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What's VoIP For Life Worth?

Well if you look at the results of the United Online charity auction, about $1,400 a subscriber. That puts a damper on companies asking $2,000 a sub who have been shopping themselves to some of the bigger names on the net.

In Vonage terms that would price them at $1.4 billion, but this is all before you factor in cost of customer acquisition and monthly cost.

So let's do some quick math.

Vonage spends about $8 dollars a month on each line in administration, support, transport and termination. With one million lines that's eight million per month or 96 million a year in expense for their current customer base not counting overhead.

Since they spend a reported $700-800 to acquire a customer in the first year alone it costs a max of $896, plus another $96 dollars a year to maintain the customer.

Since they churn at about 7-8 percent a month, according to industry sources, their competitors who pick up the former Vonage customers, that means every 14 to 15 months Vonage is losing their entire customer base in theory. At a $20 gross revenue paid (the average price between their two plans, excluding softphone) that's $300 in gross revenue or a negative $596 per customer Vonage has generate.

That begs the question how many customer Vonage has to generate to become cash flow positive?