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Amp'd Files For Bankruptcy Protection

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growing too fast...?

Shaggy145J

Jun 2, 2007, 11:37 PM
for some reason I don't remember learning in college that more growth = losing money

🤣
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temp_name

Jun 2, 2007, 11:58 PM
Growing too fast is not "bad", but it might not be the best in terms of profit. In economics they teach you of two costs: fixed and variable.

In this situation fixed is wages, equipment costs, rent, etc. The variable cost though is related on everything that needs to be increased as customers grow.

The problem here is that in some cases it could cost a lot more to aquire that extra 10,000 customers than it did to not aquire them. Even in making money on those customers, it might not be as much or barely any at all.

Example:
1st 10 Customers cost $100 to maintain and the company profits $500.
2nd 10 Customers cost $200 to maintain and the company profits $500.

1st 10 --> Avg Cost = $10, Avg Rev = $50 | Avg Profit = $40/cust.
Al...
(continues)
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renardlee

Jun 3, 2007, 12:26 AM
thats a really good explantion for the ampd situation, i knew that customers, and new customers cost money but i didnt know that a rapidly growing company can lose money like that, thanx
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phonenvy

Jun 3, 2007, 10:35 AM
Happpened to my first business. Remember, cricket did the same thing. Twice I think.
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Shaggy145J

Jun 3, 2007, 5:06 PM
I stand corrected - thank you very much for the explanation
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nextel18

Jun 3, 2007, 5:57 PM
Yea Temp explained it very well. Another few companies that are growing tremendously but continuing to see losses are Sirius Satellite and XM Satellite Radio.
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muchdrama

Jun 5, 2007, 9:18 PM
temp_name said:
Growing too fast is not "bad", but it might not be the best in terms of profit. In economics they teach you of two costs: fixed and variable.

In this situation fixed is wages, equipment costs, rent, etc. The variable cost though is related on everything that needs to be increased as customers grow.

The problem here is that in some cases it could cost a lot more to aquire that extra 10,000 customers than it did to not aquire them. Even in making money on those customers, it might not be as much or barely any at all.

Example:
1st 10 Customers cost $100 to maintain and the company profits $500.
2nd 10 Customers cost $200 to maintain and the company profits $500.

1st 10 --> Avg Cost = $10, Avg Re
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(continues)
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chocolateman85006

Jun 6, 2007, 8:59 AM
🤣
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middlekid3058

Jun 4, 2007, 5:48 AM
It is the MVNO model, some have the funding to survive and some simply do not have it. I can honestly say this is not the last of the MVNO deaths(remember ESPN mobile)...
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chocolateman85006

Jun 5, 2007, 9:01 AM
middlekid3058 said:
It is the MVNO model, some have the funding to survive and some simply do not have it. I can honestly say this is not the last of the MVNO deaths(remember ESPN mobile)...




ESPN Mobile? Who'd wanna remember them?
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yellowm3

Jun 10, 2007, 10:57 AM
Now that's the real answer!

How do you operate a successful business competing with the people that you are paying them to use their towers for your whole business structure?

How about this let's open up a company that purchases cars from Honda, re-brand them, and sell it to the public, while competing with Honda... That would have the same success rate as Amp'd Mobile purchasing from Verizon, selling to the public, while competing with Verizon. It's a no brainer
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chocolateman85006

Jun 11, 2007, 8:12 AM
True. Espn Mobile drove me crazy. It was horribly unorganized.
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