Some help?

David · Mar 30, 2012

I suck at math, so help me out.

Hypothetical:
I make $30k/month and have 1k people paying me $30/month. I want to pay $5/person to SOME of them in return for an extra $20/month upfront (so $50/month). I have $2k/month in bills. How many people (by %) can I pay and still make money?

myp · Mar 30, 2012

Unlimited? You want to pay them 5 a month but they pay you back 20 upfront (so before the 5), so you come out positive no matter what. Maybe I didn't understand what you were trying to say?

David · Mar 30, 2012

myp said:
Unlimited? You want to pay them 5 a month but they pay you back 20 upfront (so before the 5), so you come out positive no matter what. Maybe I didn't understand what you were trying to say?

Some context then. :giggle:

Okay I have some people (I don't really but you get the idea) and I'm charging them a flat monthly rate of $30 to access my inventory. The inventory is communal so everyone has access and is invited to contribute and add to the value of their $30. As added incentive I'm willing to let some people, for $50/month, seek payment for 5 items of their choice. Each unique use per month (so someone using an item 5 times in a month only get's counted once) earns that person $1, so potentially $5 per person which I'm assuming to avoid under counting. But I can't offer this to everyone and make money so out of 1k (a nice clean number) people, what % of people can I pay and still pay my $2k/month bills an have an income that out paces my payouts?

myp · Mar 30, 2012

When you say "Each unique use per month (so someone using an item 5 times in a month only get's counted once) earns that person $1, so potentially $5 per person" are you saying that you are the one paying that $1 per person?

If no, then I don't see what cost you are incurring for letting people seek payment for items and if yes, you are only going to be in the red if you are losing money for each unique use (are you? you didn't specify that?) If yes, and they seek payment for 5 items, I still don't see how you can't let everyone do it considering you are charging them 20 extra per month and only paying out 5.

David · Mar 30, 2012

myp said:
When you say "Each unique use per month (so someone using an item 5 times in a month only get's counted once) earns that person $1, so potentially $5 per person" are you saying that you are the one paying that $1 per person?

If no, then I don't see what cost you are incurring for letting people seek payment for items and if yes, you are only going to be in the red if you are losing money for each unique use (are you? you didn't specify that?) If yes, and they seek payment for 5 items, I still don't see how you can't let everyone do it considering you are charging them 20 extra per month and only paying out 5.

Yes I'm the 1 paying and I don't want to pay everyone. I'm asking how many I can pay.

But... Letting people charge and making users pay themselves. I'll still restrict it to 5 choice items, that $30 is for a reason. Or I could offer access to my personal inventory for free and charge $200/month and let people charge whatever they want for everything (and offer a discount for items ofered for free). This is still a work in progress.

myp · Mar 30, 2012

How I am reading it is you charge $30 a month from 1k people for a total of $30k a month and you have a fixed cost of $2k a month. That leaves a net of $28k positive per month. You are thinking of letting some users pay an extra $20 a month and you will have to pay a max of $5 a month (leaving $15 a month positive per person) to let them earn off your inventory. All the numbers here are positive, which is why your question as to how many you can pay is as many as you want.

Now I might still be misunderstanding you, which I assume I am. That aside, I am not sure if what you are asking is in terms of opportunity costs (i.e. letting users make money off your inventory, you might be foregoing some potential income for yourself as your potential customers become their customers).

David · Mar 30, 2012

myp said:
How I am reading it is you charge $30 a month from 1k people for a total of $30k a month and you have a fixed cost of $2k a month. That leaves a net of $28k positive per month. You are thinking of letting some users pay an extra $20 a month and you will have to pay a max of $5 a month (leaving $15 a month positive per person) to let them earn off your inventory. All the numbers here are positive, which is why your question as to how many you can pay is as many as you want.

Now I might still be misunderstanding you, which I assume I am. That aside, I am not sure if what you are asking is in terms of opportunity costs (i.e. letting users make money off your inventory, you might be foregoing some potential income for yourself as your potential customers become their customers).

Like I said, I'm bad at math. lol

And yes that was my result as well until I realized I was dealing with more then 2 people. 1 use = $1x5= $5. But $5x999= $4,995 (as I said, I'm maxing out the numbers). See my dilemma? I can pay only a few people and I want exact numbers. I'm looking for a % because it'll hold true no matter how many people are involved.

myp · Mar 30, 2012

David said:
Like I said, I'm bad at math. lol

And yes that was my result as well until I realized I was dealing with more then 2 people. 1 use = $1x5= $5. But $5x999= $4,995 (as I said, I'm maxing out the numbers). See my dilemma? I can pay only a few people and I want exact numbers. I'm looking for a % because it'll hold true no matter how many people are involved.

When you do $5x999 why are you also not doing $20x999 (the 20 you charge upfront) also? Because in that case it is $20x999 - $5x999 and that always comes out positive. In fact, the more users who take part in the program, the MORE you make.

David · Mar 30, 2012

myp said:
When you do $5x999 why are you also not doing $20x999 (the 20 you charge upfront) also? Because in that case it is $20x999 - $5x999 and that always comes out positive. In fact, the more users who take part in the program, the MORE you make.

Yes but the $20 isn't universal. The people I'm not paying are only paying $30 ($15 if they use 5 items an nothing if they use 30). The $20 only factors in for the people I'm paying.

myp · Mar 30, 2012

David said:
Yes but the $20 isn't universal. The people I'm not paying are only paying $30 ($15 if they use 5 items an nothing if they use 30). The $20 only factors in for the people I'm paying.

Yes but the people you are paying, you are only paying $5 a month and in return they are paying you back $20 a month, which leaves you with a net positive of $15 a month.

David · Mar 30, 2012

Sorry, you're going to have to spell it out for me.

Me and math, we're not friends.

myp · Mar 30, 2012

All of the people who you are paying $5/month to ALSO pay you back an extra $20/month. You obviously end up in the green whether or not it is 1 person or 1000000.

David · Mar 30, 2012

myp said:
All of the people who you are paying $5/month to ALSO pay you back an extra $20/month. You obviously end up in the green whether or not it is 1 person or 1000000.

10 people pay $30 for $300. 90 people pay $50 for $4,500. Each of the 90 could make $495. $495x90= $44,550. I'm only making $4,800.

myp · Mar 30, 2012

David said:
10 people pay $30 for $300. 90 people pay $50 for $4,500. Each of the 90 could make $495. $495x90= $44,550. I'm only making $4,800.

Is that $495 from other people or from you?

David · Mar 30, 2012

myp said:
Is that $495 from other people or from you?

If all 99 people (I'm not counting the person getting payed) use all 5 items, that's $5x99= $495. If this holds true for all 90 people getting payed, you get $44,550.

myp · Mar 30, 2012

David said:
If all 99 people (I'm not counting the person getting payed) use all 5 items, that's $5x99= $495. If this holds true for all 90 people getting payed, you get $44,550.

Basically my question is why are you doing $495x90? Where is the 495 from? You said in your original post that you pay them each $5, not $495.

David · Mar 30, 2012

myp said:
Basically my question is why are you doing $495x90? Where is the 495 from? You said in your original post that you pay them each $5, not $495.

Per unique use. 1 person uses 5 items, that's $5. If 2, $10.

myp · Mar 30, 2012

David said:
Per unique use. 1 person uses 5 items, that's $5. If 2, $10.

Well how many items do you have? And is there a max limit that they would be able to use? I thought you took a liberal average of 5 and in that case you easily make money even if they use a few more than 5.

David · Mar 30, 2012

myp said:
Well how many items do you have? And is there a max limit that they would be able to use? I thought you took a liberal average of 5 and in that case you easily make money even if they use a few more than 5.

Well that depends on them.

5 items is the number of items they can chose to make money off of.

Going back a bit, letting them charge whatever they want on those 5 items or setting up a sliding scale where consumer ratings dictate the price might be a better way of doing this. Maybe I could also ask for donations and at the end of the month give away 75% of whats collected in a monthly lottery?

So many ideas, I need something that works though! lol

Some help?

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