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OVPN's revenues and expenses

David Wibergh, about Announcements

Most people probably already know that OVPN is a very transparent company.
Among other things, we report the amount of traffic that passes through our servers, how our infrastructure is built and how we ensure that no logs are saved.

But today we take it to a new level. Some people wonder why OVPN is more expensive than other VPN providers, and how we justify it. It's definitely a good question, and something we are happy to answer.

We have thus decided to publish our trade secrets as it is called, and publicly account for our income and expenses.

We start by reporting revenue per subscription.


1 month (31 days)

Our one-month subscription costs 69 SEK including VAT.

Of this 69 SEK, 13.8 SEK is VAT and is paid to the Swedish Tax Agency. The remaining amount is 55.2 SEK.

If you pay via PayPal, a transaction cost of 5.6 SEK will be incurred for us, which means that the revenue we receive is 49.6 SEK.

If you pay by card, a transaction cost of 4.65 SEK will be incurred for us, which means that the revenue we receive is 50.55 SEK.

If you pay by invoice, a transaction cost of 10 SEK will be incurred for us, which means that the revenue we receive is 45.2 SEK.

If you pay via Bitcoin, a transaction cost of approximately 2 SEK will be incurred, which means that the revenue we receive is 53.2 SEK. When we exchange the Bitcoin for Swedish Kronor, the bank charges a exchange fee.

3 months (93 days)

Our subscription, which lasts for three months, costs 177 SEK including VAT.

Of this 177 SEK, 35.4 SEK is VAT and is paid to the Swedish Tax Agency. The remaining amount is 141.6 SEK.

If you pay via PayPal, a transaction cost of 9.27 SEK will be incurred for us, which means that the revenue we receive is 132.33 SEK.

If you pay by card, a transaction cost of 7.78 SEK will be incurred for us, which means that the revenue we receive is 133.82 SEK.

If you pay by invoice, a transaction cost of 10 SEK will be incurred for us, which means that the revenue we receive is 131.6 SEK.

If you pay via Bitcoin, a transaction cost of approximately 2 SEK will be incurred, which means that the revenue we receive is 139.6 SEK. When we exchange Bitcoin for Swedish Kronor, the bank charges a exchange fee.

12 months (366 days)

Our subscription, which lasts for 12 months, costs 588 SEK including VAT.

Of this 588 SEK, 117.6 SEK is VAT and is paid to the Swedish Tax Agency. The remaining amount is 470.4 SEK.

If you pay via PayPal, a transaction cost of 23.24 SEK will be incurred for us, which means that the revenue we receive is 447.16 SEK.

If you pay by card, a transaction cost of 19.7 SEK will be incurred for us, which means that the revenue we receive is 450.7 SEK.

If you pay by invoice, a transaction cost of 10 SEK will be incurred for us, which means that the revenue we receive is 460.4 SEK.

If you pay via Bitcoin, a transaction cost of approximately 2 SEK will be incurred, which means that the revenue we receive is 468.4 SEK. When we exchange Bitcoin for Swedish Kronor, the bank charges a exchange fee.


Investment costs

We currently have three servers in Stockholm that we have purchased, and have a server in Malmö that we currently rent. We have purchased a server that we will soon place in Stockholm, and we will further purchase three servers to replace the rented server in Malmö.

Investments made:
Four servers @ 6 000 SEK excluding VAT = 24 000 SEK excluding VAT (30 000 incl VAT)

Planned investments for the next six months:
Two 48-port switches = 9,000 SEK excluding VAT (11 250 including VAT)
Two SFP transmitters/receiver modules = 6 000 SEK excluding VAT (7 500 including VAT)
Three servers = 18 000 SEK excluding VAT (22 500 including VAT)
Cables = approximately 1 000 SEK excluding VAT (1 250 including VAT)

We also plan to expand abroad in the next six months, but we are still in the process of collecting quotes from data centers, so we still don't know what that cost will be.

If there is any specific region you would like us to target, you are more than welcome to contact us.


Consulting fees

We have paid about 15 000 SEK excluding VAT (18 750 including VAT) to consultants during the development of OVPN. The consultant's mission is, among other things, to be on call and quickly resolve any operational disruptions when I am not available.

Many customers also want us to build our own client to make it easier to connect. Therefore, we allocated approximately 40,000 SEK excluding VAT (50,000 including VAT) to build our own client. The client will then be released as open source so that everyone can review the code.

Operating costs

Every month we have operational costs for running OVPN.

The operating costs range from the cost of having servers in the data centers to, for example, our live chat.

In round strokes, it can be said that the current operating cost is about 5 000 SEK excluding VAT (6 250 including VAT) per data center we are in.

Our operating costs increase the more customers we get because the volume of traffic increases in direct correlation with the number of customers. Since we never oversell our subscriptions, we expect each customer to consume about 1 TB of traffic. 1 TB of traffic for a customer results in 2 TB of traffic for OVPN, as it counts as inbound and outbound traffic.

1 TB of traffic for OVPN costs about 10 SEK excluding VAT, which means that we expect a customer to cost 20 SEK excluding VAT each month for traffic consumed.

Marketing

I am really passionate about OVPN, and I think it's incredibly fun to see how our customers recommend us on to their friends. That's the best compliment a company can get.

Since our customers are very satisfied with the service we provide, we do not have to pay anything for marketing.

No marketing costs benefit all our customers, as we can spend the revenue on improving the service, instead of attracting new customers.

Salaries

I started OVPN in the summer of 2014, but started working on it early this spring. OVPN takes up between seven and ten hours every day for me, which is extremely fun because I really like what I do.

So, what's my salary? My salary is the total sum of zero crowns per month, and it has been so throughout the trip. I think it is more important to reinvest everything to expand OVPN and ensure that all customers are satisfied.

I will start taking a salary at the beginning of Q2 2015, as I have been working for a year without pay. Until then, everything is reinvested to continue expanding OVPN.

Okay, what does this mean?

The total amount of investments that have been made and planned is approximately 58,000 SEK (72,500 including VAT). In addition, 15,000 SEK (18,750 including VAT) has been paid to consultants. Approximately 40,000 SEK (50,000 including VAT) has been spent on operating costs during OVPN's life span, and an additional 40,000 SEK (50,000 including VAT) is allocated to the development of its own client.

The expenditure is thus 153,000 SEK (191,250 including VAT). This is when no salary has been paid in the meantime. If I had taken out a salary, the expenditure would have been significantly higher.

How, then, have we thought about the pricing of our subscriptions? The average of our revenue in a month is $4.46, because we calculate that each customer consumes 2 TB of traffic (for OVPN), the profit is 44.16-20 = $2.46 per customer per month.

Not all customers consume that amount of traffic, but we use it as a flat rate to ensure that we never oversell our subscriptions.

To cover our investment costs and consultancy fees, we need to sell (58,000 + 15,000 + 40,000) / 24.16 = 4,677 months of OVPN.

To pay our operating costs every month, we need to have 10,000/44.16 = 226 customers. We do not use the profit per customer in the calculation because each customer contributes to an increased operating cost.

Salaries will also have to be paid in the future, both to me and future employees. If we expect to have two full-time employees who have a salary of 25 000 SEK per month, this will result in a cost of 59 285 SEK per month including holiday pay and employer's contributions.

To cover payroll costs each month, we need to have 59,285/ 24.16 = 2,454 customers.

Summary

To deliver a sustainable and good service, it is necessary to have at least a profit of 24.16 SEK per customer.

The profits are used to finance the purchase of new equipment, and will be used to pay salaries to incredibly committed and knowledgeable employees. Although no salary is paid at present, we are required to maintain a pricing that can fund the salary of future employees.

Our pricing is highly reasonable to maintain a reliable service, which you can happily recommend to your friends without having to worry.

If you have any questions, concerns or criticism, please feel free to contact david@ovpn.com.

David Wibergh