What is the asset value of each subscriber I secure, should I wish to sell my virtual ISP and retire?

This is a very good question. In addition to the cash flow generated each month by building a large subscriber base, there is an opportunity for a second windfall should you wish to exit this business by selling your subscriber base. Each of your subscribers is an asset that can be sold!

So what is the value of a subscriber?
The shortest answer we have seen is from Christopher Knight, author of "ISP Marketing Survival Guide." On page 22, he suggests that a subscriber base of 1,000 with a retail price of $19.95/month is worth $500 each. However, although this may be accurate, we feel it is a little too simplistic. So allow us to give you a more detailed answer.

There are four key factors that determine the value of a virtual ISP's subscriber base. Each of these factors plays a very critical role in the value.

1. Average Revenue Per User - ARPU is based upon your retail price for service. A subscriber base averaging $19.95/month is worth about three times that of one that averages only $9.95/month.

2. Number of Subscribers - The larger your subscriber base, the more it is worth. It takes just as much time and legal expense to acquire a subscriber base of 100 as it does 100,000. However, the value for the buyer is much greater with a large subscriber base. For example, a subscriber base of 1,000 is worth four times as much as a subscriber base of 500. Imagine the value of several thousands!

3. Life Expectancy - The subscriber average life expectancy of a low-priced, low-end virtual ISP is about 90 days while the average life expectancy of a high-end, high-quality virtual ISP is about 18 months. Average life expectancy is determined by the virtual ISP's ability to control subscriber churn. If a buyer can expect they will enjoy the revenue for a longer period of time, the subscriber is obviously worth more. So a subscriber base with a life expectancy of 18 months can increase the value by as much as six times that of just 90 days.

4. Buyer Demand - The last critical factor is the industry climate. If an ISP has raised funds to build a large ISP they can do so far quicker by buying out other ISPs then securing the subscribers themselves. So if a virtual ISP is fortunate to find two buyers willing to bid against each other, it can dramatically impact the price a virtual ISP can secure for their subscribers. And without a buyer, the subscribers have no value other than the cash flow to the owner. So the marketplace and the timing of a sale can have a major impact on the price you receive.

Having shared all of this information, the $500 per subscriber quoted by Christopher Knight can be high or very low. Information on recent industry sales is available upon request. The key point from this exercise is to understand that the Alliance Virtual ISP Success System is designed in all aspects to maximize each of these key factors.