21st Century Tech at 20th Century Prices?

Another blog originally posted on the now defunct quantumwebcafe.com blog site making a case for keeping the prices in the cafe as they were – unchanged for an impressive 17 years!

We had a complaint the other day.

We don’t get them very often, so they do stand out when they come along. This one was about our prices. Apparently, they’re too high.

Of course, we’ve never competed on the ‘pile it high and sell it cheap’ approach that almost every internet cafe did back in the day and instead focused on good quality and secure equipment, customer service and a nice environment. It’s much harder to manage, much more expensive to run and you need to maintain a good team at all times to make it work (also very tough), but in my view it’s worth it. It always has been.

But this customer was adamant that our printing, scanning and internet time was ‘ridiculous’ and was actually furious when he came in to enquire, eventually storming out in complete and very verbal disgust. We haven’t seen him since.

It got me thinking though. We’re the longest running Internet Cafe and Games Zone in the UK and we’ve held our prices for 17 plus years straight. That’s quite something. Surely we could justify raising them even just to keep up with inflation, let alone reducing them to pacify this would-be customer.

Now with my interest peaked, I used an inflation calculator to work out how much our prices would be today if we’d simply raised them with inflation from when we opened our Reading cafe in 1999. The results were quite an eye opener!

Our basic internet access price is still £3 an hour. This is the most anyone would ever pay assuming they were not using any of our discount schemes. But in the late nineties and early noughties, the most common hourly price was £5 an hour, including ourselves until around 2005. That would be £8.09 per hour in today’s money! Even if we’d only charged £3 an hour and just raised it with inflation, that would still be £4.85 an hour today!

In short, it now costs more per hour to park in Reading than it does to use our internet access! That’s quite an astonishing thought.

At inflationary adjusted prices we’d be scanning at £1.62 a page and printing each black and white page for 32p and colour at 65p. That’s quite a chunk over a large document and even though, in real terms, the cost hasn’t actually changed, it just ‘feels’ too much doesn’t it?

So, multiplying these differences over a typical number of customers over a year, the difference in turnover between what you would have expected if you’d graphed it all those years ago to where we are is simply eye watering, especially if you’re sitting where I am!

So, the obvious question is, since we must be one of the only companies around who have never increased prices, how on earth have we survived? And not only survived, but continued to reinvest and update on a regular basis? The answer lies in the industry we’re in.

When we opened, dedicated internet lines were the only option. There was none of this new fangled fibre and ADSL nonsense. A 256K line (that’s a quarter of 1MB!) cost somewhere in the region of £25,000 a year. No, that’s not a typo. Although we need to maintain more lines than most people for backup, it’s still far cheaper than that, allowing the natural erosion of money to be absorbed by the reducing costs.

Toner cartridges used to be extremely expensive back in the day, but they too have fallen in price. (And I would say quality also at times, meaning we have to test each one first before letting it loose on customer documents)

Remember when a basic PC cost upwards of £1500? The equivalent spec today is just a couple of hundred pounds. And the power they have is simply astonishing.

So, as everything is now so cheap, we can drop the prices to negative inflation levels, right?! Well, that would be lovely. Except that rates have very much gone the other way. Electricity isn’t exactly 2.9p a unit any more, and we use quite a lot of that! Rents went crazy in the late noughties and never really came back down. And staff tend to not like being paid at 1999 rates, or roughly £4.40 an hour! (But then, my first job was 95p an hour, so in that context it sounds like a fortune!)

Of course, this exercise does nothing except satisfy my personal curiosity which was stirred late one evening and, being slightly ‘Rain Man’ in this context, I found the results fascinating. Since I had gone though the bother of working them all out, I thought I’d share them with you, although I concede you may not find it quite as interesting.

Nevertheless, next time you’re in Quantum Web Cafe, the UK’s longest running internet cafe and games zone, just remember you’re actually paying 1999 prices in a 2017 establishment.

And how often can you genuinely say THAT?!

 

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