Normally you have your revenue (top line) minus all your expense directly related to providing the services. “Cost of goods sold” or COGS is a big part of your expenses. Cost of BW, power, direct labor, health insurance, loan interest, depreciation expense, etc that will give you gross income. Note loan interest is an expense, the principle part is not.
All that stuff is called “above the line” or ATL. Then you have all the expenses that are there with or without customers. Office rent, power, extraordinary expenses etc. This stuff is “below the line” or BTL. Then you add ATL and BTL and hopefully you will have a positive number. That is your Net Income. The “bottom line”. You can have positive cash flow but negative income due to the effect of depreciation and other things. Or you can have a positive net income but a negative cash flow due to investing in more stuff. Like I said, the principle part of your debt payments are not expenses, they are in investment. That is just converting dollars into other assets. So you are keeping that money, just in a very hard to liquidate form. As long as your bottom line is positive and you are cash flow positive you are good. Assuming you are paying yourself a paycheck. From: Sterling Jacobson Sent: Wednesday, March 08, 2017 1:24 PM To: af@afmug.com Subject: Re: [AFMUG] Cost of Operations per Customer a month Of course not, it’s horrible with fiber, lol! This is just monthly costs to operate the company minus any capex or debt payments. Our current debt repayments are almost exactly one third of our monthly revenue. And by end of year, that will likely be almost one half our monthly revenue. From: Af [mailto:af-boun...@afmug.com] On Behalf Of Gino Villarini Sent: Wednesday, March 8, 2017 1:21 PM To: af@afmug.com Subject: Re: [AFMUG] Cost of Operations per Customer a month Are you including capex? On 3/8/17, 4:09 PM, "Af on behalf of Sterling Jacobson" Gino Villarini President Metro Office Park #18 Suite 304 Guaynabo, Puerto Rico 00968 <mailto:af-boun...@afmug.com%20on%20behalf%20of%20sterl...@avative.net> wrote: >There is probably a name for this in business, but I'm not a >trained/schooled businessman. > >What is your ISP cost per customer to operate right now? > >Minus debt payments. > >Mine is currently $38.86 a month. > >That is taking my normal monthly costs minus loan payments and dividing >it by number of customers. > >It seems high to me, but I am just getting started I figure. > >Mine should go down some as I grow customers in already built areas, >being fiber it's geographically bound of course. > >I think by the end of this year I should be around $25 per customer a >month. > >I don't have many business clients, but this calculation doesn't really >count those for much anyways. > >What do you guys think?
