When one hits, he can make amazing high profits. On average, 1-900 numbers charge $1 for the first minute & 75 cents for additional minutes. The average call lasts three to five minutes, so his revenues per call average $2.50 to $4. If he invests $40,000 he only needs 10,000 to 16,000 calls to break even.
His cost on each call will equal $1.50, giving him a profit margin of about 40 percent per call before he deducts his overhead, operating costs & taxes.
Here is what a typical month's revenues, expenses & resulting profit might look like:
Monthly Revenues: $100,000 (25,000 calls at $4 per call) Fees to the Carrier: $40,000 (average 40% of gross) Fees to service: $3,000 Marketing: $40,000 Overhead: $10,000 Total expenses: $93,000
Monthly profit: $7,000
If one invests $60,000 in the total start-up, his return on his investment per month would equal 11.7 percent. More likely, a national start-up that would generate $100,000 per month in revenues would realize 8 to 13 percent per month. "The goal is to realize between $1.08 & $1.13 for every $1 he invests”.
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