Hello,

I'm thinking of starting my own hosting firm through reselling. I've been checking on some reputable hosting firm such as futurequest.com, dids.com, communitech.net, superior-host.com, below10hosts.com, etc. I'm doing survey on their features and prices, and of course, most of them have different features and prices. And that's what matters to me.

I'll be reselling for an Alabanza host. But right now, I'm not sure how should I set the price. Should I set as low as superior-host.com and below10host.com
or should I set the prices something like communitech.net, futurequest.com and dids.com? Prices will be the first impression that every clients will get, so I hope to get good impression but not through the phrase "Cheapest host around".

I'm trying to concentrate and offer good customer service and support to my clients.

I hope you guys understand and you can give me some suggestions. Thank you.

Regards,
Andrew Chen
weishen@pl.jaring.my

PS. Below are the basic features of the packages I'll offer. I would like to know what price do you expect from these packages.

1 - 70mb, 5GB bandwidth
2 - 150mb, 8GB bandwidth
3 - 400mb, 10GB bandwidth

Dear delz,

I cannot help you on the different prices, because that is pure research work. What would you expect from a webhosting company? 24/7 service, 100% uptime, cheap price, large space, fast, etc.

This might not be relevant to webhosting, but in traditional business there are three generic competitive strategies. First, overall cost leadership. This requires massive attention to cost control (i.e. "your cheapest host around".) Second, differentiation. This means differentiating the product or service offering - creating something that is perceived industrywide as unique (i.e. money-back guarantee, 24/7 hours service) Third, focus. This means a focus on particular buyers, products, or geographic market (i.e. country-specific, pure focus on small businesses or personal home pages).
Gerard

Pricing is a difficult question. Companies like http://www.datareturn.com charge a fortune, and still get lots of business. Other companies charge peanuts, etc etc.

I think the trick is not to be just another hosting company. Like Gerard said, work out what you can offer that other hosting companies can't, then play up those points as a selling point. In the case of DataReturn, they are highly specialised in the NT/2000 market, and they know their stuff.

People will pay for a service, they value that service based on their own values. For example, I look for reliable servers from a host that knows how to manage them properly, so I don't mind paying a bit more for a host that can give me that.

This question has been asked before, and I think you will find it helpful to look up the earlier discussion on the topic in addition to copnsidering the responses you have gotten thus far.

Remember that web hosting is ultimately about people, not technologies. Put people first and you will likely do better.

Guys,

Thanks for your reply.

Well, what range of price d you consider as cheap and expensive? That's what I'm not really sure about. For example, Host X provides 200mb, 8GB bandwidth for $14.95 per month while Host Y provides all that for $29.95. Do you consider $14.95 is cheap or reasonable?

That's all for now. Thank you.

Regards,
Andrew Chen

A lot of the pricing differences you see directly relate to the overall business plan of the company. The majority of hosts are in the business with one final goal -- "Sell Out". The worth of their company is determined by the number of clients they have. Selling the packages for less than what they would really cost equals cheap hosting which equals more clients which equals a bigger pay out in the end. Other hosts are trying to run their business in such a way that will ensure a stable growth pattern in order to make a profit and stay in the business without selling out. This alone accounts for much of the price differences you see. (Not all of it of course ...)

Another factor is the basis of all businesses. How much it costs YOU to provide the package is what determines how much you will be charging the end user. Some hosts are able to obtain excellent rates on bandwidth but pay high rates for their technical support. Some hosts outsource the hardware requirements while others purchase it all and put it together in house. Some purchase their own high speed lines, others co-locate and share the costs etc etc etc.

To determine your prices, and IF you are planning on building this as a profit making business rather than a company for sale, think about your own costs. How much are you paying per GB of bandwidth? If you are paying $3/GB and you price a package for $15/month -- how much bandwidth can the client ACTUALLY USE before you begin to lose money? What times of the week can the client contact tech support and have a HUMAN ACTUALLY there ready and able to respond? What are your hardware costs going to be to service the client? etc. etc. etc. Try to figure the ACTUAL cost of the package imagining the client is using every single bit of what it offers. Then factor in the number of clients to see your cost. Once you know your COGS you will then easily be able to decide what to charge, compare that to the other hosts for competition's sake and run with it.

One mistake I see all to often is hosts putting a price tag on their packages based solely on what everyone else is charging without taking the time to really consider how much it all actually costs. If that isn't rough enough we also tend to forget to factor in the administrative costs, offices, humans, taxes, phone bills, time, billing, sales, etc....

If you are charging in such a way that your costs are covered, you can then ACTUALLY PROVIDE the services you are promising your clients. If you are charging based on what "everyone else is doing" you may not be able to cover your costs and the end result becomes clients feeling cheated because you couldn't deliver...

Deb

In addition to what Deb said, which I heartily agree with, it is also a good idea not to copy other sites. Many are so full of lies, trickery and deceit, and even better ones are unbalanced and have unfair terms of service, that you would do better starting from scratch.

Consider pricing as one of those items. I am so tired of the x.95 pricing scheme that is so typical of American pricing. It started out as a point of sale, impulse buying trick in stores, and log ago permeated the industry. While most people probably don't even think about it anymore, it reeks of trickery.

If you want to stand out from the crowd, you don't do it by following it.

Originally posted by delz:
Hello,

I'm thinking of starting my own hosting firm through reselling... I'll be reselling for an Alabanza host... Should I set as low as superior-host.com and below10host.com...

I'm trying to concentrate and offer good customer service and support to my clients.

I am a bit confused. Are you going to resell for an Alabanza host (such as Superior), or are you going to lease a server from Alabanza yourself?

Also, there can't be enogh companies focusing on customer support and service! Price isn't everything, and more expensive hosts do quite well due to the level of support they provide. It is what builds a solid base, rather than a quick turn-over base.

Duster,

Do you suggest me not to use x.95 anymore and use x.00 instead heh?


That would be my suggestion, as part of a theme of honesty and full disclosure. In fact, without me saying anything about it, one of the companies that sometimes posts here, did the same thing for all but their entry level hosting plan. Their site and terms stand out from the rest for their simple honesty.

After all if something is worth $19.95, isn't it worth $20? Is a nickel going to keep someone from buying something or utilizing the service? Do people really think in terms of x.95 or is it a trick to make it seem like it's not really $20, but much less?

That's a uniquely American trick. While I think America has a lot of things to be proud of (including the Internet itself), I don't think this is one of them.

My philosophy is to skip the games and trickery and think of fairness to your customers every step of the way, from the ground up, so to speak.

The very best business transactions are those in which both parties are satisfied, and that only happens with equitable terms, something too uncommon in web hosting. Even some good companies have rather poor contracts and terms of service that lack any sense of fairness. It would be nice to be able to depend on their written terms as representative of the company. After all, that is what many will judge them on initially. Fortunately, some of these companies are better in practice than their written terms would lead one to believe.

[This message has been edited by Duster (edited 07-15-2000).]

Guys,

Thanks again for all your replies.

Deb,

Thanks for spending time to advise me on the pricing. But I would like to ask this. If a person is doing his/her service under Alabanza, then he/she would have to charge a whole lot more to maintain in business? Alabanza charges bandwidth far expensive than many other hosts, which is around $6 if not mistaken. (correct me if I'm mistaken)

Duster,

Do you suggest me not to use x.95 anymore and use x.00 instead heh?


Anyway, thanks again. I would be glad to receive more suggestions. :) Thank you.

Regards,
Andrew Chen
weishen@pl.jaring.my