When people signup for dedicated server and/or colocation plan, do they usually pay annually or monthly?

Assume you give them 2-3 months free if they pay annually. In general, will they take the advantage and pay for the whole year?

I think most people pay monthly. Some possibly pay quarterly.

As a provider of dedicated/colocated servers, I see no reason to give customers 2-3 months free if they pay annually. What's the advantage for me? That's a lot of free service to be giving away without any real benefit on the host's part. The most I've seen is 1 month free if you pay annually for a dedicated/colocated server.

With virtual hosting, it makes a little more sense, since you're always going to have people who lose interest in their site and cancel. By having them pay annually, the customer can't just decide to shut down their account after 3 months since their site is no longer successful.

But generally the people with dedicated/colo servers are much more interested in their site. Although we're not huge, we do have a fair number of dedicated/colo servers -- some for over 2 years. All of them pay monthly (except one that pays quarterly). And we haven't had a single person cancel yet. I have nothing to gain by offering them 2-3 months free just because they pay me in advance.

We have quite some customers pay for half a year in advance...

We stopped even listing pricing for 3,6,12 months on dedicated and colocation because no one purchased it anymore. We have maybe 5% that pay for 3/mo at a time. Most people want a huge price break to pay for a year up front, we price as low as possible and we cannot afford to give another month or two free.

If you can afford to give them 2-3 months free and still have low pricing, I suspect you will have some takers on the pre-paid year.

Regards

Originally posted by synapse
If you can afford to give them 2-3 months free and still have low pricing, I suspect you will have some takers on the pre-paid year.

I know if I was offered 2-3 months free by a reputable company for a dedicated/colo if I paid a year in advance, I'd take it.

We offer 2 months free if you pay for 10 months in advance....and very few clients actually opt for that payment method. This is for dedicated/co-lo clients....Our virtual hosting clients, which we offer the same deal to...take us up on that very often. Dedicated/Co-Lo offerings are high ticket items, and not as easily paid for in advance.

Sean R.
BurstNET

Originally posted by BurstNET
We offer 2 months free if you pay for 10 months in advance

Why, though? What's your advantage? I see the potential advantage for the client, but not for the host.

Cash Flow.
$3000 is worth more to us now, than $3600 later....because that money can be put now into advertising, and will generate revenue above and beyond what we would have gotten from those two months we gave up revenue from.

Sean R.
BurstNET

Ah, okay. That makes sense. We really haven't done any advertising yet, but it's something we're considering. But that's probably another thread altogether.

well, even if you are not doing advertising yet ... that $3000 upfront is definitely more useful for you ... Basically the client will pay for the whole server and you don't have to wait several months until the server cost is covered back by the monhtly revenue off the server...

cheers,
:beer:

As a soon to be dedicated hosting customer, I would be very suspicous of a company that relied on an up-front advanced payment model (as opposed to one which offered it along with the monthly option). Companies which rely on such a cash flow model (requiring pre-payment) are often not built on sound financials. I know this in not stricktly OT but I had a spare two bob in my pocket :)

Originally posted by dektong
well, even if you are not doing advertising yet ... that $3000 upfront is definitely more useful for you ... Basically the client will pay for the whole server and you don't have to wait several months until the server cost is covered back by the monhtly revenue off the server...

But if you don't need the money right away...

I guess the changes if you're buying 100 servers a month instead of 10.

Either way, seems the point is moot, because most people don't want to or can't pay annually anyway.

well, it depends..during our first month of getting a dedicated server or co-Locating a server to a NOC, we usually pay the months fee after that if we are happy with the network connection/uptime, tech support, etc.. we then call the said NOC and ask them, if we pay for 3/6/12 months in advance, can you give us any discounts ? extra bandwidth free? etc..

Well, the other obvious reason, is that if a client seems happy with a deal or the service (although they usually get the service only after paying), then it's more of an incentive to the client to sign up if they can get a couple of motnhs hosting free. If you raise your prices a little (obviously you're making a profit anyway by offering a plan), then you can still make (likely enough or close to the same amount of) enough money to make it worth it, and to the client too, more of an incentive, more money now and go for more of quantity instead of trying to get a little more from less people.