Charge per Additional Minute
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Free Monthly Minutes
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Registration only
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Trial
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$6.95
|
$.79
|
0 minutes
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Basic subscription
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Middle
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$14.95
|
$.69
|
20 minutes
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Premium subscription
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High
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$29.95
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$.59
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45 minutes
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The per-minute prices were higher than the cost of standard long distance services, but approximately the same as other enhanced phone services, such as local collect calls, which ranged in cost between $.35 and $.70 per minute depending on the length of the call, plus a per-call connection charge. While the company did not want consumers to compare the directReach product to 1-900 numbers—for fear of tainting the company's image—directReach was priced well below most 1-900 calls, which ranged in cost between $1.99 and $3.99 per minute. PCC's prices took into account the fact that the directReach product involved two phone calls—one to the 1-800 number and then one to redirect the call from the 1-800 service to the customer's phone—even though the person placing the call dialed only one number.
To reach users of chat rooms and dating/match services, PCC planned to establish strategic relationships with Internet service providers, chat room services and online match services, by offering them attractive revenue-sharing agreements. Partners would not incur any up-front costs for featuring the PCC product on their Web site. The company also planned to use banner advertising and its own Web site to market the product.
PCC projected revenues of $12 million in its first year of operation, growing to $48 million by year five. Cost of goods sold was calculated on a per-minute basis and included all services associated with buying, selling, and billing the customer for calls, as well as credit card fees. Gross margins were projected to be around 61%, while operating margins—after advertising, promotion and G&A costs—were projected to be around 43%. Net income was projected to be $5 million in the first year, growing to $21 million by year five.
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