Solavei’s strategy layers elements of direct sales and affiliate marketing on top of a conventional cellular company.
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 items get intriguing. Solavei relies on its consumers to sign up other clients. For each and every 3 customers they bring in, they get paid $20. They also stand to advantage when the folks they sign up sign up other people, and they’re able to even make some from sales beyond that. Solavei also promises other one-time bonuses for signing up new clients inside one’s 1st 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.
Although arrangements that pay folks just for recruiting other distributors are usually classified as illegal pyramid schemes, these selling actual goods or services could be legal, even though the Federal Trade Commission delivers some cautionary recommendations on its Website. 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.