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How does Dan make money from MJ?

 
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PTravel
Dan isn't smart enough to hire me


Joined: 18 Jun 2008
Posts: 194

PostPosted: Thu Apr 16, 2009 1:31 pm    Post subject: How does Dan make money from MJ? Reply with quote

I'm a satisfied MagicJack user. I've got three MJs (one for home, one at the office and one for travel), and I've just ordered a 4th for my wife. The MJ I have at home is a replacement for primary phone service.

What I don't understand is how Dan's business model earns money. The cost of buying an MJ is probably enough to cover its manufacture, plus a little bit more, but, at some point, Dan will exhaust the potential market for the device and that will eliminate a primary profit center.

MJ's international rates are very, very competitive, but I would think that the people who purchase MJs for that purpose, rather than buying an international calling card that has similar rates, would be rather limited.

That just leaves domestic US service -- unlimited at $20 or so a year. I can't imagine how MJ can make money from that. Perhaps the plan is to eventually sell advertising based on demographic data collected by the MJ, but I would think even that would be rather limited.

I like my MJ service and want it to continue. I just can't figure out how MJ will make money providing it.
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PostPosted: Thu Apr 16, 2009 1:31 pm    Post subject: Magicjack support, tips, tricks, and hacks

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QuantumIguana
MagicJack Newbie


Joined: 06 Apr 2009
Posts: 8

PostPosted: Thu Apr 16, 2009 5:49 pm    Post subject: Reply with quote

The cost to manufacture the device is probably not very high. There are a great many electronic devices we can by that cost less than the MagicJack.
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mberlant
Dan Should Pay Me


Joined: 01 Feb 2009
Posts: 829
Location: Japan

PostPosted: Thu Apr 16, 2009 8:14 pm    Post subject: Reply with quote

There are many small revenue streams that fit together to make MJ work. There are also some sleazy marketing assumptions at work here. Here are some of the costs and revenues that fit into the VoIP operations side of the puzzle. For argument's sake, let's assume that the physical dongle is sold at its fully loaded cost of $20, and only look at the VoIP operational costs.

- It costs MJ less than 1 cent per minute to complete an outbound call.
- It costs some amount for electricity and rent to run the servers.
- It costs some amount for support staff and home office staff.
- It costs much less than $1.00 per month for each DID telephone number.

-- MJ takes in $1.67 per month from every customer paying year by year (Less from people who buy a 5-year extension.).
-- MJ earns a tiny amount per inbound phone call per minute in revenue settlement (which adds up enough to completely pay for the DIDs, with more left over).
-- A significant number of MJ customers stop using the service prior to the expiration of the service term. The remainder becomes revenue without the expense of further outbound calling.
-- Some dongles die in the middle of the service term, and a replacement dongle is purchased. If the user selects a new phone number for the new MJ and does not negotiate with Customer Service, the remainder of the term on the old MJ is abandoned. If the user transfers the old phone number to the new MJ and does not negotiate with Customer Service, the entire first year of service that comes with the new MJ is forfeited.

One phenomenon that skews the abandonment rate higher than in most business models is that the total price is so low, intentionally placed below most people's opportunity cost (the price people put on paying themselves for their own labor). Because the overall price is so small, people are encouraged to gamble on the chance that MJ will be of useful service for the price.

[That is what drew me to MJ. I subscribe to top tier VoIP services in various parts of the world, but decided that spending only $40 on the MJ experiment was an amount I could afford to lose if the experiment failed.]

If MJ were to go out of business right now, leaving me with several unfinished service terms, I would not feel the need to complain (from a financial standpoint). Most of those who ultimately abandon the MJ after two or three months rightly conclude that they have gotten their money's worth out of it, when comparing the amortized cost with the $20 per month price of a first class VoIP service.

This is not a defense of MJ's sleazy marketing practices. It is only an attempt to decode the financial elements that support the operation.

p.s. MJ's international rates are acceptable, but not great, when compared to other VoIP service providers. This is a very reasonable price point, considering that the vast majority of MJ users never deposit money in an international calling account. There have been only a small handful of discussions about international calling in this forum, which I believe to be indicative of the MJ population at large.
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kgm032
MagicJack Newbie


Joined: 25 Aug 2009
Posts: 6

PostPosted: Tue Aug 25, 2009 4:27 pm    Post subject: How do they make money Reply with quote

They make their money on keeping the service running for the first year convincing you they are a solid product, getting you to pay for the second 1 -5 years, then overexpanding to the point where quality goes down and you abandon them. I swear the day after I upped for the 5 year plan, my calls became choppy and the device is now usless, nothing else changed on my end.....so they got 60 buck from me because of course, that money is not refundable...so Warning...even if your MJ works fine now..NEVER up for more than a year at a time so fi you decide to drop you are only out the 20 buck...
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callontom
MagicJack Contributor


Joined: 17 Apr 2009
Posts: 51
Location: Clifton, NJ

PostPosted: Tue Aug 25, 2009 5:03 pm    Post subject: Re: How do they make money Reply with quote

kgm032 wrote:
They make their money on keeping the service running for the first year convincing you they are a solid product, getting you to pay for the second 1 -5 years, then overexpanding to the point where quality goes down and you abandon them. I swear the day after I upped for the 5 year plan, my calls became choppy and the device is now usless, nothing else changed on my end.....so they got 60 buck from me because of course, that money is not refundable...so Warning...even if your MJ works fine now..NEVER up for more than a year at a time so fi you decide to drop you are only out the 20 buck...


I went for the 5yr along time ago and my MJ works fine. Quality seems to get better even. No more beeps, and i never get cut off. I will say i use a computer dedicated just to MJ. 900mhz with 512 mb ram. Win xp .
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maine-iac
Dan isn't smart enough to hire me


Joined: 25 Mar 2008
Posts: 347
Location: GA

PostPosted: Tue Aug 25, 2009 5:07 pm    Post subject: Re: How do they make money Reply with quote

callontom wrote:
kgm032 wrote:
They make their money on keeping the service running for the first year convincing you they are a solid product, getting you to pay for the second 1 -5 years, then overexpanding to the point where quality goes down and you abandon them. I swear the day after I upped for the 5 year plan, my calls became choppy and the device is now usless, nothing else changed on my end.....so they got 60 buck from me because of course, that money is not refundable...so Warning...even if your MJ works fine now..NEVER up for more than a year at a time so fi you decide to drop you are only out the 20 buck...


I went for the 5yr along time ago and my MJ works fine. Quality seems to get better even. No more beeps, and i never get cut off. I will say i use a computer dedicated just to MJ. 900mhz with 512 mb ram. Win xp .


Your mileage may vary.
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callontom
MagicJack Contributor


Joined: 17 Apr 2009
Posts: 51
Location: Clifton, NJ

PostPosted: Wed Aug 26, 2009 4:56 am    Post subject: Re: How do they make money Reply with quote

maine-iac wrote:
callontom wrote:
kgm032 wrote:
They make their money on keeping the service running for the first year convincing you they are a solid product, getting you to pay for the second 1 -5 years, then overexpanding to the point where quality goes down and you abandon them. I swear the day after I upped for the 5 year plan, my calls became choppy and the device is now usless, nothing else changed on my end.....so they got 60 buck from me because of course, that money is not refundable...so Warning...even if your MJ works fine now..NEVER up for more than a year at a time so fi you decide to drop you are only out the 20 buck...


I went for the 5yr along time ago and my MJ works fine. Quality seems to get better even. No more beeps, and i never get cut off. I will say i use a computer dedicated just to MJ. 900mhz with 512 mb ram. Win xp .


Your mileage may vary.

yes mileage may vary, but i think that's the nature of voip
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ertooso
MagicJack Newbie


Joined: 16 Jan 2020
Posts: 5

PostPosted: Mon Dec 21, 2020 9:50 am    Post subject: Reply with quote

I prefer earning money playing simple online games. This way, you kill two birds with one shot. You have a lot of fun playing a game and, in a case of a win, you get a pleasant financial reward. It is ideal pastime for me. I am also going to start trading on tickmill https://tradersunion.com/brokers/forex/view/tickmill/ . It requires knowledge and skills, so I am training now.
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