I assume that you’ve arrived at this site because you are searching information about the internet cafe business in the Philippines for the purpose of determining whether you’ll push through with your plan of putting up one.

Good for you! ‘Coz you have made the most important process of all to be an effective entrepreneur… Feasibility Study!

This is not an exhaustive study, but I will just point out the major factors why you should or should not put up an internet cafe in this country based on my experience as an X-internet cafe’ owner. I’ll try to break them down into seperate posts.

It is sad to know that a lot of people do not perform feasibility study before they put up a business. It is also sad to know that other people who where taught how to perform F.S. through education does not properly do it. These people are so optimistic that they are blinded by their desire to have a business of their own.

So let’s get it on! Let us start with the topic of COMPETITION

COMPETITION. “Know thy self and know thy Enemy (competitors)” – And don’t forget to ask HOW MANY ENEMIES will you have? This may be the number one factor that you must consider. Even if you have the skill, the capital, best service, positive attitude, good management, good location, passion for the business… even if you have all of these you will not survive if you will decide to ignore the LAW OF SUPPLY AND DEMAND.

We are in a free market and the “Law of Supply and Demand” will certainly apply. I just can’t understand why there are investors who put up their internet cafe in an area wherein there are 10 internet cafe’s already established! There are a lot of internet cafe that goes to bankruptcy when they ignore that law or in my case I failed to FORESEE the increased in number of internet cafe in my area.

When there are too many i-cafe in one area, the most common thing that will happen is that the i-cafe who has few customers will lessen his service price upto the point that they will go below their “break-even” point just to attract customers. Now it is impossible for you to compete with these “suicidal” competitors who are “operating at a lost”. What do I mean? How many internet cafe do you know who have a rate of 15 pesos an hour? FYI, with this rate, those internet cafe are operating at a lost. Why? Just try to compute for their monthly expenses and DON’T forget the DEPRECIATION (of course you need to get back your investment) of your computers, you will see they are operating at a lost.

Question: What is the mentality of this “suicidal” competitors of yours?

Answer: The Crowd Mentality. They think that if they run their business with their computers running 9-10 hours a day having no idle computers… they think they are gaining profit. They want to gain customers by lowering their price. Usually this is done by “new players” or new internet cafe’s. They term this as “promo”. Certainly customers especially teenagers who want to maximize their budget, they will try the new internet cafe’. This is not bad perse, but it is damaging to the whole internet cafe business in that area if that new player runs his/her promo over a long period of time. The problem in here is that you can not do anything about it! Even if half of your regular customers had transfered to that new icafe’! Well… actually you can do something, you could also try to be a “suicidal” i-cafe owner and have your rent at 15 pesos an hour. What will happen in here is that all of you i-cafe owners in your area will be engaging in a “price war”… There are no winners in such a war. It’s a domino effect really.

The proper attitude that each i-cafe must have is that one must “COMPETE WISELY”… see the bigger picture that will affect the internet cafe business in your area. Do not use the computer rental fee as a promotional tool to attract customers. Every i-cafe must realize that it is better to compete with your competitors by improving one’s services, computers, environment etc… rather than lowering your rental fee ‘coz that will only result in a PRICE WAR wherein everybody looses. If there will be only one idea that you will be remembering by reading this post is “COMPETE WISELY”. Wag nyong sirain ang internet cafe business sa inyong lugar sapamamagitan ng pagbaba ng presyo… domino effect lang ang mangyayari.

You should put up an internet cafe if:

1. There are a maximum of 2 internet cafe in your target area. Of course this all depend on the size of the market, but even if the size of the market is large I will not invest in an i-cafe if there are 3 or more competitors in that area… why? Sooner or later there will be other people who will put up an internet cafe in that area (beware of the big players like NETOPIA). That is the “gaya-gaya” mentality of Filipinos especially now, there are companies who will provide you all the things you need to setup an internet cafe (Smart) in an installment basis. The point in here is that you should only put up an internet cafe wherein your ROI will be achieved in just 1 year… at most 2 years. Why? Because the internet cafe business is easy to put up. You must be ready to convert/sell the whole business or the individual units when “Price War” begins in your area.

2. There is an association in the area that has the legal powers to empose/set the minimum service price. I’ve heard of one association that have done this and they were given the power by their local government to regulate their prices. But this is very difficult to achieve. In my case, there existed an association in our area but it has no legal powers… so it’s policies are only followed by members who understand the value of unity in pricing… but there will be always other “dumb” i-cafe owners who still do their own pricing and go below 20 pesos an hour… (some 10 per hour! gosh).

3. You can somehow make an agreement with you local government that only your internet cafe be allowed to be given a business permit. I’m not sure if this is possible with an internet cafe. But I know of some businesses like a cable company in our area in which that company is the only one allowed to operate in our town… and no other cable company are able to setup their business. Dirty Politics might be working in here… but hey “that’s business”! If you can do this, good for you! 🙂

Given the above condition, the internet cafe business is a lucrative business. Especially if you can dictate a P35 per hour price and continuous flow of customers! 🙂 Hey that is not impossible with the above conditions. 6-7 years ago the rentals is about 35 – 40 pesos an hour… but instead of increasing the price because of increased in operational cost (electricity, building, labor), the computer rentals go down????!!!! Tama ba yun? Lahat nagtataasan ng presyo… ang computer rental bumababa? Hindi naman bumaba ang operational cost? 😦

If you have finally decided to push through it… our next topic will be the second most important factor to consider… LOCATION.

Visit Our Official Website: http://www.icafeproject.com

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Comments
  1. Evangeline Mendoza says:

    Thanks for this. 🙂 Good thing I learned from you to do FS before putting up Internet cafe. I’m planning to put up Internet cafe in Nueva Ecija with just 5 units for the start. I’ll put up with printer and other services . I’m checking now how many competitors are there. For pricing, they are on P15/hour. This is now the usual rental in Internet cafe. Is that price will work for me?

    Hope you give your thoughts on this.
    Thank you so much!

  2. Aida bernardo says:

    Meron ako pwede irecomend n location s isang school s cavite wla cla internet cafe dun. Malayo lang kc s place namin kya di namin m transfer

  3. Aida bernardo says:

    May forsale ako computers for internet cafe bka may interested

  4. Aida bernardo says:

    Meron ako 15sets ng computers ready to operate may kasama n server at 5 peso coin box bka may interesado bumili

  5. Glenn says:

    It seems that almost all of the internet cafes in the Philippines have low customer service, pirated softwares and video games, no snacks and coffee(internet cafe with no coffee?WTH?), poor maintenance, poor facility, average PC quality and lastly, DULL business.

    I have been to many different internet cafes and it is truly RARE to find one that is up to my standards of GREAT Quality Internet Cafe and even this RARE ones have their “mistakes”.

    Although I am still a college student(CE), I am planning to make an internet cafe business that people can see as “Best in the Philippines”. My plan would include making it a two-story internet cafe with the ground flour having the reception area that includes different snacks and stuff, “tambayan” area with cool and natural environment which they can also operate their laptops or Ipads and having the PC on it as only for Gaming and stuff. The second floor includes PC who’s sole purpose is for education, internet browsing, editing, document making and other related activities that doesn’t include games. This second floor also ensures that there will be a quiet atmosphere so that customers can focus. It also includes a terrace for people who want to smoke and take a break.

    In terms of the station units, each of them will have a comfortable seat that will be applicable for them and also decreases back problems. Also, each station will be spacious to make the customers feel as if they are at home wherein they can eat without spilling their drinks on the computer and eat in a side table rather than just holding it.

    But what I mostly will feature is our dedication for Anti-Piracy of any sorts of games and soft wares which is rampant in almost all internet cafe businesses. I will also support the Pilipinas Anti-Piracy Team in their goals to eradicate piracy in the Philippines by making banners or endorsements that will promote this. This will at least help the people realize that we must never support piracy in our country.

    Any comments if my Plan is alright?
    Thanks.

  6. Esmeril Guerzo says:

    Sir tnx po sa mga infos. Ask ko lang kung meron po bang mga existing company ngaun na nagbbenta ng mga computer sets and nagbbigay ng service like yung pagsset up ng internet cafe.. I’m very interested po to put up one by next year. Nagcconduct po ako ng research by reading blogs. Madami po akong natutunan sa website nyo. More power.

  7. may december says:

    sinong gustong mag finance para may business din ako, may area na ako sa cebu

  8. troy says:

    im agree

  9. Eddie Isles says:

    I agree with you, lowering the price will have an impact to all businesses. The owner can offer a loyalty discount when they keep coming back so that other owners do the same without lowering the price. I learned my marketing by networking with somebody who nerd my services instead of selling and it works for me during the housing market boom. Business plan is your guide to be successful in this business. I plan to set an on line boutique and I will apply network marketing. I can create 20 jobs with this system without affecting other busenesses

    • Nei says:

      No need to lower down the price. Mine is the 6th cafe in our area but what separates mine from the rest is how we take care of our customers. All the other cafes are on a price war. All of them had trimmed down their rental prices to P10.00/Hour. Imagine, mine is just at P12.00. But we capitalize on our creativity by having tournaments or fun activities, giving out gift items to our loyal customers on Christmas day and etc. Other than that, we set our minds into not depending on rental sales alone. We added other services such as CD burning, downloads, file conversions, printing, scanning and all other computer-related stuff we know. That’s how I’m keeping my cafe’s revenue at maximum.

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