I am ready to move from my reseller account to a dedicated server. However, the pricing of my plans (now that I have control) seems to have me at a loss.

How do companies like HostRocket (I know how Tera-Byte does it) offer the amount of bandwidth they offer without going broke (since they colo)? I know that the estimate for the average user is 500MB, but there are a LOT of heavy traffic sites. Aren't they the ones that are attracted to those cheap prices?

I want to change my prices now that I have flexibility, and I noticed that the trend is toward cheap prices with excellent service, but I really must be missing something.

What I also do not get, is that HostRocket allows multiple site hosting. Isn't that asking them to use up the bandwidth? How do you stay afloat?

I was thinking of offering something similar to their old plan, 200MB, 8GB bandwidth for $10.95. Would that be a safe plan to promote?

I also want to have resellers. If I offered 50% off, is the norm to have enough customers to make a profit?

Thanks

EDIT: I apologize, I posted this in the wrong forum. I tried to delete and repost in the reseller forum but it would not let me.

What your going to find out is that if you offer a plan that costs you more should the customer decide to use all of his/her resources your business will fail regardless.

It is not a good business plan to offer more than you can chew, even though the odds are that your customers wont use what they are offered. Its simply bad business for you too offer it in the first place.

I know I would rather host with a company whos making a profit regardless than a company who puts its chips on hope.

Your going to find those customers who want everything for nothing, what you need to ask yourself, is if those are the customers you want!

I'm not sure about that, almost all hosts play the odds on all customers not using all their resources. That way the few that do get more for less. If all the sudden all customers used all their reources, you would see prices rise quite a bit.

They get away with it by playing the ratios of thier customer base . Based on the advertising they do , they know what "type" of customers it draws . They also know damn near to the customer how many will actually use the full resources available versus how many won't . Very simuliar to modem pooling at an ISP . The more customers you have the better your statistics get and the better you can manage your bandwidth , also it becomes much easier to (and less painful) provide the high bandwidth user with what you offered . I would not think of doing this until you had atleast several hundred customers and and several months at that level to generate a some decent reliable statistics on customer usage . Even then you had better be prepared for some excess bandwidth charges because nothing guarantees your stats will work . Does it sound profitable and fun , maybe if you enjoy running out to the parking lot to throw up from all the stress ..........

yes, how does tera-byte stay in business! please tell me!

actually i would like to hear of one host out there that does not play the averages game. just one shared plan that charges based only on the costs. i think you will find there are none.

Steve

Originally posted by Keeg
actually i would like to hear of one host out there that does not play the averages game. just one shared plan that charges based only on the costs. i think you will find there are none.


If you look here (http://www.webhostingtalk.com/showthread.php?threadid=12558) and here (http://www.webhostingtalk.com/showthread.php?threadid=11579) you'll find two such hosts.

DISCLAIMER: Yes, one of those is me. Mods, please edit this if you consider this advertising... I wouldn't have replied at all if Keeg hadn't posted such a specific query.

cperciva: How successful are these business? Can you give an example of a large hosting company that does this?

keeg: I believe most hosts play the averages in some way, shape or form. What I want to know if to what level to play it.

For example: if you have a modest plan of 100MB, 5GB bandwidth for $14.95 (which is on the high side) and you are paying $2/GB for bandwidth, that's $10 right there, not including server usage, support and credit card related fees. You are already in the whole.

If you have a plan that is 100MB, 5GB bandwidth for $10, then you break even on the bandwidth and take a loss on server usage, support and credit card related fees. Again a loss.

On a 300MB, 12GB bandwidth plan for $12.95, that's $24 bucks just on bandwidth. You have a loss before you even calculate anything else. Even if you get as low as $1/GB on bandwidth, you are just breaking even.

Now they say that the average site uses 500MB bandwidth per month, so even if you have multiple site hosting, it's a win, IF you have enough average clients to offset the few large clients you have.

To price by usage, a 100MB plan, 5GB bandwidth would be atleast $19.00, to reassure a profit, $21 be cushy. Is that how these companies that charge by usage do it? And if so, why??? I went to inetflex.com and did a quote for a 100MB plan, and 5GB bandwidth and it is a whopping $30.40/month.

What is a "safe" margin to gamble with?

Originally posted by TravelinMan
cperciva: How successful are these business? Can you give an example of a large hosting company that does this?

Both companies are recent startups; as far as I know they are the only two working on this business model.

Note: I don't think I can really say any more without breaking the forum rules so unless I hear otherwise I'll just shut up now.

Oh if it ain't creep! Welcome! What brings you here?



As to everybody else, I play the average game and I can tell you it is bloody risky. Charles will know.




Oh and getting to tera-byte, must be more or less the same as catalog. Wish I could find that email. Last year I emailed catalog for a quote.

They were offering dedicated servers with 100gb for $219 or something like that.
I emailed them and said I'm interested but I don't want the transfer. I want to pay only for what I use.
They replied and said okay $215.
$5 difference for a server with no transfer and one with 100gb? I said they mad.
They emailed me back with this long story about transfer, it was quite funny. Also, they said their dedicated clients only use about 5gb to 10gb a month per server and offering 100gb makes it easy on their billing department as they too lazy to calculate actual usage each month.
Yeah right!
If I had taken them on their offer, they would be broke by now. The reason why I didn't go with them was because that's when their uplink wasn't too reliable.

heh i need a cheap host that can handly my bandwidth...i'll probably sign up for tera-byte's plan 4

hope they'll be as good as hostyard :)

oh yeah, i also may sign up with 9kd.net
what do you guys think? i'm a low income high school student.
should i go with tera-byte.com or 9kd.net?

No doubt.
Tera-byte.com
:D

:eek2: did I read write :confused:

9kd, 10gb/month for $15/year :nuts:



creep, go with tera-byte.

You'll have 20gb/month to play with. You can put all your files on one server instead of having to split the files on different servers like you did in the past.

Also, I would change the location of your images or anything you had to download as I think people were hot-linking your site which was causing the over-usage.

And, I would start saving for plan 5 just to be on the safe side incase your traffic doesn't decrease.

definitely tera-byte, creep.

Did you see how much extra 9kd will charge you for transfer? $10/1gb/month.

ok thanks
all my images are on my aol account, so it was never part of the bandwidth i used, and i put all my files on this dude's cable server (which is down right now :(). i also just added this anti-leech and hotlinking thing in .htaccess, so that should stop any leechers/hotlinkers

Originally posted by Dylan

9kd, 10gb/month for $15/year :nuts:


Someone is playing with her/his resources too much :D

Originally posted by Kiwi


Someone is playing with her/his resources too much :D

and further more.. unlimited webspace, subdomains and 99.9 uptime.. :eek:

Originally posted by creepcolony
should i go with tera-byte.com or 9kd.net?

9kd servers are located in london on the gemsoft.net ip block. (IP database lookup results)

In fact gemsoft is an ISP. So I think that quality of their services is not very very good! Although this needs a 15 days test to be sure of their reliability etc.

Mac