I was wondering what people think about setup fees. I mean, would you as a customer not signup with a host because they're charging for example $10 setup fee?

Some hosting companies take very high setup fees. $500 for a server setup or $100 for a virtual server setup is absolutely too much. I would never signup with such a company.
$10 setup fee is ok.

Personal opinion below.


Competition is so tight that new hosts offering setuping fees are at a disadvantage. Why sign up for a host that includes a set up fee when you can get the same service from a host with no set up fee? Some hosts that have a good repuation with support can offer setup fees. This is because people know this host is good and could be worth a little extra money for the good support. But a new host has no reputation.

I think you're both right. It depends who is charging setup fee and how much they're charging. Although if you think about it, a setup fee could mean "it's hard work setting you up, so we're gonna charge you for it".

well some people charge a setup fee because they have to pay a control panel license or something like that... other charge setup fees to avoid people that are really not serious about what they are ordering. do you think that if you really care about your site you will signup for a $1 per month plan with free setup? I mean there are a lot of reasons why companies charge them. do you think it cost Verzion $80 to setup your business phone line?

I agree, there is too much competition.

Setup fees are tempting because they might help you spot dodgy credit cards straight away but thats about the only plus I can see with all the free setup competition. But I suppose you could work it as an admin charge which gets refunded at the end of a hosting contract or period with a customer, or discounted off the first 3 payments thereafter, etc.

$0 to $15 setup fees are ok, after all, quite a bit of the time, the user is recommended to that host by a current client, and if the setup fee is under $20, they will still signup

After all...like i say...Everyone and their grandma is a hosting company today, the only thing that sets you apart from everyone else is how you treat your customers. After all, look at Hispeed, look at HostRocket

Two very separate companies (when Hispeed wasnt bought out by USNET) and one offered a $40 setup fee, the other $10 setup fee, yet they both have thousands of customers.

So although the newly started company might have more use of the setup fee money, you should build up your reputation first and then charge what your service is worth. Am I right?

Mr. Amazon....

You learn well my student ;-)

I think setup fee is fine, but not high setup fee.

Everyone has to contribute to maintain the server right?
I assume hosting companies use setup for maintainence purpose.

The only reason why we have a setup fee is to pay our affiliates. I always tell customers that they can get around the setup fee by signing up as an affiliate and referring themself.

Our affiliate program has been very beneficial at getting us additional customers.

But even if we didn't have an affiliate program to pay for, we'd probably still charge. I believe that a customer willing to pay a setup fee is more likely to stay longer. They're thinking "I only have to pay it the once".

While customers who aren't serious about their web site, and may not have it for very long are thinking "What if I cancel right away, then it doesn't equal out".

IMHO.

Originally posted by bitserve
The only reason why we have a setup fee is to pay our affiliates. I always tell customers that they can get around the setup fee by signing up as an affiliate and referring themself.

Our affiliate program has been very beneficial at getting us additional customers.

But even if we didn't have an affiliate program to pay for, we'd probably still charge. I believe that a customer willing to pay a setup fee is more likely to stay longer. They're thinking "I only have to pay it the once".

While customers who aren't serious about their web site, and may not have it for very long are thinking "What if I cancel right away, then it doesn't equal out".

IMHO.

So you're saying that you only want customers that are planning on staying for a long time and by charging setup fee you're driving the ones that only need your services for let's say 3-4 months away?

It's not so much the ones that only need the service for 3-4 months.

It's the ones that don't KNOW how long they'll need the service for, because they have no long term plan.

I've personally never seen it as a justifiable expense. I feel people shouldn't be penalized if they sign up then decide they'd be better off elsewhere. It doesn't cost us much in time and labour to set an account up after all. (virtual accounts)

Regardless of whether we could do it and maintain signups rates, I don't think we'll ever be doing it...

Greg Moore

Originally posted by akashik
I've personally never seen it as a justifiable expense. I feel people shouldn't be penalized if they sign up then decide they'd be better off elsewhere. It doesn't really "penalize" anyone though, or at least doesn't have to. Presumably charging a setup fee would allow a lower ongoing monthly fee. It frontloads the payment for an account, meaning the longer a customer stays the more it benefits them. But there's a break-even point at which the effect for the customer is exactly the same. For example, a host planning to start operations might decide to set prices at $10 monthly for a package, or at $9 with a $5 setup fee. For a customer staying for five months, the net effect is the same.

OK, I suppose you could say that "penalizes" those that only stay for a month or two, but you could also say that it rewards your long-term, stable customers.

Yeah, what JayC said. :)

When talking about shared servers, setup fees seem somewhat unfair. Why? When you set up a shared hosting account, the process is autmoated from start to finish.

Not to say that all set up fees involved with shared hosting are bad. For instnace, if the user asks for additional services that require a tech to d work to set p, like extra datbases, adding *certain* features, etc.

Also, set up sounds fair when it comes down to anything related to a dedicated.

Originally posted by gnorthey00
When talking about shared servers, setup fees seem somewhat unfair. Why? When you set up a shared hosting account, the process is autmoated from start to finish. I think I may have said this in another thread a while ago, but for the sake of accuracy those hosts that do charge them would probably be better off not calling these charges "setup fees." Because that does imply that they are meant to cover a direct cost of setting up the account, and that's certainly not -- for shared hosting -- what they really are. They're really just a mechanism for managing (improving, from the host's standpoint) cash flow. Perhaps "startup fees" would be a better term.

From a marketing standpoint, though, the implication that there is a logical reason for them that's made by implying they cover costs of setting up the account might have value. At least, for those customers that don't realize how simple setup really is these days.

Perhaps like mobile phone companies put it when you register a phone or and account.

Registration and/or Service Charges?

Another thread on this issue http://www.webhostingtalk.com/showthread.php?s=&threadid=26284