How about having an option in orbit to allow prepayments on all your servers for X amount of months. Say if you prepaid 6 months you would receive a 10% discount 12 months 15% etc etc?

I can see how and why people would want this, but I would much rather have the discount on a monthly basis.

Nice idea but headache for accounting. You know what, I am already enjoying lower prices on a monthly basis by paying the higher setup fees. Works fine for me.

To right on the headache bit. I do it for a few of my clients but tracking it on a large scale like they had would be chaos.

nice advantage for sm because they have a guaranteed commitment and a boost to current cash flow. They probably would only have to give a very small discount to attract takers. Some people would like it as a resolution to always worrying about the 5 day payment window that's been discussed recently. Personally, I like it like it is now so I can easily make server changes if something better comes along.

The thing that would worry me if that boost of cash flow wasn't well managed it could mean huge problems later down the line.

And also, think of the possible chargeback issues.

The prepay option could be added to the setup fee and I don't think it would be too bad for accounting.

Prepayments has to be treated differently from current income and thus they need to set up the additional entries for prepayments. Obviously since they are future income, they cannot be classified as current profits and technically cannot be utilized in any ways.

There would also be the need to do tracking of the remaining pre-payment periods per customer and at the start of each calendar month, they would need to pass the journal entries to transfer the current month billing from that prepayment account.

Under the current system, there is no need for tracking as all accounts are deemed billable at the start of each billing month. There would be the need for payment schedules for each and every single customer which opted for prepayments.

I would believe that they set all billing date to be the first of the month instead of the anniversary of the start date is to simply the accounting function. By introducing prepayments, it would add back to the complexity of the system.

Talkster5 brought up the interesting point of chargebacks. I know that some web host do offers quarterly and annual payments but being small, it might not be difficult to implement. However when someone is unhappy, they could opt to do a chargeback and usually it is an issue of all or nothing, ie they would get every single cent paid for even for the months which they have already used or nothing at all.

Also if they use the genuine process of an early termination, how would they account for pre-payments.

As it is, accounting is already bogged down and pretty slow. Adding this new function would inevitable cause more issues at accounting and may further slow down the accounting department. Apart from offering you a discount for prepayments, they would probably need to incur more work and thus need to spend more by hiring more staffs. So if you look at the macro picture, they might inevitably be overtaxed and earn less.

Also if prepayment becomes the norm here, it might scare some people away because not only that it becomes more expensive for them (there are already complains that SM monthly charges are high and there are those who seems to be just riding on the beam as it is) and quarterly or annual payments would be out of the league of most. It also reduce the level of flexibility, say if you need to upgrade or terminate prematurely.

I don't see where chargebacks come into this. If a user wants to chargeback, they could just as easily chargeback on multiple monthly payments as they could with a single pre-payment.

Off the top of my head, how about something like this:

Each user has a balance shown in Orbit and you have the option to add funds to it at any time. (With lets say a minimum payment non-refundable amount of $250 and only in multiples of $50).

You specify in Orbit whether payments are to be taken from the current balance or from your credit card. This allows people to topup their balance and either use that or keep it in reserve. The balance can only be used if it covers the whole payment, you can't use it for part payment with the rest coming from your card. If a CC attempt fails, the amount is automatically taken from the reserve.

It would be optional to add funds so it works for both sets of people, those who want to use the reserve and those who don't. Because the balance is kept against an account and not a single server, upgrades would not pose a problem.

In the end, SM get a longer commitment from customers and the customers who wish to have a reserve get peace of mind that payment issues won't cause a problem.

No, Edwin, got you. Yes, the receipt of such an advance payment could be recorded as unearned revenue, a liability. The journal entry would typically require a credit to the unearned revenue account and a debit to cash. Once debited to cash, they could do whatever they wanted with it. Their liability would remain on the books though until the term had expired. They might or might not declare it immediately as income, depending on whether or not they chose to use cash basis or accrual basis of revenue reporting. However they would still have the cash on hand to wallow in or invest, or whatever they chose to do with it.

Heh, "wallow".

actually, here in alabama we say 'waller'.

[quote="wullie"]

Each user has a balance shown in Orbit and you have the option to add funds to it at any time. (With lets say a minimum payment non-refundable amount of $250 and only in multiples of $50).

You specify in Orbit whether payments are to be taken from the current balance or from your credit card. This allows people to topup their balance and either use that or keep it in reserve. The balance can only be used if it covers the whole payment, you can't use it for part payment with the rest coming from your card. If a CC attempt fails, the amount is automatically taken from the reserve.

It would be optional to add funds so it works for both sets of people, those who want to use the reserve and those who don't. Because the balance is kept against an account and not a single server, upgrades would not pose a problem.

[quote]

That sounds like a better idea.

hehe.. but I would pay in advance cause currently the exchange rate Canada-Us is pretty good!

That doesn't make a difference to them though, they still get the same dollar amount no matter when they get it.

The other point to consider here is SM could stick the reserves into a high interest account and make some more money that they normally would not get.

Thinking about this for a second...
Servermatrix did just fine when they first announced their company to the world meaning [me,you,everybody].
I can't see how anyone here could make things progress the comapny[SM] if the market just isn't there or enough money gained by their service they offer.

Increase of money <- only for a minute.
Increase of offers <- only for a minute.
Increase of anything <- only for a minute.

I hate to see a company that tried so hard to please so many people and put so much effort in support and employed so many bright minds hard at work to face the outcome of tomorrow.

Technology its a love/hate relationship.

Servermatrix and The Planet are more than just technology - the people, history, identity, and customer realtionship are a big part.

I know when I buy a server, I do a lot of research and ask a lot of people about their experiences. It's just too much of a headache moving sites from one server / facility to another to take a risk on a new server, no matter how good the technical specs or the deal, if I don't trust the company based on research and recommendations.

I'm not sure I'd personally be interested in this current proposition unless the discount was at least 15% yearly for prepayment, but I think it's healthy for customers to express their wishes and if enough are interested in a particular idea and it's not too difficult to implement, I do think that keeping customers as happy as possible will definitely progress SM/TP's business, more than any transitory special or advertisement, etc.

But then to make this worthwhile, the interest in that account would have to be higher than the discount they would be giving for prepayment? I've seen figures here in the range of 10-15% ...

Just to clarify on this, I wasn't looking at this with any discount in mind. Personally the discount would not matter to me, I would like to see something like this to prevent any possible problems along the way with the current accounting "5 days or disconnection".

If I have a reserve then I know that I don't need to worry about any problems with taking money from a card.

I don't know if I'd want to prepay long stretches like 6 to 12 months (Unless I could put the remaining "unspent" money towards a new server), but I think that requiring customers to prepay their last month would solve SO many accounting issues. Credit card rejected? No problem, they've got a whole month to sort it out. Cheque lost in the mail? Again, a whole month. Bill unpaid? Again, a whole month. See where I'm going?

Problem is, the setup fees are already enormous (From the viewpoint of a customer from the days of zero setup fees for all servers as the standard), paying for the last month right off the bat would jack up the initial investment to insane proportions.

So I propose replacing the setup fee entirely with a prepayment of the last month. Problem solved.

BTW, by last month, I mean, when you sign up you pay for the current (upcomming) month, and another "phantom" month, that takes effect when you cancel. This is the standard practice of many ISPs.

The last server I bought at EV1 (3 years ago) I paid a $430 setup fee. From my perspective, the current setup fees are tiny!

Setup fees are usually not refundable and thus with any new business dealings, no matter how much research you do, there would always be the risk element working with someone for the first time.

I supposed it is not always the issue of whether someone could afford it or not, I am sure that most can or else they wouldn't be embarking on a long term thing such as a leasing a server but it is an issue of financial exposure and thus risk element.

Basically if I sign up with someone, come up with $0 setup and find that the service is below par, I could just terminate the contracted and my exposure is just the month rental and in this case, a prorated sum.

However if I were to sign up with someone and pay a $299 setup and find the below par service, I would be out of pocket $299 and that can be costly if you find yourself hopping from one place to another and paying setup fees. It can really bleed one's pocket.

Of course, I've been here long enough to know that I would be getting above par service and am more than willing to come up with whatever setup fees.

All that said and done, I am not sure if providing a 10 to 15% discount for prepayment would be beneficial to SM/TP. The way I see it, they are already priced at the bottom level of the market and with all the new add-ons they are providing, there would definitely be additional cash outlay there. Those equipments and facilities do not come cheap.

I rather pay them what I am doing now and knowing that they be afloat for the distant future than to prepay and see them overstretching themselves financially.

I see a lot of potential with SM/TP and with what they are providing technically, I am sure it would cost them a bundle and probably that's why prices have gone up to help fund the facilities and manpower upgrades and usually to no additional cost to us.

When I was first configurating my server it was getting very expensive but In the end I decided to choose the best my server could have because I know it will come in use soon(I think lol). It came to $380+ and wasn't sure if to pay that but then I realised the setup fee goes afterwards which was kind of a relief and tempted me to buy it and I payed
So now I am paying £177.18 per month and I just make sure I have that amount in my bank account to cover this before the payment is due. So I think there is no need to pay X amount of months. It is just down to you looking after your own money

That's not the point though, I have enough money in the bank to pay for my boxen more than 100 times over - but if your card dosen't work or is stolen at the end of the month (as mine was a few months ago) then that dosen't help you much.

I've noticed they've had the 'month to month' contract as the only option to a drop down box on the order form for a while. I thought by now they would actually implement some kind of longer term contract and with an entire accounting dept, it shouldnt be too difficult to offer at least a quarterly option and put a little discount on that.

About a year ago, they had an annual contract, the difference is that with the annual contract, your setup fees were waived but it was a lot simplier then. You still pay month by month like most annual contracts but I supposed you waived the rights to terminate at the end of the month and you are not subjected to lower new pricing..

So, you want to pay for a year, right now, and so, after that . . . when the rate change, you request back to a monthly fee . . . :shock:

I would like to pay in advance as well, mainly due to the recent threads about servers being turned off because someone could not pay one month or cards declined etc its a little worrying.

This is exactly the thing that the first month last month thing would solve. If your card was stolen and you weren't able to pay SM, instead of shutting down your server you'd have 30 days to mail them the payment.

Oh mail the payment, That does sound like a good idea

OK, you've touched on a sore subject here. We mail out a very small magazine and it's amazing that about 1 out of every 600 seem to either be misrouted or lost and need to be replaced. We frequently for example get a "no such address" one month while the month prior and month following delivery to the same unchanged address works fine. Other times it just arrives two weeks late for reasons unknown. I would not feel that secure mailing my payment, unless it was a long time in advance because you're almost certain to have 1/600 or so lost or delayed.

[/steps off soapbox]

Depends what you ship it with.

I do most of my mailing to the US and Canada via Canada Post Xpress Post.

First of all, it's insured. Second of all, it registered and trackable (Optional sig too). Third of all they've never misrouted or delayed any of the items I've sent through them.

I think XpressPost is 2-4 days from Montreal to Texas, so if something goes wrong you have plenty of time in your 30 days to mail another.