Back in 97 when I started my hosting biz there where only a few hosting companies (i.e. addr.com, icom.com) who'd sell cheap web hosting. By cheap I mean web hosting packages big enough for most people for less than 10 bucks p/mo. Now hosting prices average $8 or so for your basic package..

I think this has really hurt the industry.. To make the same profit as you'd make from 500 customers @ $13 p/mo, you now have to host over 800 sites. This means the same profit, but more work, more support, more billing, more problems, more headaches... And because you are not making enough profit to hire the needed staff, your level of service takes a dive and this in turns hurts and angers your customers!

I mean, let's face it.. we are hosting for profit and anyone who sells dirt cheap hosting is probably thinking that more customers means more profit.. how wrong.

In a few years, we'll be hosting 10,000 accounts with enough profits to hire two tech guys and lease ourselves a Toyota Camry.

Shouldn't we try to stabilize the industry rates and let quality of service and support distinguish us?

This is, unfourtunately (for webhosting companies), the inevitable. Once there is more competition, rates significantly lower so that small companies can compete with established giants. This is the way it goes in any business, well, except for oil, they have OPEC :D

You get what you pay for and any businessman/woman worth their salt will know this simple equation. Trying to undercut yourself to beat the competitors will only end in tears. Keep it realistic and your customers will respect you for it.

I've had customers ask me why I don't drop the setup fee, simple I tell them "this covers the administration and setup of your account and should you decide to leave after only a few months, it covers the cost of the domain name as well".

Our prices will rise again after Christmas, in line with added business - we charge what it costs to maintain a good reliable and honest service!

Honesty, Integrity and Credibility are what makes a good business these days.

good for you :)

I too charge a modest setup fee and after a lot of thinking as to wether I should drop it so I can better compete with other hosts, I decided against it. This is what I need to charge to keep my services top notch. I will not undermine my company!

Prices are inevitably going to drop, as the cost of doing business falls. Both servers and bandwidth are an order of magnitude cheaper now than even three years ago -- why shouldn't prices also be lower?

Yes, there is a cost to user support; yes, hosting plans now are generally more generous in terms of bandwidth and disk space; however, there are some hosts which provide very limited support and have not increased their quotas significantly. To argue that they should keep their prices high does a disservice to consumers.

Well, there are a few areas that increase, such as support salaries. While I won't pick apart every aspect of hosting, I will say that I'd expect my cost for a ram upgrade (for example) on a dedicated server, to be a bit lower than it would have been last year. I think I have some $87.00 Crucial 64 MB memory in my old home computer bought quite a bit ago. I think it is $33 for 256 MB now...

Originally posted by Chicken
Well, there are a few areas that increase, such as support salaries. While I won't pick apart every aspect of hosting, I will say that I'd expect my cost for a ram upgrade (for example) on a dedicated server, to be a bit lower than it would have been last year. I think I have some $87.00 Crucial 64 MB memory in my old home computer bought quite a bit ago. I think it is $33 for 256 MB now...

I disagree....

I still pay top dollar for my ram.

Comparing a generic ram $19.99 for 256 (i see it in stores)
to
NameBrand like Micron, etc $49.99 for 256.

I have learned it after ram failing to utilize its full potential on 2 of my comptuers and my tests was right, both machines with the same specs but the one with the micron ram ran more smoothly.

Originally posted by Synergy
NameBrand like Micron, etc $49.99 for 256.


Yes, but that's still pretty cheap compared to spending $800 for 128kb of RAM. Ok, the WWW wasn't around back in those days, but still, even for the Name Brands, prices have dropped dramatically since when most web hosting companies started up.

Originally posted by Synergy

Comparing a generic ram $19.99 for 256 (i see it in stores)
to
NameBrand like Micron, etc $49.99 for 256.


But Micron RAM doesn't cost that much anymore. The prices seem to drop every week. Crucial.com (Micron's direct sales site) is charging $27.89 for a 256 meg PC133 DIMM right now, with free shipping. That's CL3 non-parity, but that's what the cheap almost all of the RAM you see in store is going to be, and Crucial will sell you a 256 meg ECC CL2 PC133 DIMM for $31.49. Still dirt cheap and still Micron memory.

-Joe

Prices are inevitably going to drop, as the cost of doing business falls. Both servers and bandwidth are an order of magnitude cheaper now than even three years ago -- why shouldn't prices also be lower?

Same in the ISP business. Yet AOL and Earthlink raised the price.

Hardware can get cheaper, sure. But technology always finds a way to create the latest and greatest. This cost more money. Also, software doesn't get cheaper.

Who cares what the going rate is?
Are you *gasp* saying that you are like every other cheap-ass hosting ($8/month) company out there?

I know of an Adult hosting company who's prices are a lot higher than the going-rate and all their customers know that as well, they don't try to hide it... they say so on their site.

Why do they have many customers? It's their service.

I would surely pay more than $8/month if I wanted decent service.

You absolutely get what you pay for.

I know for a fact I will not have any hosting plans for $8/month, my service is worth more than that, is yours?

I hope I got your brain stirring :)

Half of the thread is about hardware prices - but drastically spoken: who really cares what 512MB cost? The main costs are bandwidth and employees. And I don't expect to drop costs for employees.

The cost of employees might not drop, but the cost of bandwidth certainly has. Bandwidth prices drop anywhere from 50% to 75% each year on average.

Originally posted by cperciva
The cost of employees might not drop, but the cost of bandwidth certainly has. Bandwidth prices drop anywhere from 50% to 75% each year on average.

Employees are more important than bandwidth.
Soon everyone will have 100mbit to their houses for $10/month, but they all won't have the skills to manage their own servers and such.

I think abzug is right.
And some will find out the hard way that they have to pay reasonable $ for reasonable technical skills.

I agree that you get what you pay for, we charge more than the average price out there (But hey we're in the UK) but that allows us to spend on top notch equipment, it allows us time to grow steadily and maintain good support at all times, rather than reputation damaging spurts where we wouldn't be able to provide our usual top notch support. We've never had a customer complain about the prices we charge and why? Because we've never had a customer complain about the support we give.

People realise that support costs money and people are willing to pay and will always be willing to pay to have their hands held when they need it.

I'm with Karl on this one. We made a decision a long time ago to not bow to the price war, and as a result we're still here when a lot of the bottom feeders have gone back to flipping burgers at McDonalds, and we're still growing *shrug*. We might not get out hundred signups a day, but we still turn a decent profit taking care of the people that do think we're affordable enough.

Greg Moore

Greg, that's what I call reasonable price (BTW, you have a similar price structure as we). A price that is not a rip off but also not a $3.95 for everything.

Well it is only understandable that as more people get online and the web hosting industry pie get fatter, more people want a share of it. It is up to those first movers to be dynamic and ome up with strategies to keep them competitive. This is what differentiates the winners and the loosers in my opinion.

Daff
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