I was checking the advertise forum. And I see that some host offer their service for $4 with 5 GB/mo.
I know that they are playing the probabilities game (like everybody).
But I think that prices are too low.
In my country that is called "dumping" and is against the law (that is because some big companies lowered the prices making that small companies cannot compete with so low prices and they must close his doors).

Just my $0.02

I fully agree regarding price but disagree regarding "dumping". :)
I would only sell something for 5$ if I don't have to provide any support (newspaper, hamburger). The most costly thing is not bandwidth but technical skill.
In our business most of the time not the big companies lower the prices but the small ones - especially the one man show where the owner thinks he can afford this. If time shows him that this doesn't work he stops either the business or he struggles for higher prices - but usually the next one shouting "cheap! cheaper" will wait right behind him.
If you sell an account for 5$ a month and you have one support call per month (some have more, some have less per month) you are loosing money.
Just my 2c. :)

It's not price dumping. That generally refers to a physical product with a known and fixed cost where a company sells at below cost in order to drive out smaller competitors and gain market prominance, if not dominance. That's much harder to do with services.

Many industries have those who sell by price, especially cheap prices. There are also those who sell by value. You simply have to decide which market to appeal to and not be concerned with the rest. No one company can be all things to all people.

I think it depends on how the company is structured. Say you have a $5.00 a month hosting company but the customers are only alowed e-mail support and have to sign a yearly contract. That could be a low cost profitable company.

On the other hand if you have a $5.00 a month company with unlimited phone support and a monthly contract you probably won't last for long.

Just my .02 cents.

i like low price hosting...good for 14 year olds who pay for hosting with allowance like me

The market will eliminate those hosts when they can't support their business with $5 accounts. Their clients will be back in the pool looking for hosts soon enough.

-t

Creepcolony, why do you think that host charge more than other? Just to make more money?
If 1 GB cost is $2 (at least) and some host offer 5 GB for $5 how do they do? how do they pay for the tech?
Maybe, you do go to get any support or if you use what they offer you account would be closed.
Maybe is good for you if you don't have problems in move your site time by time from 1 host to another.

Originally posted by Walter
The most costly thing is not bandwidth but technical skill.

Could not have said it better myself. A lot of times customers claim that they can get twice as good a 'deal' at one host than another.

Upon investigation, the good deal host is often times a reseller for some unlimited bandwidth host. They can lower their $/gb charge to nearly nothing because they have "unlimited bandwidth"! Customers flock to that host, thinking they're getting a good deal. Sad part is, we see them back here in the boards looking for another "good deal host" a week later and with horror stories.

On the other hand, the host that was twice the price owns and administers their own servers and either colocates or owns their own NOC. They also know what they are doing, and theoretically know a good deal about administering a server themselves.

In the end, to compliment Walter's comment, you don't pay for bandwidth, you pay for the support you get out of that host. :)

If you take a look at the percentages nearly only 5% of your clients will use there allocated resources, thats how :)

and how about the support? :)

How efficiently a company is run can have a HUGE impact on whether or not they can stay afloat when offering low price. If things are not done to cut extra costs without making the product suffer, the company will not survive.

-Brendan

Dear Jedito,

There are many ways to cut support down, eg, large faq base online, forums (where other users can help each other), manuals etc..

Regards,
ValuableHost
Originally posted by Jedito
and how about the support? :)

One thing that wasn't mentioned too much is. People who start a hosting company off their Cable connection so their server is in the home. Sure you can give away all sorts of things but in the long run the connection is going to suck not to mention they are probably violating the ISP's contract and would be shut down, leaving alot of po'd people. Cheapest bandwidth I've ever seen from a NOC is $1.50 /GB

Brendan,

Have your prices always been $12.95/mo? Or were they $9.95/mo at one stage? The reason I ask is that you guys have had a lot of growth. I wanted to see if you felt the need to increase price.

LOL! whoever runs a server off his cable connection is not in his right mind!
Originally posted by Newbie
One thing that wasn't mentioned too much is. People who start a hosting company off their Cable connection so their server is in the home. Sure you can give away all sorts of things but in the long run the connection is going to suck not to mention they are probably violating the ISP's contract and would be shut down, leaving alot of po'd people. Cheapest bandwidth I've ever seen from a NOC is $1.50 /GB

Originally posted by Hostexp
LOL! whoever runs a server off his cable connection is not in his right mind!


umm..

*alpha shuts down Apache web server on his comp

dang, now where'd i put client list??? i gotta make some calls now :D :laugh:

warning: just joking above... or am I? :nuts:

i understand people that just have a simple webpage that don't mind the $5 a month, but in all reality, why wouldn't someone go with a reputable company that is $20 or even $50 a month that has great support, i would think in the long run it would be worth the headache. If I ran a hosting company and only charged $5-$20 a month, I wouldn't even provide support, my time is worth more than pennies.

I do not agree with you, someone who has $5.00 plans would also have plans ranging from $20-$50 at least. This way if customers like the $5.00 plans, there is a chance of them upgrading to the larger plans. Don't forget, cents = hundreds, it all adds up.
Originally posted by JKLIVIN
i understand people that just have a simple webpage that don't mind the $5 a month, but in all reality, why wouldn't someone go with a reputable company that is $20 or even $50 a month that has great support, i would think in the long run it would be worth the headache. If I ran a hosting company and only charged $5-$20 a month, I wouldn't even provide support, my time is worth more than pennies.

If I ran a hosting company and only charged $5-$20 a month, I wouldn't even provide support, my time is worth more than pennies.

We see this almost everyday. People asking about our service because their web host went out of business. The trend seems to be to:

1) Start a hosting company because you will be rich.
2) Provide great support because you are excited about your new company. So you sit in from of your computer 24/7 helping new customers.
3) You have a little trouble getting customers so you offer cheap hosting for a few dollars over your bottom line.
4) A year later you have 1000 customers.
5) It dawns on you that with 1000 customers I only make 1 - 2 k a month in profit. This is barely enough to survive.
6) You get tired of sitting in front of your computer 24/7, so support goes down hill. You can't higher someone with 1 - 2 K.
7) You fold shop.

Of course all business markets suffer this. But it just seems that with the low cost barriers to become a web host, this industry sees it more.

Originally posted by UmBillyCord


We see this almost everyday. People asking about our service because their web host went out of business. The trend seems to be to:

1) Start a hosting company because you will be rich.
2) Provide great support because you are excited about your new company. So you sit in from of your computer 24/7 helping new customers.
3) You have a little trouble getting customers so you offer cheap hosting for a few dollars over your bottom line.
4) A year later you have 1000 customers.
5) It dawns on you that with 1000 customers I only make 1 - 2 k a month in profit. This is barely enough to survive.
6) You get tired of sitting in front of your computer 24/7, so support goes down hill. You can't higher someone with 1 - 2 K.
7) You fold shop.

Of course all business markets suffer this. But it just seems that with the low cost barriers to become a web host, this industry sees it more.

That makes the assumption that the profit margin is really that low, and that all 1000 customers sign up and remain permanently on the lowest-cost plan. That's just not the reality. We celebrate our 3rd anniversary this year, how's that for proof of longevity and that it is more than just possible? ;)

There are an awful lot of assumptions being made here.

I am not the big guy trying to run the small guy out, but the small guy trying to compete.

I did not necessarily want to start offering such cheap plans, but my competitors were and I was losing customers to them. Ironically, these were the customers that never seemed to need support (and they don't get or need massive bandwidth)

But I do agree, that you should be careful when signing up for hosting. Some of those cheap plans are a bad deal in the end. Buyers should always beware. :)

but you don't have extremely low prices.
I'm talking about sites that offer package for $4 or $5 with 200 MB space and 5 GB transfer.

Well, then yes, they are playing the odds and will lose out in the end.

I rank those kind of hosting companies in the same category as those that say "unlimited", because that is what they are trying to say without saying it.

We celebrate our 3rd anniversary this year, how's that for proof of longevity and that it is more than just possible?

Your business is based on bringing in accounts with a teaser rate of $5.00 and upselling as they grow. This is not what is not being addressed by Jedito. He is talking about the company giving away the farm for $5.00

Congrats on three years. :cool:

Originally posted by shpilkus


That makes the assumption that the profit margin is really that low, and that all 1000 customers sign up and remain permanently on the lowest-cost plan. That's just not the reality. We celebrate our 3rd anniversary this year, how's that for proof of longevity and that it is more than just possible? ;)
Craig, I check out your site, and you don't offer 10 GB for $10.
Is not about sites like your this theread. Is more for sites that offer ridicullus prices offering a lot of things.
As I say before, sites given 10 GB and 200 MB for $7 .
How much margin did you give to your customer to upgrade plans? Even if they want to upgrade because he need more than 10 GB of bandwidth..you're loosing money a lot!

Billycord,
Wow you must be a mind reader!
Thats exactly what happens to most people, they offer really low prices and offer good service at first , but the real low prices doesn't make them too much money and then.. they lose interest.

A Classic!


Originally posted by UmBillyCord


We see this almost everyday. People asking about our service because their web host went out of business. The trend seems to be to:

host, this industry sees it more.

I definetly AGREE with you! Its usually the smaller companies with leased dedicated servers that offer the lower prices, due TO the fact that their is TO MUCH competition. Most people think the lower the prices are and the more sales, works for most places but NOT WHT! But i don't see anything wrong with that, don't forget 5% of users use there allocated amount.

Regards,
ValuableHost
Originally posted by PagesUSA
There are an awful lot of assumptions being made here.

I am not the big guy trying to run the small guy out, but the small guy trying to compete.

I did not necessarily want to start offering such cheap plans, but my competitors were and I was losing customers to them. Ironically, these were the customers that never seemed to need support (and they don't get or need massive bandwidth)

But I do agree, that you should be careful when signing up for hosting. Some of those cheap plans are a bad deal in the end. Buyers should always beware. :)

Originally posted by Jedito
Creepcolony, why do you think that host charge more than other? Just to make more money?
If 1 GB cost is $2 (at least) and some host offer 5 GB for $5 how do they do? how do they pay for the tech?
Originally posted by Jedito
I'm talking about sites that offer package for $4 or $5 with 200 MB space and 5 GB transfer.

Valuablehost - $5.95 - 150meg - 5GB
Below10host - $7.75 - 200meg - 5GB (using customizer)
noxraq - $6.99 - 100meg - 3GB

I know these aren't all exactly the stats you listed, but they're pretty close. I mean, the below10host is almost $8 for what you used as an example. That's still pretty cheap. Would it be your contention that at these prices these hosts can't survive and/or support their users?

Thanks,
A guy in search of a lowprice host...