money you are willing to lose. you can't control how fast you will learn how to make money and how fast you will make money, the accuracy of your projections, how fast you will get traffic, how fast you can find affiliates THAT MATTER and so on.

I really wish you luck. its going to be tough.

gonzo just offered the best advice. get real help and shorten the curve as much as possible. dont assume you know and lose money. not sure about how to choose between a russian and a pikey though. maybe there isn't a good choice.

HoneyBlond · 08-10-2005

Quote:

Originally Posted by sarettah

Hi HB

How you doing ?

That is a great thread, thanx for finding it. I have it bookmarked now

Hi Sarettah,

No probs upon reading this thread I just had to go find Bill's posts ;-)
Hows life with you ?

Vick · 08-09-2005

I'm not even going to read the posts

$500,000 to do it right, and you might not need most of it ........

..... but you have to be able to lose every cent and not cry uncle

TheEnforcer · 08-09-2005

I knew you guys would come through....

gonzo · 08-10-2005

Good luck on working a new PPS program. Sounds like you are going to need it.
My suggestion... in all seriousness?

Hire Serge or Nick as a consultant to get it done for you properly.

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.

08-09-2005	#2
Nickatilynx Banned Want to see your own Advertising Here! Join Date: Oct 2002 Location: Vancouver Canada Posts: 15,115	Re: Initial cost of starting a PPS program? Don't even try it. You haven't a clue!!! Where's the shave factored in? ;-)))

08-09-2005	#3
Dravyk Easy Like Sunday Morning Want to see your own Advertising Here! Join Date: Oct 2002 Location: Behind a couch, somewhere in Philly Posts: 7,628	Re: Initial cost of starting a PPS program? wibble __________________ All Of 'Em Mainstream Webmasters New: WebmasterConventions.com

08-09-2005	#4
xenigo Members Join Date: Aug 2005 Posts: 66	Re: Initial cost of starting a PPS program? Perhaps I haven't, but that's where I'm asking for clarification. Prove me wrong, Nick. I know most squeeze every ounce of revenue out of their traffic through pre-checked cross sells, upsells in the members area, entrance / exit consoles, including some less reputable tactics. But I'm not talking about doing anything sneaky, only conducting business above the board here.

08-09-2005	#7
TheEnforcer Scored VIP to Anton's Piss Tank Want to see your own Advertising Here! Join Date: Oct 2002 Posts: 8,781	Re: Initial cost of starting a PPS program? Oh.. BillPMB.. where are you?? There are all sorts of things one must consider. Money to cover outages for your server and other unforseen stuff. Processor issues where they hold/freeze your money or just don't pay you. Your program becomes the darling of TGPers and your retention levels dson't nearly equal your projections and you need to outlay a shitload more than you thought.. and much more...

08-09-2005	#15
Rolo Members Join Date: Dec 2002 Location: Six Feet Under Posts: 2,150	Re: Initial cost of starting a PPS program? So you will pay $25 PPS on $29.99 signups? No $0-$5 trials? __________________ "Chaos is the law of nature, order is the dream of man." ~Henry B. Adams (Historian) 1838-1918

08-09-2005	#20
HoneyBlond Mostly Harmless Join Date: Nov 2002 Location: Australia Posts: 309	Re: Initial cost of starting a PPS program? Some of BillPMB numbers on a PPS program: http://www.oprano.com/msgboard/showthread.php?t=37817 :-) __________________ Capital letters were always the best way of dealing with things you didn't have a good answer to. ICQ 11157134 Aim HunnyBlond1 Eml honeyb@honeyblond.com

08-09-2005	#25
Vick Celebrating Company's Success with A Beer From Mini Bar Want to see your own Advertising Here! Join Date: Oct 2002 Location: Little South of Sanity Posts: 6,551	Re: Initial cost of starting a PPS program? I'm not even going to read the posts $500,000 to do it right, and you might not need most of it ........ ..... but you have to be able to lose every cent and not cry uncle __________________ Pssst Click the Button Above I once wanted to be a Gynecologist But I couldn't find an opening

08-10-2005	#27
gonzo Fat Fucking Nobody Want to see your own Advertising Here! Join Date: Apr 2003 Location: Atlanta,Ga. Posts: 17,795 Blog Entries: 11	Re: Initial cost of starting a PPS program? Good luck on working a new PPS program. Sounds like you are going to need it. My suggestion... in all seriousness? Hire Serge or Nick as a consultant to get it done for you properly. __________________ We are putting the bastards of this world on notice; greed and corruption will always be met with "a voice made of ink and rage." "Never try and be like anyone else" - Hunter S. Thompson "The truth is the truth no matter how you try and package a lie" - Shellee Hale

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