Business Model - Calling Cards

Description

Calling cards business is one of the most common business models in VoIP (voice over IP) industry.

The essence of the calling cards business model is to creatively segment customers by various demographic or behavioral characteristics

and to design calling cards offerings to meet their specific calling needs.

The calling cards business typically attracts entrepreneurs who want to enter new market, businesses with established retail

distribution channels, and service providers who want to diversify their revenue streams.

What is needed to implement this

Equipment/infrastructure:

• Hosted MOR (with Calling Card addon)

It is a full solution, hosted on Kolmisoft servers so you do not need any additional equipment on your premises.

Suppliers/providers:

• DID number (access number)
• Termination provider
• Printing (if you sell printed cards)

How it works

1. User buys a Calling Card (over the Internet/printed, in a store/street/etc).
2. User finds the NUMBER and PIN of the Card. It can be on the plastic/paper Card or given to the user in an online Calling Card Store.
3. User dials an access number, which is given to the user in the same way as the number/PIN. User can dial this number from anywhere in the world.
4. System asks the user to enter the number and PIN (or only the PIN). When user dials the access number, IVR will ask him to enter card number and/or PIN.
5. Are the number and/or PIN good? In this step the system checks the database to see whether a Card with the provided number/PIN exists. If the Card is not found, the user is asked to enter new a number/PIN. It is possible to change how many times the system will permit reentry of the number/PIN. The default is three tries.
6. The system tells the remaining balance on the card. This step is optional and can be disabled.
7. The system asks for the Destination to be entered. IVR will ask the user to enter the destination he wishes to dial.
8. The system tells the remaining time. Based on the entered destination and the remaining balance, the system will tell the user the remaining time he can talk with this destination. This step is optional. It is influenced by Ghost Minute Percent.
9. The system dials the Destination. Using LCR, the system chooses the cheapest provider and dials the entered Destination.
10. After the call, its cost is deducted from the Card's balance.

More detailed logic is explained here.

Financial figures

Investment

Investment to this business consists from the following parts:

• Hardware (server, gateways)
• Software (MOR softswitch with billing & routing)
• DIDs
• VoIP traffic
• Printing
• Staff
• Marketing and other expenses

Usually for those who want to start business from 0, we strongly recommend using Hosted solution. Why?

Because you need to concentrate on your business rather that server management and other technical details.

If you want to make money from this business, you need to think about your clients and how to sell and market your cards in the best possible way.

On the other hand, if you want to minimize your initial investment and try to build own infrastructure without very good knowledge in this area, it will be just a waste of your money.

In case you have good specific knowledge in this field, you should ask yourself - shouldn't you be responsible just for the technical side of this business and hire someone who knows how to market and sell your product?

The basic rule is very simple - concentrate on the things which you do the best.

If you decided to take our advice and host the full infrastructure, investment starts from 480 EUR/month (640 USD/month).

Here you can check the newest pricing.

It depends on the plan you choose and additional services you take together with it. To be more specific:

• Here you can find Hosted solution plans and how they differ from each other.
• Here you can check available addons in MOR which expand the functionality. The most important is Calling Cards addon.
• Here you can check available support plans. It is even possible that we do all the configurations for you so you could concentrate on your business.

The second rule - the better functionality, service and support you need, the more you have to invest.

Usually the biggest criteria for all start-up companies is to minimize the initial investment, this is why we play with open cards.

Minimal investment to infrastructure - 480 EUR/month.

We have covered the necessary infrastructure (Hardware + Software), now let's talk about additional things you require: DIDs, VoIP Traffic and Printing.

We do not provide this and can only recommend:

• DID number (access number)
• Termination provider
• Printing (if you sell printed cards)

Please address all your questions related with DIDs, Termination and Printing for those providers for whom you send the inquiries.

Next thing you need to do is to form your staff. From our experience staff is usually formed by partners, who have some share of the company.

You can do the same to avoid the initial investment or you can simply hire an employee.

Below you can see three main areas where someone from your team should be guru at:

• Distribution. Responsibility - find distributors and expand this channel.
• Sales and marketing. Responsibility - analyze the competition, create different calling cards for each client segment depending on the demographic and other characteristics.
• Managing infrastructure. Responsibility - searching and adding new providers for DIDs and termination, generating calling cards based on sales requests, ensure the quality of calls.

The last thing - marketing and sales expenses. As this is not our specialization, we leave this to calculate yourself based on your market.

Profit

We have collected information about the profit from several Austrian, Italian and Ireland companies.

Below you can find the results that were achieved in 6 months from the business start:

Company	Sales (calling cards per month)	Income (EUR/month)	Expenses (DID, termination and printing) (EUR/month)	Profit (EUR/month)	Peak of concurrent calls
Austrian company	10 000	39 000 EUR	36 300 EUR (120 channel DID – 890 EUR, printing – 300 EUR, termination – 35 110 EUR)	2700 EUR	81
Italian company	4 000	22 000 EUR	21 200 EUR	800 EUR	20
Ireland company	18 000	43 320 EUR	36 900 EUR (DIDs and printing – 600 EUR, infrastructure – 300 EUR, termination – 36 000 EUR)	6420 EUR	80

In the above provided examples two companies had their own MOR systems, while the remaining was renting full infrastructure.

All of the enterprises are one-man companies.

Case study

Here you can find a case study of using MOR in Calling Card business.

What else is needed to be taken into the consideration

• Applying hidden fees and advanced rates. This allows you to increase your competitiveness.
• Protecting your system. VoIP fraud is very common and to avoid huge losses you need to ensure the highest possible security.
• Applying flexible payment plans for your resellers and distributors. This is a common practice in calling card business. By allowing post-pay you will have possibility to attract more partners and sell more cards. On the other hand this reduces your cash flow.

What is the first step to start

• Decide which plan to start with. We recommend Hosted Gold and Platinum support so you could concentrate on your business growth while we will do all configurations for you
• Contact our sales department and we will show you how MOR system works for Calling Cards
• If you are happy with the system, we will send you the contract to sign and the proforma invoice to make the payment for our services
• We will assist you with initial steps to get this business up and running.

Contact us

If we have missed some information or you would like to see how you can use MOR for calling card business, feel free to contact us.

FAQ

Question	Answer
Can I have a website to sell Calling Cards?	Yes, you can. For this you need to find a developer who can create a website and integrate it with MOR system. Kolmisoft does not provide such services, but we give necessary tools (API) which are needed to integrate MOR with your website. API is available only in Hosted Gold plan.
From your experience, please how would you advise me to set the rates?	There is no easy answer - it depends on several things: 1. your buy prices, 2. your desired profit, 3. your competitors prices