Heres something that has always bugged me about hosting.

Setup Fees

Now in regards to Colo and Dedicated's I can understand charging a fee. There is preparation involved and what not.

In regards to Virtual Accounts, are you kidding me. We dont charge a setup fee for our virtual accounts, and Ill tell you why.

It takes me about 1 minute in ensim to setup a account, and I have timed my IS person before it takes him about 35 seconds. Most of it is typing.

I just dont understand why companies charge a setup fee. Theres no extra cost in setting up a account, from all the panels i ve used the turnaround time is about a minute.

I just dont understand why this is done, too me its a slap in the face to customers...

Joe

Originally posted by JBIZ718

I just dont understand why this is done, too me its a slap in the face to customers...

Joe

I think it's just amortization for others who cancel, or any other unpredictable things. Aslo you forget accounting system.

I own a hosting company, and the accounting takes me no time.

We have about 300 clients, and its not really hard to maintain it.

A setup fee is just bad business in my view....

Joe

Its usually just this: the host needs X dollars from an account over the course of a year. It gets charged one way or another but often hosts with setup fees have a lower monthly fee etc. Also, handling the accounting on 300 clients is much different than the accounting for 10 or 100 times that.

-Brendan

Originally posted by JBIZ718
I own a hosting company, and the accounting takes me no time.

We have about 300 clients, and its not really hard to maintain it.

A setup fee is just bad business in my view....

Joe

What accounting program are you using?

In regards to accounting,

I still dont see a need for a setup fee.

If you have 30000 accounts, at the average of 20$ per month, you are making about 600k a month or 7 million dollars a year

The accounting shouldnt cost you that much.

Ive talked to a few public companies and also worked as a credit manager before this computer stuff, and the costs should not be that high.

I still dont agree.

I noticed Hostrocket you charge $9.95 as a fee. Why? I dont see that covering any costs. Nothing against you, just dont see why thats really needed.

Joe

New customers usually need more help getting started. They are not familiar with the control panel, or need help moving the domain over, etc. Once they get settled, the amount of support requests they submit decreases. Therefore, the set-up fee can be used to sustain this additional plethora of questions.

Whatever reason one has for use of a setup fee seems to come with the business of hosting. Regardless of the amount, I won't even consider using a host that has a setup fee for a typical virtual hosting plan. I don't see the reason other than making more $$$ to be charging this. Do people really actually make more this way? I'd imagine this would dramatically cut back on sign ups. It's abused often too, hosts that use that as an advertising gimmick "Setup fee waived if you act now. $50 Value!!"

Maybe I just have a different interest then a small setup fee.

Those are all valid points, i just dont agree. I think they are not needed.

I mean if you fill a entire server with domains, the profit you make will cover all your costs.

IE:

300 server per month
250 domains paying 10$ per month
2500$
-300
-500 in other fees, what ever they are
1700$ per month profit.

Seems not needed in my book. And even if you boost the server specs, and have a few more costs.

I also have a question to BenS: what kind of servers do you use.

Joe

I agree

Joe

Out of curiousity - and not to be rude - but why do you care? I don't like setup fees myself, so we don't charge them, but I'm not really that concerned about what other hosts decide to do with their business model.

Joe, since this is not relevant to the topic, please email me, or make your email address available.
(We all know the mods attack people that take the post off course ;) )

Thanks

Because I can, it effects the industry that my company is in.

Constant analysis of companies is something we try to do. There are many sucessful companies out there. We are sucessful, but it is important to learn faults and mistakes of other companies.

Anaylsis is something we feel is important.

Joe

We do charge a setup fee yes, but our average account does not cost $20 either. As a customer I would rather pay a $10 setup fee and $10 a month than no setup fee and $20 a month.

-Brendan

I can see the setup fee to cover the additional initial support costs, but of course, who *likes* set up fees? Common sense says that web hosting clients wouldn't.

I dont want to get into battling about price wars and all.

But that analogy doesnt really work. A $0 setup fee shouldnt make the price go to 20$ per month.

I just dont understand some things. Maybe my business model is just different then the next person.

I just think that you can be succesful and not charge one.

Joe

Originally posted by JBIZ718
We are sucessful, but it is important to learn faults and mistakes of other companies.

Joe

This is something that definatly shows through in every post you make on these forums. You should try looking for positive things in successfuly companies, it would make you a much more pleasant person to talk to.

-Brendan

Hosting clients dont like any fees :)

-Brendan

I dont think you have ever spoke with me, but I am quite pleasent to talk to.

You should watch what you say. Until you speak with me, you shouldnt say something like that.

Be careful

Joe


Slowly getting angry

:angry:

True, and I see *that* at FWS often :rolleyes:

Originally posted by JBIZ718
Because I can, it effects the industry that my company is in.

Constant analysis of companies is something we try to do. There are many sucessful companies out there. We are sucessful, but it is important to learn faults and mistakes of other companies.

Anaylsis is something we feel is important.

Joe

How exactly does it affect the industry? It doesn't. Some companies charge setups, others don't, and it doesn't matter a whit one way or the other except in the eyes of the consumer. If they don't want to pay it, they move on. Easy.

You sound a lot like someone else that used to frequent several forums with your continual "faults of others" type posts. The condescension is not attractive.

Someone else's business model is not like yours. Again I say: so what?

I say I look out for my clients and consumers in the industry.

Thats what I say.

I am going to ignore the rest you said about me. You havent spoke with me, and need to watch what you say.

Your starting to insult me, which is wrong. I might question why something is done, but im not insulting you.

Joe

:angry:

What are you talking about? I have not insulted you, but I can certainly see what's in front of me: you have insulted every host out there that charges setup fees. Just because you don't agree with the fact that they charge them. Out of some self-professed noble concern about consumers. The fact that you continue to drag this out despite some hosts who charge setups telling you the reasons why (since you're so confused by it) tells me that you a) have no respect for their positions, or you would drop it and b) that you have no other intent than to just put your name into as many posts as possible.

Just how are you looking out for consumers with this (yet another) meaningless thread? It is not illegal for hosts to charge whatever fees they see fit as secondary to the hosting fees themselves. Again I say: so you don't agree with them, who cares? Other hosts charging setup fees have zero effect on your business or the industry.

Well since i dont agree with setup fees its now insulting.

I find you insulting, so we agree to disagree.

Its funny how easy people get defensive in this place. I state one opinion, someone posts, i retort, and now here we are.

Until someone can give me a good explanation of why there needed, i think there bad.

I have the right to my opinions, and dont think that i ve been insulting

Joe

Ok, here's the main kicker of why this thread won't work so well:

Setup fees aren't needed.

Neither are $10/gig/mo data transfer fees when it costs the host $2/gig/mo, or less. The charge is the charge that the host decided upon. Some hosts charge $20/gig when they pay $2/gig and some hosts charge $5/gig when they pay $4/gig.

Heck, you could even just forget about charging at all (unlimited ::shudder:: ).

Needed has nothing to do with pricing structure. Take the exact same plan (space, transfer) and compare 300 hosts. Opinion means there will be no right nor wrong in this thread.

I hope more host's do have setup fee's makes it better for me and my marketing slogan :) "Signup now!, no setup fees!"

Let me point out a few things to you, as gently as I can, since you continue to miss out on the obvious point here:

You started this thing off with a "this bugs me" post.

Quotes from you, to start and after people have already explained to you why they charge setups.


I just dont understand why this is done, too me its a slap in the face to customers

A setup fee is just bad business in my view....

Those are all valid points, i just dont agree. I think they are not needed.

We are sucessful, but it is important to learn faults and mistakes of other companies.

Well since i dont agree with setup fees its now insulting


Now, who is insulting whom here? You are, continually asking why, why, why, when it has already been explained to you multiple times. Numbers 2 and 4 in that list of quotes are particularly insulting to those who charge setups, as you have zero knowledge of some other host's business and no basis for a claim that a setup fee is a "fault" or "mistake". Host Rocket for one is much larger than you, and has scores of good commentary on the service itself. Tell me exactly how that business is "bad" just because you disagree with what Brendan & Co. do. Then explain to all of us how they can be at "fault" for building a successful business using their model. And then you can tell me why they should care what you think anyway.

Why you keep dragging this out is beyond me, as you look foolish. We get it. You don't agree with setup fees. Know the answer to that one? DON'T CHARGE THEM. That was simple. It's what we do.

You think because you disagree with their opinions on this that your opinion must by default be the only one that matters? It takes a certain type of arrogance to think the world must revolve around your opinion alone or that everyone should by necessity agree with you just because of some opinion you hold.
If you insist on taking everything as some sort of personal affront when someone disagrees with you, I can predict a very unhappy and stressful life for you.

Im not even going to retort to that.

Instead of getting enjoyment in slamming you, and countering with your also continued posting, i will drop this.

Chicken best explained it.

Joe

I'm crushed. I'm also amused that you'll accept Chicken's answer but not those from any of the hosts who posted trying to answer (over and over) the question you originally asked.

I'd say about half the hosts out there charge setup fees. Some of them are even quite large. It's a matter of opinion whether those are good things or not. It's the opinion of the client that matters, and the best way for people to express their opinion on that entire issue is with their dollars. And just think - you might even get business because someone passed over another host who did charge setup fees, so why are you complaining about it?

PEOPLE...

PLEASE put this thread back on track, I think the original question was meant to be phrased in a different way:

Should there be setup fees? If yes why? And if no why?

My simple philosophy on this is Hosts Like setup fees customers dont..... :)

I love to KISS

(keep it simple stupid :) )

Interesting... some people are concerned just because they don't have setup fees and other do. If you don't like setup fee don't charge it and its that simple.

There are many reasons to charge setup fee and some are good enough to escape them and you should be happy that you got competitive advantage over others

...affecting whole industry... what ??? Companies charging setup fees is effecting whole industry simply because you don't charge it... its funny. It sounds to me like if I can afford free hosting for 3 months every one should offer free hosting for 3 months otherwise it is affecting whole industry. (FYI: there are companies who offer 3 months free hosting). Later if I can offer 6 months every one should offer free hosting for 6 months.

If I might, Charles, I would like to modify your statement:

Some hosts like setup fees, and some clients will pay them. Some hosts don't like them, and lots of clients don't, either.

How's that? :)

Hello everyone :)

The way we did OUR stuff is that we do not charge a setup fee for level1 and 2 accounts.
level 3 accounts we do charge a small setup fee.

We put it this way if they can afford the level 3 account then they shouldn't have any probs paying for set up.

It's like driving a car, if you drive a small/economy car you fill it up with 87unleaded , the gas stations priced those at a very low cost bec. they know that you can't afford to drive yer car :p
Now, on the other hand if ya drive like what chicken is driving(Porsche 911) then you fill it up w/ 92Super that costs $$$...

does it make any sense :confused:

We currently don't charge setup fees, but they are certainly valid. Automation makes setting up a new account effortless for us, but there are still costs in time and/or money associated with new accounts. These costs can include:

* Advertising, marketing, and pre-sales contacts with new customers.
* Running fraud checks to make sure new customers are on the level.
* Helping new customers set up their sites, modify their domain records, configure their email programs, etc.

In order for a host to stay in business, the customer has to pay for these services in some way, whether it's with a setup fee or a regular monthly hosting fee. I can't see that it makes that much of a difference.

There's one exception - if a host uses high setup fees to make customers stick around when they'd otherwise bolt due to poor service, then this is a problem. However, a host who offers good service and simply charges a setup fee to defray setup costs...no problem. In any case, it's all voluntary and there plenty of options out there for consumers.

Finally, paying a setup fee can even be an advantage if you're with a host for the long haul. You've paid for your own setup at the outset, and so you're probably not paying for everyone else's each month.

We are busy revamping our plans, which used to carry a setup fee (on the virtual plans).

The way I see it, most companies use it to cover initial suport costs and to ensure that clients are serious. As we know, most problems occur during the first couple of days - domain transfers taking forever, etc. This is normally the most vulnerable period in the relationship between the client and hosting company.

It is also used as a marketing tool. For example, we waive the setup fee if clients pay in advance (which is basically the same as entering into a 6-12 month contract).

But my feeling is that a client would prefer to sign up with a host that does not charge setup fees (all other factors being equal). Changes are that we will drop it soon.

Blah, blah, blah ...

Originally posted by JBIZ718
I own a hosting company, and the accounting takes me no time.

We have about 300 clients, and its not really hard to maintain it.

A setup fee is just bad business in my view....

Joe


I agree. We have about 1500 customers and we have never charged a setup fee for virtual hosting. All costs are figured into the monthly hosting fee.

As someone else pointed out, it takes about 30 secs to setup an account. If you have a decent accounting system, that should take very little time as well.

--Tina

Originally posted by afriq
We are busy revamping our plans, which used to carry a setup fee (on the virtual plans).

The way I see it, most companies use it to cover initial suport costs and to ensure that clients are serious. As we know, most problems occur during the first couple of days - domain transfers taking forever, etc. This is normally the most vulnerable period in the relationship between the client and hosting company.



Then you'd better offer decent customer support.

You shouldn't charge more upfront so that a customer feels somewhat trapped to stay with you. Make them WANT to stay with you.

--Tina

In my opinion, this thread is just here to make someone look good and put down others. Pretty sad if you ask me. There is a reason for setup charges, each company is run differently. If you choose not to have one, then great.

I will say as a customer.(And acutally I am)

I don't mind setup fee lower than $10 but some hosts have setup fee up to $25.(That price is highest I have seen). I wouldn't go for host that charges $25 setup because I would question why $25 setup fee is needed.

In my opinion, setup fee is needed for some hosts because it often happens that new customer will leave within 30 days. Then you will have to refund the money. (Assuming you have 30 day money back)
If you have setup fee, you won't lose much if the customer leaves after his 29 days of exploring your service.

Tha's the way I see it. I am not a webhost so I don't know what is behind of this setup fee.

Originally posted by Sesran
In my opinion, this thread is just here to make someone look good and put down others. Pretty sad if you ask me. There is a reason for setup charges, each company is run differently. If you choose not to have one, then great.

Too right. Its funny how some people can get so worked up over how others do business :)

I don't understand how you could call charging a setup fee "Bad business." You can charge whatever you want. If I charge a setup fee and you don't you call that "bad business," but if you charge a higher monthly fee then me for same services then aren't you doing the bad business?

Anyone can charge whatever they want, it's up to the customers to decide if it is worth it.

Our main reason for our small setup fee is for our time and services used with our 30 day money back guarantee. But we keep it a low reasonable number.

What I am saying is that the company can charge whatever they want to charge. It's not doing bad business or a slap in the face.

I was also wondering what your URL is Joe?

JBIZ718, I want to ask you something.

I own a hosting company, and the accounting takes me no time
sarcastic: Does it take no time because you aren't doing it?

300 server per month
250 domains paying 10$ per month
2500$
-300
-500 in other fees, what ever they are
1700$ per month profit


1700$ profit? Are you kidding? Do you really have no costs for taxes, supporters, advertising, software, telephone, financial accounting, chamber of commerce,....................

In general, the Zero set up fee is the same as 'no down payment', '90 days same as cash', etc. It's a business eating their own costs to attract customers. That doesn't mean there are no setup costs, just that many businesses are willing to eat them in order to make a sale.

It takes time to set up a new virtual hosting customer; you answer their questions via email and telephone, set them up in the billing system and on the servers. Many end users need assistance getting up and running-and they have a lot of questions that pertain to using their specific FTP client, how to set up their email client, and other third party software issues, as well as problems with their own cgi scripts. All of this takes varying amounts of time, and time, as they say, is money.

It takes even more time to set up a new server co-lo, even after their IP's are assigned and SWIP'd, the engineer has given them a port, set up their space in the server room, answered their technical queries, the engineer still usually spends a couple of hours helping out the customers once they are on site, especially if its their first co-lo and they haven't configured it properly before bringing it in.

If all customers were cash and carry, they just ordered the service via an automated interface without any user intervention on the host's part, and didn't need any support, then there would be no need for set up fees., but it isn't a perfect world.

The decision to charge or not to charge is based upon what your costs are during the setup period, and whether or not you can afford to eat them to attract business, or to close a sale.

That was a quick example.

And yes there are other fees, but Im staying away from posting here for a while.

The minute you questions something, it gets slammed.

I will post only informative comments if any.

Joe

Originally posted by Phoenix
In general, the Zero set up fee is the same as 'no down payment', '90 days same as cash', etc. It's a business eating their own costs to attract customers. That doesn't mean there are no setup costs, just that many businesses are willing to eat them in order to make a sale.Exactly! The setup costs are there for the host either way; the question is whether they are billed up front to the customer or whether they are spread out over a number of monthly payments.

Really, from the cost accounting standpoint a reasonable setup fee is better for a customer that stays with a given host for a long period of time -- otherwise, since the host is obviously recovering the setup expenses from the monthly fee, the longer you continue to pay that fee beyond the point that the setup fee has been amortized the higher setup fee you are paying.

To call a setup fee "bad business practice" is just silly; it's no more a bad business practice than is any other business decision one might make. It makes more sense from most standpoints because it allows your income flow to more closely match your expenses: no matter how small they are, there are some upfront costs to acquing and setting up accounts. It's only from the marketing standpoint that charging a setup fee has its negative side.

Right, I dont wanna start war but this thread has gone way off topic.

Ive seen someone attack two other people in this thread which is BANG SMACK OUT OF ORDER

If you cant say nice, dont say anything at all.

If I want to charge setup fees, I willl (I dont) - but the fact of the matter is - its a per company thing and it shouldnt have anything to do with other hosting companies

Rant Over

Here here Nick. I do believe the ruls mention being nice to fellow users as well as not trolling, and I'm sorry JBiz but you are trolling, pretty much every thread you start ends up with you insulting people and being norrow minded to wind people up - Now that is trolling.

Originally posted by Annette

It takes a certain type of arrogance to think the world must revolve around your opinion alone...

Right, especially when the world clearly revolves around MY opinion :D

As I said earlier, Im just no longer going to post much here.

I have my posts that interest me, but overall the only posts I will start will be just information.

As I said the minute you question something people get defensive.

They get so defensive it turns into bad stuff.

So with that In mind, and why I stopped writing in this post as it became well, not where I had wanted it.

I dont consider me trolling at all, you call what you want. I dont think trolling is starting a topic and then people slamming you.

Joe

Trolling is starting a topic with the intent to get people all jacked up and incite angered discussion, to no real purpose. Or it's throwing out a totally bogus topic and getting a lot of people to discuss it for weeks on end. You bait your hook and dangle it in the water and wait for the fish to bite.

Your comments in your opening post were rather incendiary, and continued in that vein, fanning the flames as it were.

If you start a thread saying that you are good and others who do things differently than you are bad, that is trolling. The most common trolls of this type are racist, sexist, homophobic, religious.

Maybe this thread should just be locked or thrown out, its really stupid for people to be fighting over whether there should be setup fees or not.

Just my humble opinion :)

I was rather hoping this discussion would be beneficial for the forum (which was why I didn't lock it earlier), but instead it's turned into a rather nasty situation of someone mis-interpreting what another says and letting a flame war loose.

I don't like to point fingers, but one of the posters should definitely take a class in perception*, simply because this poster keeps mis-interpreting what is valid criticism and discussions and turns it into a flame war.

Have a good think about how you present yourself to this forum, and how you'd like others to treat you. Treat others as you would like them to treat you (with due respect). You wouldn't change your attitudes towards your $100K client simply because of something he said that you interpreted differently, right?

This is why the rules had to be re-written in the first place.

Thread locked.



* Available at your local college as part of a psychology or management subject.