PEC customers have deployed tens of thousands of telecom applications over the years using our software solutions. CardSaver™ allows both startup and experienced prepaid companies to offer Prepaid Calling Card services to customers. With its user-friendly, yet powerful functionality, CardSaver™ is the industry-preferred billing software for Prepaid Calling services.
It is a great idea, before starting your business, to attend a prepaid trade show to get an idea of what to expect in the industry.
PEC has a great deal of experience designing and integrating with products developed for the Prepaid Calling Card industry. If there are any questions that you have, please do not hesitate to contact us.
There are many factors to consider when setting your selling rates. You need to consider your competition’s prices, your expenses, and the buying rates per destination.
Analyzing your competitor’s pricing is not as straight forward as it may seem. Sure, they advertise 8 cents a minute to India, and 1 cent per minute within the USA, but how much are they really charging? The truth is that the profit for most companies is NOT made with the per-minute charge, but rather, with the various fees that they charge to their customers. Yes, there are many cards in the market that do not have fees, but these cards always charge a significantly higher rate per minute. Below are the different fees that CardSaver supports:
So let’s take the scenario where your competition is charging 8 cents a minute to India. Let us assume they have an activation fee of 39 cents, a connection fee of 39 cents, and a billing increment of 3 minutes. There is no disconnect fee or maintenance fee. Let us also assume that the customer’s call lasted for 25 minutes (which rounds to 27 minutes if you are using 3 minute increments). The total cost of the call is as follows:
(27 minutes * $0.08) + ($0.39 activation fee) + ($0.39 connection fee) = $2.94
The total charge per minute is actually 11.8 cents, NOT 8 cents. That’s a 50% difference! Even if your cost is 9 cents per minute, which is more than the advertised price, this call would be profitable. So, as you can see, the profit is in the fees, not the charge per minute.
In Economics, the practice of setting different rates for different customers is called price discrimination. Almost every company takes advantage of this economic practice whether you realize it or not. The idea is to charge more to customers that are willing to pay more, and charge less to customers that are not. Put yourself in the following situation:
You are a resident of the United States, and you are on a business trip in France. You have just landed at an airport in Paris. Now, you need to find a way to call home and let your family know that you have arrived safely. You also need to call the office in the US and confirm the time of your meeting tomorrow. Would you mind spending 30 cents per minute for this call? Probably not, especially if your company is paying the bill!
CardSaver allows you to brand different cards and set different rates for each card, thus allowing you to take advantage of price discrimination.
Generally, when calling card companies create a new brand of card, it is targeted toward a specific region of the world. For example, one of PEC’s customers created a card called “Hello Africa” which targeted consumers wanting to call Africa The rates for Africa were set so that it would yield a 10% profit. The rates for calling to USA and UK were set to 5 cents per minute, which is still a reasonable rate, yielding a profit margin of 400%. It turned out that this customer made more profit from the few customers that called USA and UK than from customers calling Africa. Although most people will call the destinations you are targeting, do not forget that people will need to call other destinations as well, and they are usually willing to pay a premium.
By simply setting your selling rates higher than your buying rates, it does not guarantee that you will make a profit. You need to consider all your recurring expenses into the equation, such as your lines costs, your Internet cost, your printing costs, your co-location fees, and any miscellaneous business expenses that you may have. The largest expense is usually the distribution expense. It is always best to exaggerate expenses to consider the worst-case scenario.
In areas that are highly dominated by minorities, there tends to be a great deal of competition in the phone card business. However, competition does not mean there is no money to be made. Be sure to read the section in this document entitled “Competition Pricing (The Hidden Fees).” Most customers in these minority-dominated areas tend to buy phone cards from local ethnic retail shops. Usually, these stores are willing to carry new phone cards if they feel they can make money with it. Retail stores generally buy cards at about 75% of the face value of the card. For example, if you have a card that has a face value of $5.00, the retailer will pay you $3.75.
Areas that have a large number of international and business travelers tend to be more profitable for phone card companies than minority-dominated areas. Retail stores in these areas tend to take higher commissions, however, the profit margins are also much higher (see the section of this document entitled “Set Different Rates for Different Customers”). Retail stores in these areas will usually pay less than 75% of face value for phone cards.
Many phone card companies prefer not to sell directly to retail stores, but rather prefer to sell cards through a distributor. Phone card distributors usually distribute more than one brand of card and usually have an established relationship with the local retail stores. Selling through a distributor is the best way to sell a high volume of cards, however, there is a price to pay for this convenience. After paying the distributor and the retail store, you should expect to receive less than 70% of the face value of your card. Also, distributors usually do not pay you up front for your cards; they only pay after they get paid.
Internet cafes are ideal locations to sell prepaid calling services. There is no need to purchase PSTN lines from the phone company, and the Internet infrastructure is already in place. Also, customers do not require a physical calling card, so there is no need to print any cards. Customers that are already using the Internet services will be aware that they now can make international calls from the same location.
Over the past couple of years, Internet phone card sales have increased tremendously. The Internet makes it convenient for customers to purchase and recharge cards. There are, of course, advantages and disadvantages to choosing this method of distribution:
In any business, there is no customer like your own customer. If a customer is satisfied with the quality of your service, chances are that you can convince him to buy from your company again. On the back of every card and in every email that you send to a customer, it is essential that you offer recharge capabilities. Recharge capabilities increase your profit margin by removing the distributor from the picture.
PEC offers customers two solutions to allow recharging capabilities. The first is via the web, and the second is via the telephone. Customers can use their credit cards to recharge their accounts instantly.
First and foremost, you must develop a solid infrastructure for your prepaid calling card system to run on. Without a solid infrastructure, you will be spending more time worrying about your systems integrity than marketing your product. The following is a list of equipment and services that you will require to start the business. We have also included recommendations that we feel will ensure a solid infrastructure.
We list this item first not only because it is one of the products that we provide, but because it is the most vital in the list. Choosing a good billing software will ensure that every call made through your system is tracked and no call is left unbilled. CardSaver™ by PEC is not only a robust, dependable software package, it is also the simplest and most user-friendly package in the industry. CardSaver enables you to view reports on traffic passing in and out of your system. CardSaver also gives you complete control over your calling cards, including PIN generation, usage fees, expiration dates, and much more. CardSaver is a vital component for developing a solid infrastructure.
The VoIP gateway that handles all of the calls into and out of your system is the next vital component. If your hardware fails, your customers calls will not go through. Thus, we recommend choosing one of two brands for your VoIP gateway: Cisco or Quintum. Although we are a proud reseller of Quintum hardware, CardSaver fully integrates with Cisco VoIP gateways. These two vendors have a large following and many online forums exist where you can go to receive answers to any questions that you may have regarding configuration or specifications.
Today, you can purchase a Dell system for $499 with monitor included. That is a definitely a great deal, but unless you are only planning to use the system for Internet browsing and word processing, we do not recommend using these type of systems for your mission critical applications. You have a choice of using a high end server dedicated with a Windows Server OS, a Virtual Windows Server running on a VMWare platform, or just running a Virtual server in the CLOUD such as AWS or Azure. Depending on the requirements, PEC will recommend the best solution
The Internet service that you choose is the backbone of your calling card network. Choosing a reliable Internet service will ensure that your billing server and VoIP gateways will stay online. Ideally, you should place your servers in a co-location facility (i.e. 60 Hudson Street in New York). Internet service in a co-location facility is much less likely to go down than in your office or home. If you are placing your systems in a co-location facility, be sure to ask your Internet provider what kind of redundancy is available in case their service goes down; often, the provider will use the backbone of another Internet provider in this event. If your Internet provider does not have a failover plan, you may want to consider selecting a second Internet service as a backup.
The phone service that you choose is as important as the Internet service that you choose. If your phone lines are down, your customers cannot call into your system. Generally, phone service is more reliable than Internet service, so it not necessary to be as concerned about redundancy. However, be sure to choose the correct phone service for your application. If you have a system that supports T1 lines, make sure that the T1 is a PRI. If you require that the Caller ID is logged for every call, be sure to add Caller ID (ANI) service. If you have any questions about which lines to order, the best idea is to contact your equipment vendor or PEC.
In most places throughout the world, power outages are a daily event. If your systems are located in a place where power outages are common, it is essential to have some sort of power generator. For those living in places where electricity is taken for granted, it is still important to consider the integrity of your power service. It is essential, regardless of your location, to have a UPS battery backup. It is recommended that your battery backup can last at least two hours in case of a power outage. If you are placing your equipment in a co-location facility chances are that you will be connected to a generator, however, it is still necessary to have a UPS battery backup.
When selecting long distance providers for your calling card system, it is usually best to select multiple carriers. Most calling card companies provide service to almost anywhere in the world, but focus on a particular region of the world. For this reason, it is best to have an A-Z long distance provider that can send your calls to anywhere in the world and also a regional long distance provider that focuses only on the region of the world that you are targeting.
When searching for a long distance company, there are four major factors to consider: price, quality, reliability, and capacity.
Just as in any other business, the idea is to buy low and sell high. Do your homework before selecting a carrier. Often, the price per minute will differ depending on which city you are calling. For example, calling Lagos, Nigeria is 3 cents per minute, while calling Abuja is 8 cents. Also, for many countries, mobile phone charges will be significantly higher than land line charges. For example, calling any land line in the United Kingdom may cost 1 cent per minute, but calling a mobile phone can cost upward of 25 cents per minute. PEC can help recommend a company to use or you can use our own provider.
With CardSaver, you will be able to generate an unlimited quantity of calling cards. CardSaver will export these cards to a comma delimited flat file which can be given to a card printer. When searching for a company to print your calling cards, there are few factors to consider: price, quality, and services offered.
Generally, it will cost you between 5 and 10 cents per calling card for printing depending on volume. Of course, the larger quantity of cards that you print, the better rate per card you will receive. Keep in mind that most card printers require that you order at least 10,000 cards, in which case the cards should be about 10 cents each. Expect to pay a setup fee for the printing as well and a design fee if you are not creating the design yourself.
Although price is an important factor, quality is often more important. If possible, view a sample of the card printer’s work before placing the order to make sure that it is acceptable. Pay attention to details such as material thickness, ink quality, and the quality of the silver scratch off area located on the back of the card. The card should be presentable.
Some companies offer graphic design services as well as card printing. If you are not planning to create the card designs yourself it is a great idea for the card printer to create the designs for you.
The above network diagram depicts what a typical prepaid system layout would look like. Please keep in mind that the CardSaver RADIUS Server, the CardSaver Web Server, and the CardSaver Database Server can be combined into one system.