How to make cash from Web and mobile services
Posted Sunday, April 22 2012 at 18:37
The fact that mobile is big in Africa is undeniable with more people seeking to understand how to best derive value from this channel.
The key value that most people and businesses seek to know is how to generate revenue from various services that they can offer. Here are the various ways of billing.
Shortcodes are three to four-digit numbers that are allocated by mobile network operators to premium rate service providers for purposes of setting up services.
At the time of setup, shortcodes are assigned billing bands, which range from normal SMS rates to premium rates of up to Sh100.
Shortcodes do not offer flexible billing and you must choose the best fit for your service.
Shortcodes attract a monthly rental fee from the operators and may have a premium one-off fee if the code is seen as “golden”, such as an easy-to-remember number like 5544.
Mobile originated billing is a shortcode based billing where the consumer is charged every time they send input to a shortcode.
If one has insufficient airtime, they are notified and do not access service.
Mobile terminated billing is also shortcode based. Here, the user is billed once they successfully receive a message on their mobile phone.
It is popular for subscription based services where the consumer doesn’t need to engage the service to pull content.
If one has insufficient credit, they will not receive the content and as such you must account for this in your service revenue projections with assumptions.
The model with most VAS services is revenue share, which is usually on a cascading model. The higher your volumes, the higher your payout.
Out of the starting block, operators will take up to 50 per cent of gross revenue net of tax.
This does not lend itself well to business models whose core services are targeted to niche markets translating to low user numbers and hence low volumes.