Solavei's approach layers aspects of direct sales and affiliate marketing on top of a traditional cellular business.
The company's product is a simple a single. Clients spend a $49 sign-up fee, and $49 per month for unlimited talk, text and information on T-Mobile's nationwide network. Customers can either bring their very own unlocked GSM cellphone or pay the complete unsubsidized cost of one from the 3 models getting sold by Solavei. The models, from HTC and ZTE, vary from $159 to $500.
Here's where things get interesting. Solavei relies on its customers to sign up other customers. For every three customers they bring in, they get paid $20. They also stand to benefit when the people they sign up sign up others, and they can even make some from sales beyond that. Solavei also promises other one-time bonuses for signing up new customers within one's first 60 days as a member.
Solavei also says there is an option to be a "member" without getting service, for $149 a year. It's unclear what benefits membership provides beyond the ability to recruit and profit from other members.
While arrangements that pay people just for recruiting other distributors are generally classified as illegal pyramid schemes, those selling actual goods or services can be legal, though the Federal Trade Commission offers some cautionary guidelines on its Web site. Solavei says it has taken steps to ensure that its system fully meets all government regulations.
As for its business model, Solavei insists that it really is simply removing a crucial inefficiency inside the cellphone enterprise model: The high expense of attracting and retaining clients. Indeed, beyond the cost of running the network, a single of the largest expenses for cellphone businesses are the costs associated with acquiring customers, which includes subsidizing phones and advertising. Solavei says it is as an alternative pouring those dollars toward its clients - who're also its sales force.
The company's product is a simple a single. Clients spend a $49 sign-up fee, and $49 per month for unlimited talk, text and information on T-Mobile's nationwide network. Customers can either bring their very own unlocked GSM cellphone or pay the complete unsubsidized cost of one from the 3 models getting sold by Solavei. The models, from HTC and ZTE, vary from $159 to $500.
Here's where things get interesting. Solavei relies on its customers to sign up other customers. For every three customers they bring in, they get paid $20. They also stand to benefit when the people they sign up sign up others, and they can even make some from sales beyond that. Solavei also promises other one-time bonuses for signing up new customers within one's first 60 days as a member.
Solavei also says there is an option to be a "member" without getting service, for $149 a year. It's unclear what benefits membership provides beyond the ability to recruit and profit from other members.
While arrangements that pay people just for recruiting other distributors are generally classified as illegal pyramid schemes, those selling actual goods or services can be legal, though the Federal Trade Commission offers some cautionary guidelines on its Web site. Solavei says it has taken steps to ensure that its system fully meets all government regulations.
As for its business model, Solavei insists that it really is simply removing a crucial inefficiency inside the cellphone enterprise model: The high expense of attracting and retaining clients. Indeed, beyond the cost of running the network, a single of the largest expenses for cellphone businesses are the costs associated with acquiring customers, which includes subsidizing phones and advertising. Solavei says it is as an alternative pouring those dollars toward its clients - who're also its sales force.
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