All new Registrations are manually reviewed and approved, so a short delay after registration may occur before your account becomes active.
New Type of RTO
We're looking into offering a new type of RTO server. Essentially, instead of us billing a flat $XX a month for a server, you'd get to break down your terms and pay on the cost of the server. So, let's take a quick example (numbers below are fictional and do not constitute an offer).
Let's say we have a Dual L5520 with 16 GB of RAM and a 2TB drive (1U). This costs $250. You come to the order form and be able to choose between a 12 month term with 15% interest or a 24 month term with 25% interest + a down payment amount.
So, you'd have to put $50 down. Then if you took the 12 month term, you'd pay $16.67 a month. If you took the 24 month term, you'd pay $10.41 a month. Then you'd pay for the space and power.
If you wanted to add on a 2 TB drive, let's say that was $60. So, that's $12 down and either $4.60 (at 12 months) or $2.50 (at 24 months) per additional drive.
An E3-1241 v3, 16 GB of RAM, and a 1 TB drive might be something like $800. So, $160 down and $61.33 a month for 12 months or $33.34 a month for 24 months. Just to give an example of a larger server.
Ideas, opinions, and thoughts would be appreciated! You could always put more down and pay less monthly.
Comments
How much for space, power, bandwidth?
This would vary on location, but figure $10 per U, $10 - $15 per amp, and bandwidth would be $0.50 - $1 per Mbps.
So I get where this is going, but sadly people won't care about the breakdown. A majority of people will just want to know what the $XX amount per month is (So $60 for 12 months, then let's say $25/month), and nothing more.
You'd get to see that, but unlike anyone else currently offering RTO, you would also get to choose your terms.
Yes I like the idea and personally think it'd be nice the option to either go the 12/24, but I just feel it would lead to some confusion for some clients. Nonetheless, power to you for coming up with this and I look forward to it launching hopefully soon
I see this as a very interesting customizable RTO. The only downside for me would actually be that I assume this would be available in an US location. Would you also consider doing this for EU locations?
I don't know if I could deal with that headache.
Choice of length would be nice but I agree, most just want to know how much and how long for, a few may go for setup/upfront but not many in my experience.
I was thinking about 0% down, but it'd increase your interest 5% per year. Of course, this is an idea in the works and feedback is appreciated.
And what do you do when someone racks up a BW+Power bill then see's the real cost and refuses to pay?
Hate to say it but it has bad idea written all over it unless you can work out a way for pre paid cred for BW+Power
Your power would be billed every month beforehand (you wouldn't be pilled per kWh, you'd be billed for 1 amp @ 120v or whatever your server uses). Bandwidth would work like it does at most providers. If you get 10 TB, you'd get a notice at say 8 TB and then you'd have to buy more bandwidth or else your port is turned off.
This is essentially a dedicated server, but you get ownership in it (that's the idea, at least).
Ok so your no expecting people to pay per kwh or per mbit then, just standard RTO then with 12 or 24 month terms.
As long as they are not colo crossing boxes and it comes with a real contract protecting both sides I am sure everyone would love a bit of that especially if you include a per continent shipping price in advance.
Also you need a license to offer consumer credit.
The big problem with billing per kWh is that we don't get billed per kWh. We have to pay for the amp, whether you use it or not.
Bandwidth is a bit better. Since it's usually only $0.50 - $1 per Mbps, we can normally eat a few Mbps before having to kill a server. And if a client is willing to give up their server after $3 - $5, so be it.
I believe that's only if you report it. I'll definitely have my lawyer look into that, though, to insure that we don't get hit with some bogus fine or something. (It looks like this might be a UK law EDIT: found some laws about the US).
No, you require a license in every state that you will offer credit services. We went through this last year in great detail. Any form of credit agreement from a business to a personal entity is regulated, therefore you have to comply with each states requirements to offer credit facilities.
The FTC have detailed documentation about this. Its not just a matter of choosing an arbitrary interest rate and offering a service, you have a lot of red tape to comply with as well as processes if a customer is late, you can't just cease their service, you have to give them a variety of notices, opportunities to pay and so on.
Big minefield.
Interesting. I'm going to give my attorney a call tomorrow to see what he says and if he has someone who might be able to better advise me.
in what world would you be leasing a 6 year old server @ 15% interest ? new server at reasonable rate, maybe.
why wouldn't I lease from say DELL, deliver to your DC, and just pay colo fees ?
RTO seems like a dumb idea. did I miss something?
For consumers its bad news, for DC operators its a license to print money (assuming you don't get too many defaults as you can't just recycle the kit)
There's also all of the new CFPB rules that are in place and more to be announced. Lots of red tape to deal with.
Tell that to all of the people paying $50 a month to simply rent said 6 year old system...
You may wish to check usury laws before you set interest rates.
my point is that when you eventually own the server, it's worthless. so you may as well just rent. nothing to dispose of when you finish with it.
without real numbers it's difficult to compare.
Adds new meaning to 1U, 2U servers...
@Steven_F
You really need to stop and think. Check all you want with your lawyer but as @MarkTurner says you are entering a minefield that quite frankly I can't see you as a provider being mature enough to deal with from a compliance point of view.
You simply cannot do what you are suggesting on a whim which is pretty much how this is coming across.
It's clear you have given no thought to this at all, well you have but missed out all the crucial detail in considering consumer credit, which this is, no grey area here.
But then look at some of the other RTO providers, none of them have the correct licenses either.
We looked at ways to offer E3, E5 systems on RTO and by the time we'd finished looking at the regulatory requirements, it just wasn't worth the effort. You can end up with servers tied up in non-productive agreements and there is literally nothing you can do to fast track the cancellation.
The advantage for a DC operator is that you can just recycle the server when its not paid and rent it to someone else. With RTO, you have to give written warnings, notices of default and so on. Customers have the right to arbitration and if they invoke that they can end up 3-4 months later with the server running and having not paid anything.
If you were criminally minded legally run RTO, would be a fantastic way to get zero cost servers with just a month upfront. As a consumer you can tie up the credit provider to provide services whilst you stall arbitration, file an appeal, file a complaint to an ombudsman and so on.
Depends how it is set up. If you are simply saying "rent this server for 12 months at xx per month and at the end of the 12 months you will own the server". Then you are not explicitly creating a consumer credit agreement.
If on the other hand you advertise server A for $30 RTO and the exact same server B for $25 Rent Only then you are essentially implying there is a cost to own the server, which is quite different.
Even in the first example I would still have a CCA to ensure missed/late payments, abuse etc are valid reasons to not only break the rental but also the RTO.
It is complex, no doubt about it.
It sounds like a good idea to me. Pay some down and then a low monthly cost. Awesome, really.
Here is the wikipedia article.
https://en.wikipedia.org/wiki/Rent-to-own
It's been a few years, but as I recall the way it went with the musical instrument rental business was that everything was RTO on a 3 year term. That's a way to simplify the accounting. However, at the end of the first year, we would give you a large percentage off the remainder if you wanted to purchase at that point. The rent-to-own price was 50% higher than an outright purchase. It's a time honoured arrangement in the music business, perhaps it would work for servers.
BEARING IN MIND THE LEGAL ANGLE, I think it's a fantastic idea, although I'd take it one step further. I'd offer "Common Packages" (your e3-1286+32gb+2x2tb raid 1, your l5420+4gb+128gb ssd, et cetera). Allow it to be a drag and drop selection of what people want (with input validation, like not allowing e3-12xx to have more than 32 gigs or less than 1 gig of ram)