Hi everyone, just want to see what you all think about pricing in general. Mods, if this thread does not belong here please move it accordingly.

We are going to make changes to our hosting plans in the near future and just wanted to get some ideas for pricing our plans. It is pretty obvious that pricing depends on many different factors such as operating costs, licensing, insurance, payroll expenses and more... but aside from all that what are your experiences with the pricing structure of a hosting company:

Do you think that a host that sells cheap hosting plans has the same chance of success that a host that sells quality (more expensive) hosting?

Do you think the number of signups a day is greater for a company that offers cheap plans ($5.00/month - $40.00/year) compared to a company that charges around $12.95/month minimum? ...and if the signups decrease with a price increase do you think that the higher price make up for the lost signups?

I personally think that some customers are scared away when the see real cheap hosting. They might probably think (if it is so cheap the quality will also be cheap) Do you think this statement is true?

Just want to see what you think about all this...

Well, I wouldn't agree with you about pricing. In my experience the lower the price is the more clients you'll get.

But having a high number of clients isn't always the best thing. You need to provide support and help them and it doesn't really matter how much you charge them.

They expect great support and they deserve it too. If you don't provide them with great support they'll leave. In the end it's your actions that decide if you're going to keep them not the price.

As a conclusion I would rather have less clients and charge them more but then I know that I can provide them with great support and that I'm able to help them with everything possible and they're aware of it too.

Originally posted by emke
As a conclusion I would rather have less clients and charge them more but then I know that I can provide them with great support and that I'm able to help them with everything possible and they're aware of it too.

Yeah, I agree. We now charge as little as $5.95/month. We have been getting a lot of sign-ups a day, and we are providing them with great support, however, we just started up a few months ago and it just concerns me that we are not going to be able to provide the same quality of support compared to a company that charges more/has less clients. My concern is though with the fact that we might not get enough sign-ups a day with higher prices. What to you think? Do you really think that the higher price will compensate for the reduced number of sign-ups?

My Opinion:

$5 a mo. X 200 accts = $1000 gross (support fades due to so many accounts.)

$20 a mon x 50 accts = $1000 gross (same amount earned with better support)

I may be wrong :)

I think that Synergy summed it up nicely.

It's harder to sign up clients when you charge more but it pays of in the long run. Especially when you think that the better support the more clients.

If you offer great support at your existing clients they'll refer you to others and that's how most of the popular companies now get majority of their clients. Through their existing ones. :)

I also agree with Synergy.

You will have more customers with plans that cost less, but the downside to that is you will have alot of customers to support.

If you have plans that cost more, then you will have less customers, make the same money, and provide better support to your customers.

Also, the better support your customers get the more people they will tell. So I'd say going with a higher costing plans and have less customers is almost always a good thing.

This debate has been raging around our offices for years. The problem isn't how much you charge, but what criteria people are using to choose a web host, and how they perceive our industry as a whole. Our pricing structure, and their perception of us is what I'm currently wrestling with, and I'd be glad of input from the group.

We are one of the first ISP's to provide web hosting to their customers (since 1995) and we have a high-quality fully-redundant multi-homed Internet backbone network, servers, etc, and high uptimes which we guarantee. We also have very experienced and knowledgeable techs that we make available to our customers.

As you can probably guess, service like this isn't cheap to provide.

We keep our prices as low as possible (50-100/month for shared hosting, 350/month for server co-lo, 450/month for dedicated server). Like most non-hosting tech companies, after the first 30 days, we charge for support incidents that are beyond the line of demarcation (i.e. "outages"not related to our servers, network, connectivity, etc.) because we are not here to debug their own cgi scripts, help them set up new PC's, trouble shoot their 3rd party email clients or 3rd party Internet access, etc. We give them a printed manual that contains all the step-by-step setup information.

As I said, not cheap, but a far cry from what some of our more direct competitors (who seem to be having financial trouble for some strange reason) are gouging their customers for (I have a quote from one of them hanging on my wall for $4000/month for a server co-lo, almost $7,000 for a dedicated server).

The prevailing opinion that I've gotten from potential customers is that all web hosts suck, they cheat you, so it's best to get the service as cheap as possible and leave after a couple of months. I've found it difficult (close to impossible) to explain the difference between our services and the services offered by someone like Tacid or that 15 year old boy's company. They've been lied to so much that they don't believe me and without some technical knowledge, there is no way to explain the difference, so they literally accuse me of lying to them, and wanting to gouge them on the price. They try to negotiate lower fees.

Most of our customers have been with us since the beginning-some starting out as dial-up customers back in 94 when we first went into business. The only reason our customers leave is that they get offered web hosting cheaper somewhere else, and they can't get us to drop our prices to be 'competitive'. We've never competed on price against companies who can't compete with us on quality.

And by customers, I don't mean the general public, or even small business owners. Most of our customers are web designers (and some are webmasters), and they don't understand how it all works (ever had a professional web designer ask you talk them through using their FTP client-once you've told them what FTP is and recommended a client to them?), or that quality costs money. We were courting a design firm that won't touch a project under 6 figures, and most of theirs are 7 figures, but they won't pay more than 50 bucks a month for hosting these high-end, high-profile, high-traffic corporate sites.

Our former sales manager (whose background was in discount retail audio equipment) came up with an idea that he called "Web Host Lite", as a way of making sales, he took our basic hosting account, scaled it down, stripped away some of the features, and removed the 30 days of initial tech support handholding. He set the price at $24.95 (and we lose money on each of those accounts because our support guy gives all of our customers unlimited handholding-but that's an issue for another thread), and intended it to be a loss leader to gain customers who would soon be ripe for upselling.

Not surprisingly, Web Host Lite is the hosting service that sells, and for most of our customers, that's enough for them. Their sites are small, and not terribly busy, and they aren't using SQL databases or need an SSL cert. So, there is no need for them to upgrade to one of our higher-end services.

Most customers don't understand the service we all provide (it's some sort of black magic hoodoo to them) and the many hornswogglers, bushwhackers, snake oil salesmen and confidence men out there who've been ripping them off, have made them very wary of believing anything they are told.

To answer the question asked: right now, because of customer perception (which is market reality) of our industry, hosting providers that offer the lowest prices are going to get the most signups.

They don't expect quality, don't know how to define quality, can't tell in advance whether or not they are going to get quality, they just expect that they'll pay a few bucks a month for their hosting, that their site will always be up, and that they will have 24/7 access to a live person who will help them set up their address book in Outlook free of charge.

They don't know that their expectations are unrealistic.

I do web designing and offer my clients a package deal( included 5-10 pages + free domain name + free webspace on a server.)

I have 2 types of clients:

1)Informative site - where all they want is to have an Internet presence for their company and their products.

For these clients, I host them on a cheap server with basic features such as cgi, etc. and reasonable support and costing approx. $5/month.

2)Interactive sites - these clients require more extensive updating and more features such as database, htaccess(password protect areas), private forums, cgi, php, mysql, etc.

For these clients, I host them on a high end server which may cost approx. $25/month where bandwidth and server speed resources is very important to them. These clients pays well and are not concerned about cost and they want support and maintenance of their web site be given priority at all cost.

From the above, I am confident you should be able to evaluate which market sector that your want to target at and what type of server, speed, features, etc, that you can provide and at what price, it's for you to decide and the above prices I am paying should give you an indication on the price tag to set to suit the different level of clients that you wish to attract.

They don't expect quality, don't know how to define quality, can't tell in advance whether or not they are going to get quality

You are right. But as soon as this same person has troubles with his site or a question (technical or billing or....) he will know the difference. For the next host he will look at quality.
Of course: many host say 'We have quality AND we are cheap', but not many can fullfill the promise.

Originally posted by Synergy
My Opinion:

$5 a mo. X 200 accts = $1000 gross (support fades due to so many accounts.)

$20 a mon x 50 accts = $1000 gross (same amount earned with better support)

I may be wrong :)

You are not wrong. This is the ideal concept! We started with $5.95 and we are now sick of it! It is just sometimes a little difficult to change the business approach that drastically! :( But ultimately that is what we want to do! Find a balance: not $5.95 but not $49.95 just a nice price that will attract the most customers, but where do you draw the line?


Originally posted by Phoenix
They don't expect quality, don't know how to define quality, can't tell in advance whether or not they are going to get quality, they just expect that they'll pay a few bucks a month for their hosting, that their site will always be up, and that they will have 24/7 access to a live person who will help them set up their address book in Outlook free of charge.

I agree with you. We obviously have a much smaller company than yours. We are very small just starting up and only have 2 servers, however, I work 23 hour days and will support every single customer as much as I can, but how do you tell them that their problem is beyond the scope of tech support? Where do you draw the line? Some of them understand, most of them DON'T!

I don't think that this is an issue of "customer perception" I rather think this whole consumer attitude has to do with the fact that the hosting clientele has changed over the past couple of years. There are many people ordering hosting who haven't even seen an html tag in their lives. Some of then just know FrontPage, most of them don't even know what FTP is! That is very ironic but it is the reality! And yes, you are right, most of those customers don't know the difference between a "cheap" hosting plan and a "loaded" hosting plan. They just want to pay $1.00/month if at all possible. In the beginning, a few years ago, hosting was only for "webmasters" today web hosting is for "everybody" I think that has downgraded quite dramatically the quality of the clientele.


To everyone:

What do you all think will happen if a company gets about 5 to 10 new sign-ups a day and then all of the sudden raises their prices by about 50%?

Maybe all those sign-ups will be reduced to 1 or 2 a day?

As far as support goes, you will find that people want everything for nothing.

For instance a dialup customer calls his internet support for hard disk failure and then gets upset when he is told that this is not Internet related, but system related. He wants to know what he is paying his 15/ mon for if not computer support.

It's the same with webhosting, for the average user... if you they pay for somthing they feel everything they have should be supported as well.

Originally posted by bert

I agree with you. We obviously have a much smaller company than yours. We are very small just starting up and only have 2 servers, however, I work 23 hour days and will support every single customer as much as I can, but how do you tell them that their problem is beyond the scope of tech support? Where do you draw the line? Some of them understand, most of them DON'T!

That's the hardest part. I used to work for a software company. In the first 30 days, you got all the free dumb questions answered that you wanted. After that, it was a fee per incident, unless you purchased a supplemental support contract, or were reporting a legitimate problem with our software. Legitimate in that the problem didn't turn out to be that the software's refusal to print from DOS was because there was no freaking paper in the printer, those people had to pay for that incident.

Unfortunately, we also had a support guy there who didn't care what the problem was, whether or not they had a support contract, he'd just give his time away for free, and he wouldn't put through a charge to the customer. We have a similar situation here.

If there is truly something wrong with the services we are providing our customer, we support it, no charge. They report the issue, we let them know whether or not there is anything wrong on our end, and the ticket is supposed to be closed.

Unfortunately, our customers a) don't want to believe that whatever problem they are having is not because our server is down b) they have no idea how to troubleshoot their own problems and want us to do it for them and c) although we've had meetings on differentiating between what is tech support and what isn't, he can't say no to them, so they get all sorts of free support for whatever computer or Internet-related problems they may have.


I don't think that this is an issue of "customer perception" I rather think this whole consumer attitude has to do with the fact that the hosting clientele has changed over the past couple of years.

In the beginning, a few years ago, hosting was only for "webmasters" today web hosting is for "everybody" I think that has downgraded quite dramatically the quality of the clientele.


I'd turn that around and say that 'everybody' thinks they are a webmaster these days. Back in the day, being a webmaster meant you wrote you own HTML in Notepad, and then they invented Flash and FrontPage and now web design has become trendy for career changers, and these people are the #2 reason that so many of the high end Viants and Scients and Razorfishes of the world have failed-besides faulty businesss plans. They were overcharging their clients egregiously for the work of unskilled amateurs-in effect killing the golden goose. I've dealt with some of these companies, and I had to train several people at <censored>(a big noise in this area last summer) on how to do their jobs, and one of our clients footed the bill.

They actually thought that sites got on web servers by them burning a CD and mailing it to us and then we'd do the install for them (sure, but at a fee). They made a big deal about asking us all sorts of detailed questions about our web servers and wanted to set up a duplicate server environment on their premises (for a basic presence site designed in Flash). They didn't test the site before deploying it and there were serious issues with it (largely browser compatibility). When they called having hysterics because their mystery meat navigation was broken in IE, I instructed them on the importance of testing the site before launching it, then talked them through how to create a directory in FTP.

They registered all sorts of random domains for the site (basically all the suggestions that NSI offers during their registration process), ran up all sorts of charges for the customer with all of this nonsense, and then pulled the plug on us and moved the customer to Exodus (I saw the quote for that hosting, it was outrageous, but VC money burns faster than any other kind).

And this was a big-name VC funded professional web design company that charged our customers mucho dinero for the project. I think they are still in business, but have been circling the bowl for some months.

Bert, you said
What do you all think will happen if a company gets about 5 to 10 new sign-ups a day and then all of the sudden raises their prices by about 50%?

Sure, your daily signup rate will drop, let's say 50%. But I think a slow grow with better marges is far better than a fast grow with minmal marges.

Generally: stop whining. I am in the software industry for a long time and this is very common to every software company. You just have to live with. The more the software is fur end users, the more percentage of support will be for clueless people (90%?). And web hosting is outgrowing it's old market and becoming more and more an enduser-market. Learn to live with it or you can't grow.

I couldn't agree more with you Phoenix. It is sad, but we have to live with it!



Originally posted by Walter
Bert, you said

Sure, your daily signup rate will drop, let's say 50%. But I think a slow grow with better marges is far better than a fast grow with minmal marges.

Generally: stop whining. I am in the software industry for a long time and this is very common to every software company. You just have to live with. The more the software is fur end users, the more percentage of support will be for clueless people (90%?). And web hosting is outgrowing it's old market and becoming more and more an enduser-market. Learn to live with it or you can't grow.

I will also have to agree with you. We will raise our prices a little and will wait to see the results. You are right: a slow grow will benefit both, our company and our customers in the long run...

Also, I am not whining about giving out support. I was just saying that it is extremely frustrating sometimes dealing with these users, but hey, this is what I like, so I really don't mind helping a few people as long as they are willing to learn. It just annoys me that some of them think they know it all and still call for support and when you try to explain something they contradict you.

That's all part of this hosting business I guess... ;)

Originally posted by Walter
I am in the software industry for a long time and this is very common to every software company. You just have to live with. The more the software is fur end users, the more percentage of support will be for clueless people (90%?). And web hosting is outgrowing it's old market and becoming more and more an enduser-market. Learn to live with it or you can't grow.

Actually the point isn't the clueless people getting into web design-we were all clueless when we started with our Notepad-written sites. None of us were professional web anythings, the web had barely begun then.

Hosting was rather expensive, it was harder to use-I had a reseller account because we had multiple domains and there was no cpanel back then, and we all knew the rules of tech support. If it's broken, call them or send an email, otherwise figure it out for yourself.

It's more a sense of entitlement that these consumers become webdesigners have. And deciding where to draw the line, communicating that line to the customers so that they understand what is appropriate and what isn't, and ensuring that support people follow the policies is tricky, but not impossible.

The cheaper the plans we put out for our hosting, the more clients we get calling in with ID 10 T errors.

Originally posted by JKLIVIN
The cheaper the plans we put out for our hosting, the more clients we get calling in with ID 10 T errors.

The hell with "Cheap" We are also sick of it! We will raise our prices and increase the features of our plans! If we don't get the same amount of sign-ups a day, the hell with it too! At least we will be able to provide excellent technical support by maintaining a relatively experienced customer base.

I really think that the average customer that "knows" about hosting will be able to tell the difference between a "cheap" plan and a "not cheap" plan. Customers who want to pay $1.00/month for hosting are not worth having anyway. They are usually very inexperienced and expect too much for what they pay. On the other hand, "relatively knowledgeable customers" do not expect that much, know what they are looking for and might even be afraid to sign up with a "cheap host"

Anyone agree?

Originally posted by bert

I work 23 hour days


I find a BIG problem in that.
23 hours a dat for $5 accounts.
I bet they are all newbies who are still learning how to uploade.Now imagine getting 20 accounts but for example $10 those people are already expereinced and do not need any technical support.Only newbies sign up for low cost plans (most kids) because they parents don't trust internet companies.

I totally agree.

Originally posted by WaffenSS


I find a BIG problem in that.
23 hours a dat for $5 accounts.
I bet they are all newbies who are still learning how to uploade.Now imagine getting 20 accounts but for example $10 those people are already expereinced and do not need any technical support.Only newbies sign up for low cost plans (most kids) because they parents don't trust internet companies.

You are right. That is why we are raising our prices and improving the features of our hosting plans.

The $5.95 accounts worked out great in the startup phase, but that is way over. We filled up 2 servers with those accounts and yes, those customers are very annoying! :mad:

Originally posted by bert
You are right. That is why we are raising our prices and improving the features of our hosting plans.

The $5.95 accounts worked out great in the startup phase, but that is way over. We filled up 2 servers with those accounts and yes, those customers are very annoying! :mad:

A former sales manager referred to these type of customers as 'bottom feeders'.

I'd like to see our industry become truly stratified at last. Every other industry has clearly defined levels, each of which has a set of customer expectations that are in line with the products and services provided.

As an example, the food-service industry. At each level you get food that will fill your stomach, but as the price goes up, the quality of the food, and the level of service increases. (NOTE: These are broad generalizations, your mileage may vary)

At the bottom rung, you've got your fast-food purveyors-drive up, holler out your order, get some fries with that and pull up to the next window. Money is quickly exchanged for a product served in a bag, and you are on your way.

One step up, you can go to a lower-end sit-down restaurant where the menu is on the table, you ask for your selections, and your food is served. You may get plastic utensils, you may get a paper plate, or you may get china and metal silverware. The better the service and the better the food, the more loyal the customers are likely to be.

One more rung, and the food and service improve, you get placemats, china and metal silverware are the norm, and your menu is brought to you.

Almost at the top, and reservations are requested, but not required. You get a tablecloth and linen napkins, plus extra silverware besides the normal knife, fork and spoon, and in addition to the menu, you also get a wine list, and a dessert menu. The food is excellent, and your server is more attentive.

Brace yourself, you are at the top rung. The best restaurant in town. Reservations are required (unless you are a regular customer or tip the maitre'd well), as is a jacket and tie. You are pampered like a royalty, you dine on the finest cuisine, the wine cellar is extensive and filled with rare vintages, and the dessert cart adorned with tempting treats is wheeled out to compliment your after-dinner brandy and cigar.

Sure, at all levels, sometimes orders get mixed up or delayed, food needs to get sent back, and you may need to talk to the manager about it-but the higher up the ladder you go, and the more you pay, the less likely that these things will happen.

Right now, it's nearly impossible for the customers to differentiate fine dining from fast food in our industry. Too many expect four-star hosting for the price of a burger and fries.

A very good example. Which are the ways to tell the customer that you are not a fast food restaurant for a newcomer?
- word of mouth
- the look of your building (=website)
- the manner and attitude of the service person
- the price

ha ha ha ha ha haaaaaa!!! :)

Great analogy Phoenix!

What can I say, I skipped breakfast, and had to compare web hosting to eating :cartman:

I'm currently working on white paper explaining web hosting in layman's terms that uses various automotive metaphors...

Please also keep in mind that even if you must charge a little more, higher quality support and services (as well as quantity of services) pay off in the long run. Just look at the interaction and referencing in a forum such as this...word gets around. Ultimately, it's just a compromise; you can't be too greedy and you MUST supply the customers with what they want and need if your goal is long-term retention. Fly-by-nights suck - reputation is built by retention.

Originally posted by Phoenix


Right now, it's nearly impossible for the customers to differentiate fine dining from fast food in our industry. Too many expect four-star hosting for the price of a burger and fries.


Great post, many just like to try their luck! somehow for some reasons this also give me a reminder..

It's now a buyer's(client) market on webhosting with so many thousands and thousands of servers worldwide and the choices to choose. Who can blame the clients from being choosy and fussy?

Originally posted by cactus
It's now a buyer's(client) market on webhosting with so many thousands and thousands of servers worldwide and the choices to choose. Who can blame the clients from being choosy and fussy?

That's exactly what we want, clients who can choose what is best for them, according to their budgets, and understand what they will be getting for their money.

Our industry is totally fragmented, unregulated, and lacking in standards, and the customers are left with no way to choose fussily. They often compare apples and oranges without knowing that one is sweet and the other sour. They end up with false expectations, unexpected charges, downtime, and they go on to the next host, and the next...

It is not a buyers market right now, the churn rate in our industry isn't because customers are being picky, but because they are getting ripped off, and because there is no other alternative for them, no redress other than suing, and the amounts lost are usually low enough that they don't warrant a lawsuit.

This is totally a sellers market because the buyers don't know how to pick or choose between providers, so they pick the one with the best site, or the lowest prices, or the promises that sound the best.

Originally posted by Phoenix

It is not a buyers market right now, the churn rate in our industry isn't because customers are being picky, but because they are getting ripped off, and because there is no other alternative for them, no redress other than suing, and the amounts lost are usually low enough that they don't warrant a lawsuit.

We go back to the consumer "perception" issue with regards to web hosting companies.

If you sell a hosting plan for $1.00 a month, but you are honest, you don't promise anything, you don't tell them "99.9% uptime guarantee", you don't guarantee 24 hour support, etc, the whole "perception" thing would be different. The fact of the matter is that there are a whole bunch of "Morons" (nothing personal) out there who sell cheap hosting plans and they make promises that they cannot keep!

We are paying the consequences of their irresponsible business conduct and their lack of professionalism and ethics! :mad:

Originally posted by bert


We go back to the consumer "perception" issue with regards to web hosting companies.

The fact of the matter is that there are a whole bunch of "Morons" (nothing personal) out there who sell cheap hosting plans and they make promises that they cannot keep!

We are paying the consequences of their irresponsible business conduct and their lack of professionalism and ethics! :mad:

Can I get a witness!

Sorry guys, it's the sad truth that clients are more well informed and smart these days and want more value for their money. So swallow that bitter pill with a smile:) and don't fret too much, life is wonderful .

So if you are a webhosting provider, clean up your act and starting realizing the reality of webhosting before it's too late to salvage anything.

Originally posted by cactus
Sorry guys, it's the sad truth that clients are more well informed and smart these days and want more value for their money. So swallow that bitter pill with a smile:) and don't fret too much, life is wonderful .

So if you are a webhosting provider, clean up your act and starting realizing the reality of webhosting before it's too late to salvage anything.

Now, if we can only get the aforementioned "Morons" in Bert's post to listen to these words of wisdom.

To continue, does anyone have some ideas for stratifying commercial-grade web hosting, what would be the characteristics of each level , and the price ranges for each?

My thoughts for levels:

Bargain Hosting

Standard Commercial-grade hosting

Premium Commercial-grade hosting

Another question:
cheap = lack of service, no quality
expensive = good service and quality

I would be interested if there are hosting customers at this board who complain about rather expensive hosts NOT to have good service. How many are this? Are they all of the type "My hard disk doesn't work and my hosts didn't want to help me" or not?

I would be interested if there are hosting customers at this board who complain about rather expensive hosts NOT to have good service. How many are this? Are they all of the type "My hard disk doesn't work and my hosts didn't want to help me" or not?
Complaints about big hosts and poor service are common on this board. Most of the posts are beyond the type you mention.

A month back I moved from an expensive host to a low-cost ($6/mo) host recommended on these boards. I now have a problem with MIME types that I can't get resolved. It's probably a mid-level problem - not technically hard, but something that takes some investigation. I can't get an e-mail response, though, and there's no other support option.

- I would pay for an answer.

- I would be reluctant to pay in advance. IT support in general, everywhere, is just too spotty. I don't want someone telling me that MY hard disk doesn't work

- I would be especially reluctant to pay by the minute for a phone call

- I would gladly pay if it were done at the end of a help system e-mail. "Host X feels incident #4567 has been solved. If you agree, do nothing; your account will be billed $5. If you disagree, please reopen the ticket"

- I would be ticked if I were charged for something that I felt was caused by the host

- I would be hesitant to upgrade plans with this company if their low cost plan was poor

- I wouldn't have a reason to upgrade plans with this company if their low cost plan was everything I needed

- I would pay attention to hosting plan upgrades that included 1/5/10 free support calls per month.

Just some thoughts.

Originally posted by Phoenix
A comparison of webhosting and fast food :)

Damn your posts are long, it's a good job you're an interesting guy to listen to :)

Jado.

I would pay attention to hosting plan upgrades that included 1/5/10 free support calls per month

Then maybe you are different than most of the customers :)

The problem is same everywhere. We host around 220 customers who pay $30 per year for hosting. We are really sick of supporting them. When i started the firm off as a student, it was all wonderful. Attending tech support was fun and solving problems made me feel on seventh sky.

But today when I look it from business point of view, it takes a lot of my time, which can be well utilised in other areas. Also the tech support questions are really absurd. I will never forget a customer calling me 20 times in 24 hours to check the status of his domain name registration, which atleast takes 24 hours due to the structure of internet. He would just not believe me and ask me for explainations. Besides this there is too much of support demand for cgi script that they wrote. Again while learning it was fun, but when in serious business, it is intolerable. And imagine solving cgi problems for all these customers. :(

I really plan a serious restructuring of my hosting service to get quality customers whom I can properly support and who pay me handsomely.

I feel that US$24 a month should be an ideal price for most basic features like ftp, telnet, readymade cgi scripts, a gauranteed uptime, fast response, basic scripting support and may be an option to switch to database hosting.

What do you all think about it ?

Also hosting industry needs structure. I read about an upcoming association for webhosting industry from Web Host Magazine. any news ?

Regards
Abhishek

Abhishek:
$30 per year for hosting

Thats $2,50 per month? Brrr. I'm not surprised that you have headache. I think even $5 are a shame.

I know. But i think : better late than never ;)
I am working overtime to restructure my pricing and make a change to quality hosting for higher prices. I am sure many guys out here are in the same process. There is no alternative, if you are serious.

Abhishek

Originally posted by Jado


Damn your posts are long, it's a good job you're an interesting guy to listen to :)

Jado.

*bows*

Thank you.

Although I am a techie who started writing BASIC programs on a VAX at 12, my true calling is writing-and if you think my posts are wordy, I've got a 250,000 word ebook online that makes them look rather skimpy.

getting back on topic...

Support is one of the biggest factors in pricing out hosting as paying for good support staff is $$$$$-lousy support staff can be found for cheap money, but you get what you pay for.

What we do, is we include hands on assistance for the first 30 days, and after that, we offer three different supplemental support contracts-for issues not related to problems with the service we provide, such as outage reporting. We tried billing on a per incident basis after the fact, but the customers refused to pay for us to debug their .cgi scripts, talk them through configuring things on their websites, and other things not related to problems with the service they provide, their argument was that tech support is free everywhere else so we ended up eating it to retain the customers.

We considered adopting the standard practice in the software industry-if you want Microsoft support beyond the free support period, you have to call a 900 number and pay a per-minute charge or give them a cc number and pay a per incident charge billed automatically to your card- for things that were either training, or troubleshooting issues that were beyond our line of demarcation (i.e. when the server's up, the site is fine, but they can't see it because their Harvardnet DSL line is down).

We haven't implemented this because customer perception is that they can get the same support, free, 24/7 elsewhere.

Instead, our supplemental service contracts give the customer a block of what we call 'tech credits'. These can be redeemed for various services at different rates. 1 tech credit is worth 1 hour of phone or email support, 1/2 hour of developer time (i.e. web site design or script development) or 1/4 hour of on-site developer time (usually used if we are doing consulting for a client).

Depending on which plan they choose and how they use them, they can get consulting for as little as $14 an hour. All of us have been consultants in the networking and software industry prior to being web hosts, and my billing rate's been $150/hour for several years, and the SQL/Unix guy bills up to $300/hour. So, for being regular customers, we give them quite a discount.

Talash,

your idea for $24/month basic hosting is similar to our "Web Host Lite", that we charge $24.95/month for. It was intended as an entry level service, and it's proven to be the most popular.

20 calls in 24 hours is egregious and bordering on harassment.

I've seen info about a web hosts organization being founded, but from visiting the web host guild site and looking at the board of directors, it sure looks like the big guys banding together to keep the little guys down-the board members are reps from: Concentric, Verio, Interliant, and a couple of other sizeable hosting companies.

Any true web hosting organization should have resellers, single-server hosts, multiple server hosts, and small and large facilities-based hosts, to make sure that the various segments of the industry are represented.

Their focus is on certifying web hosts: $250.00 (non refundable) certification fee and $1000.00/year membership dues (paid quarterly).

Not only should there be different certification criteria for a certified reseller and a certified facilities-based host, but they really shouldn't have to pay the same dues. That's unfair at best, and it ensures that only the larger hosts can afford to spend a thousand bucks a year on a certification that doesn't really mean much right now.

Where does that leave the rest of us?

Their site also hasn't been updated in a year and a half.

Hi Bert,
I was wondering how long your hosting company has been around and what is your primary method of advertisment?

Thanks

I am really not against "cheap hosting" I just think is has to be represented properly!

As I said earlier, if you sell hosting for $30.00/year or for $5.00 a month DO NOT SAY "24 hour tech support", "99.9% uptime guaranteed" and those things. That is when the problem comes in! Off course $5.00 /month or $30.00/ year is too cheap, but somewhere around $10.00 a month would work out fine I think if it is made clear that you will not debug CGIs, you will not help them with Outlook, etc!

The problem is that if you have "morons" advertising those services then they will not sign up with you.

Talash:

You are right! Some questions are absurd, ridiculous and stupid!!!

I started to work in the IT industry about 12 years ago as a consultant in local area networks. Got my MCSE, CNE, CCNA and many other certs and was really happy back then because I had to interact with "relatively knowledgeable people" but since I started with this hosting business I have started to hear some of the most stupid and annoying things ever!

I sometimes regret I started all this, but hey! I still like what I do and I like to help people. I just don't want them to call me 20 times a day asking stupid things.

;)

Originally posted by ee-o
Hi Bert,
I was wondering how long your hosting company has been around and what is your primary method of advertisment?

Thanks

The idea started back by the end of last year, but we didn't start until about Feb 01 of this year.

We have had success with advertising, but like I said earlier we barely get our advertising expenses back. I guess this will pay in the long run though.

We pretty much advertise in Google, GOTO (a ripoff), some webhost dirs...

Advertising is difficult for most of us small companies, especially when we are competing against larger companies with lots of VC money. And so much of it is a rip-off.

Beware of trade-shows!

We saved up our pennies and went to a trade show last year- a high-profile eCommerce expo. We were assured that most of the attendees would be decision makers in IT, yadda, yadda yadda.

About the time I got a free pass to the expo every time I went to the ATM (printed on the back of my receipt) I started to get a bad feeling about this. I got an even worse feeling when we got to the show and found out that three booths down was one of our local competitors, that had recently gotten a huge infusion of VC money and was obviously there to spend it lavishly 'building their brand'. We'd called in favors to get enough people to staff the booth for the three days of the show, they had so many people they were practically trampling all over one another.

You could tell by the colors of the badge holders whether someone was at the expo with a free pass, had a press pass, or was a paid attendee. during that day I saw hundreds of free pass holders and only a couple of attendee badges. Most of the people who were there with their free passes, weren't looking to purchase services, they were looking to sell us their services, get all the free stuff, find a job, or get us to go to trade shows in the far east.

I still get a lot of calls to go to trade shows, and I tell them no. They are very expensive, and they really don't attract a lot of qualified sales leads, just a lot of warm bodies. Trade shows are a booming industry, largely feeding off the large influx of VC money that's been in the tech sector earmarked for 'branding'. Money that's dried up recently.

And then there is the tried and true advertising method, the yellow pages-Until this year, there has not been a category for anything besides Internet services, which is where the dial-up ISP's are found, and where we've been listed since the beginning-our first yellow pages ad is pinned up on the bulletin board. There is no category for web hosting, and our rep informed us that nothing was planned. We ended up pulling our ad from the yellow pages, as all it was generating was calls from people looking for Internet access or web design, not web hosting.

Anyone else learned any painful lessons about advertising for web hosts, or any success stories?

Hi,

We recently attended a trade show which is supposed to be the largest IT expo of Eastern India. It was a painful experience.

Firstly, It was so difficult to book a stall, since many companies with nice vc funding booked multiple stalls and we had to be on our toes to grab any opportunity to grab a stall. Finally they reduced the benefits to the sponsors who were supposed to get huge pavillions and converted them into stalls.

Now came the real thing. The entire show came out to be a total hardware fiasco. No internet or software ! There were 220 stalls out of which only 6 internet and software companies participated. Most of the people who came didnt knew what internet is all about. We distributed costly brochures, which were thrown in dustbins after few minutes.

Can you imagine a person walking upto our stall and asking the price of the PC (which were displaying our webdesign portfolio).

At the end of four days of hard labor (yeah, I attended most of the customers for all four days to get the real feel of it) i didnt manage a single account signup. Yeah, I got a reseller, who took 3-4 hosting accounts from me after the trade show. Coupld of design contracts, which were not worth a fraction of the whole cost incurred.

I think it is better to advertise online. I am adopting some new strategies to reach mature audiance online who can make the decision.

I cannot accept the fact that my PC is more valuable than my design and hosting portfolio.

Abhishek :)

Originally posted by talash
I am adopting some new strategies to reach mature audiance online who can make the decision.

I cannot accept the fact that my PC is more valuable than my design and hosting portfolio.

Hi Abhishek:

A "mature" audience is what all of us web hosts need and the only thing we can do to try to get that type of audience is to utilize "targeted advertising." Off course, this is always not enough. We need to change the way in which we conduct business to improve "consumer perception." We need to be more honest and promise only what we can deliver, but if me, you, Phoenix and many others do that, and on the other hand, there are still other companies out there that screw around with customers we will never make it! ;)

Originally posted by bert


Hi Abhishek:

We need to change the way in which we conduct business to improve "consumer perception." We need to be more honest and promise only what we can deliver, but if me, you, Phoenix and many others do that, and on the other hand, there are still other companies out there that screw around with customers we will never make it! ;)

Right now, web hosting is like the Wild West in the middle of the gold rush. Someone yelled, "there's gold in them thar servers!" and the rush was on. Some people have filed their claims, dug their mines and are working them as part of long-range business plans, but there are lot of 49ers who have rushed into hosting, looking to pan for whatever nuggets they can pick up freely, get rich quick, and then go on to something else. We've got claim-jumpers, bushwhackers, sidewinders, hornswogglers, and the snake-oil salesmen that seem to follow every industry when it is booming (Trade shows are a particular brand of snake oil).

One thing we don't have are sheriffs, with any sort of authority to deal with the companies who are operating in a less than ethical (as well as less than legal) fashion. There's no protection for the customers when they get suckered by a smooth-talking fellow who folds up his tents and disappears into the night.

Anyone can set themselves up in business as a web host. Including a 15 year old kid. I'm not a proponent of government regulation, but I've got a pair of scissors and I could probably figure out how to cut hair, but I can't set myself up as a barber-I have to pass an exam and be licensed. i'm pretty good at rough carpentry, but I can't set myself up in business doing that for people without getting a license.

Many service-oriented businesses are regulated-for the very reason that they protect people from getting ripped off by people who set themselves up in business to rip people off, or who are not qualified to operate such a business. In time, the governement will realize just how much money is being lost by good people to bad web hosts, and they will ensure that our industry is regulated.

One thing that we could do at the grass-roots level before the government steps in and starts regulating us is develop a set of ethical and service standards, and pricing guidelines for our industry, and as many of as want to promote good quality hosting agree to them. Publish them somewhere online, with a list of the signatories-to show that these companies have committed themselves to more than just cheap hosting and disappointing customers.

It's a way of starting, and these things can snow-ball. This is how real trade organizations get started. Small, voluntary, and grass-roots, but many of them have grown into large, powerful industry voices-after all a bunch of dairy farmers got together one day, and formed the organization that puts milk mustaches on pretty much every celebrity. Got hosting?

Web hosts have got to stop being just a bunch of individuals and become an industry. There is plenty of web hosting business out there for all of us. And if all of us little guys band together, we can be more powerful than the big guys, and we can tar and feather the crooked hosts, and ride them out of town on a rail.

Originally posted by Phoenix


Right now, web hosting is like the Wild West in the middle of the gold rush. Someone yelled, "there's gold in them thar servers!" and the rush was on.

You are right. Many guys, who have never even put an effort to know how FTP works are jumping into webhosting business.

I totally agree with the concept of a regulatory body at the grassroot level. We must define the minimum requirement for a company to be called a decent hosting company.

What can be a better forum than this one to discuss and decide on it.

Abhishek

We should start a new thread in General Conversation about this. And we should collect the typical problems customers are facing with unreliable hosts. This board is full of such complaints. Example:
- not reacting to emails
- giving no refunds

Also we should define some quality criteria, for example a money-back-guarantee.

Ok, let's start! Here is the thread:
http://www.webhostingtalk.com/showthread.php?&threadid=10656