Determining a fair market hourly price for online use

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Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in Mankayane. Therefore, Logictech cybercafe and stationary considered three sources to determine the hourly charge rate. First, we considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as America Online. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual. Second, Logictech cybercafe and stationary looked at how cyber-cafes in other markets such as Portland and Ashland went about pricing Internet access. Third, Logictech cybercafe and stationary used the market survey conducted in the Fall of 1996. Evaluating these three factors resulted in Logictech cybercafe and stationary's hourly price of five dollars. 5.6 Sales Strategy As a retail establishment, Logictech cybercafe and stationary employs people to handle sales transactions. Computer literacy is a requirement for Logictech cybercafe and stationary employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance. Logictech cybercafe and stationary's commitment to friendly, helpful service is one of the key factors that distinguishes Logictech cybercafe and stationary from other Internet cafes. 5.6.1 Sales Forecast Sales forecast data is presented in the chart and table below. Sales: Logictech cybercafe and stationary is basing their projected coffee and espresso sales on the financial snapshot information provided to them by Allann Bros. Coffee Co. Internet sales were estimated by calculating the total number of hours each terminal will be active each day and then generating a conservative estimate as to how many hours will be purchased by consumers. Cost of Sales: The cost of goods sold for coffee-related products was determined by the "retail profit analysis" we obtained from Allann Bros. Coffee Co. The cost of bakery items is 20% of the selling price. The cost of Internet access is $660 per month, paid to Bellevue Computers for networking fees. The cost of e-mail accounts is 25% of the selling price. 13
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Sales Forecast 1999 2000 2001 Unit Sales Coffee (based on average) 12,016 14,068 15,475 Specialty Drinks (based on average) 6,654 7,913 8,705 Email Memberships 8,703 10,505 11,556 Hourly Internet Fees 38,269 46,365 51,002 Baked Goods (based on average) 32,673 42,150 46,365 Total Unit Sales 98,315 121,001 133,103 Unit Prices 1999 2000 2001 Coffee (based on average) $1.00 $1.00 $1.00 Specialty Drinks (based on average) $2.00 $2.00 $1.00 Email Memberships $10.00 $10.00 $10.00 Hourly Internet Fees $2.50 $2.50 $2.50 14
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Baked Goods (based on average) $1.25 $1.25 $1.00 Sales Coffee (based on average) $12,016 $14,068 $15,475 Specialty Drinks (based on average) $13,308 $15,826 $8,705 Email Memberships $87,030 $105,050 $115,560 Hourly Internet Fees $95,673 $115,913 $127,505 Baked Goods (based on average) $40,841 $52,688 $46,365 Total Sales $248,868 $303,544 $313,610 Direct Unit Costs 1999 2000 2001
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