Ive been a member of WHT for some time now, and i have done an awful lot of research into the world of hosting, i have now noticed that since i first signed up at WHT the prices were quite high for hosting, however lately prices have dropped dramitically, how is it possible for a small host just starting out compete with such low prices, should they make a loss until they have got a good enough name for themselves, and have simailar prices, or should they charge higher prices, and aim at a different target market until they have the knowledge and reputation required to make it big in the hosting world...

Your views on this would be most apprecited.

I would strongly recommend against starting off with prices where you're not at least breaking even per account (especially in bandwidth cost). You might (most likely will) get into a trend where by the time you're known well-enough, you're out of business because all those accounts that you sold with a loss will be dragging you down too much. And then, telling all of them that "Oops, now the prices are 50% higher" will not go well and your reputation will go down the drain...

Prices on a global scale have gone down quite a bit, yes. However, the local markets are not affected as greatly. On the other hand, there are quite a few companies, such as HTTPme, that don't charge rock-bottom prices and seem to be doing extremely well (IMO) on a global scale. By global scale, I mean competing on a (inter)national market rahter than a local one.

Good luck,
Max

I myself run a somewhat new hosting company aswell and there are several wasy in my honest oppinion to be sucessful in todays market. The best way is to find your niche among the interent and focus mainly on that niche. Or in my case, I offer low and competitive prices with Hi Quality services. But what really sales me is word of mouth. Almost 80% of my customers come from word of mouth. It's like playing telephone when you were a kid. You whisper something in someones ear and watch as 40 other people whisper it in each other's ears aswell. I told a long time friend i started my hosting company and asked him to pass the word on. Little did I realize his friends were passing the word on and their friends and so on.

Out of curiosity, is the 80% based on some sort of statistic, or are you just throwing a number out? ;)

Word of mouth is a good tool, but generally only once you're an established company. Telling one person will very rarely produce the results you're describing right now

Originally posted by moohost
Out of curiosity, is the 80% based on some sort of statistic, or are you just throwing a number out? ;) Silly and unnecessary question.

The man is trying to help the thread starter with some sound advice - niche marketing and WOM advertising. Why are you trying to belittle him?

Vito

I am not trying to belittle him, and I do appologize if it sounded that way, however, I go back to my original statement that word of mouth can generally be useful only once you are established, I wish that someday 80% (or even a smaller number) of my clients come from word of mouth, but you can't expect things like that to happen on their own.

I have found in my experience that word of mouth can truly help. Often I will complete a job for someone and then they will tell someone else about my services and that person will become a client.

Fair enough (although it did sound like you were taking a shot at him).

True, WOM travels much quicker when you have a base to work with. But it can still work (at a slower rate) starting with your very first customer.

I am not a full time host, although I do have a small hosting site. I have never advertised it anywhere. I started with one local design client where I also hosted his site. WOM starting with this ONE customer has given me 64 local hosting clients.

Vito

webhosting is a serious business. You could be earning lots in months but on the other hand, managing them is fun for a new webhoster,good luck

:D great reponse, cheers every one, ill keep u updated on my progress

Simple, dont compete:)
Find an angle or niche you can supply to that others simply do not or that do not do it appropriately.

In hosting thats hard to do because so many angles are already covered, but there are few left:)

Best of luck!

find a niche offer quality and you don't have to have the lowest price.

.........and word of mouth will take you far.

Rule number 1:
Do not compete on price in today's market. There are too many little kids who have no overhead costs besides their little reseller account, and will rape you with their prices of 50 cents per year.

They will usually always catch the person looking for "the cheapest." Guess what though....since that kiddie host didn't count on growing up, and having real bills....he'll eventually need to get a real job, either leaving his hosting biz all together, or slacking off to the point where his customers are extremely pissed.

Either way...your, quality, fairly priced, service looks more and more appealing to these shafted customers. Why? Well, because it's then they realize....you get what you pay for.

As others have mentioned...find a niche. Don't target just everyone in general. The best idea is to target the audience you know most about...whether that be NASCAR fans, local businesses, churches, etc... Pick the one or two that you know most about. Then put out marketing that suits them. That should be easy if you pick something that you are passionate about as well.

In regards to WOM marketing....it makes absolutely no difference how established you are. It works.

You cannot become established with no customers. So you gain your customers by marketing, and WOM is the best form of such.

WOM works off of the basis that you only need one satisfied customer to spread the word...and more will follow after him.

Word of mouth worked for Jesus, and he was only one man ;)

DON'T COMPETE ON PRICING. USE INNOVATIVE MARKETING TACTICS!

That is all.

Yes competing on pricing is a bad idea. But if you have something that no one else has or no one else does right then you set the standard.

Originally posted by coight
DON'T COMPETE ON PRICING. USE INNOVATIVE MARKETING TACTICS!

That is all.

I'd say you are competing on prices though from the look of your META title on your website.

However, WOM is the best advertising tool in my opinion. It works even better if you give your clients that are getting you more clients some sort of reward or bonus.

Yeah. yeah... WOM and REAL WORLD marketing is a good way to start. Actually, the most important thing is: What kind of people are you offering your services?

-newbies?
-normal internet office users?
-advance users like us?

For example, advance users like most people here in the forum ( I guess) will look for low price with huge space and bandwith.

But, for normal users, they may pay high price for brand and 'reliability' of your brand.

And rookies don't want to even touch the keyboard.. it would be great to 'you do all the stuff for us' and charge less than what I pay for a A&F cloth. LOL

Actually I would have to disagree, and say that the "rookies" would be looking for cheap price high specs...because they know no better.

Try local market. Thats a good place for startups.... Offer new business's free design work if they host with you, etc.

Originally posted by itsmesee
Try local market. Thats a good place for startups.... Offer new business's free design work if they host with you, etc.

I completely agree. There are so many local markets that are still untapped. There are still plenty of folks who make a solid living as a web host charging prices like $18/month for 100mbyte storage and 5GB bandwidth a month and not offering a control panel, or anything of that sort.

Doing what I do I get the pelasure of working with a lot of folks in the local market.....I know for a fact their is plenty of market left. If you go global, you are going to be forced to compete on price, because face it, there are some of the big boys out there who offer decent service for very low prices that you just can't compete with, and if you try, you'll be wasteing your time.

Prices didn't drop too much. Most companies do just have freaky advertising campaigns like selling unlimited everything for 1 Dollar but when you go to their websites it says that the 1 Dollar offer is only when you pay for 2 decades in advance and if you want to pay monthly you pay 25 bucks.

Originally posted by nickn
I completely agree. There are so many local markets that are still untapped. There are still plenty of folks who make a solid living as a web host charging prices like $18/month for 100mbyte storage and 5GB bandwidth a month and not offering a control panel, or anything of that sort.

I agree with the statement, 100%.

Local market's have many sub-niche's - real estate agencies, doctors offices, etc..

Once you get in with one, you can alost guarantee the other's in the same sub-niche are going to be interested.


Simon

so what's better...cheap prices high specs? or high specs reasonable prices, or reasonable on both.

Originally posted by IHSL
I agree with the statement, 100%.

Local market's have many sub-niche's - real estate agencies, doctors offices, etc..

Once you get in with one, you can alost guarantee the other's in the same sub-niche are going to be interested.


Simon

Yep...We have a customer who choose to focus on pharmacies...he has 30-40 sites, some with online ordering, but the majority having 2-3 pages. Very simple..yet very effective (for him).

Originally posted by ANMMark
There are too many little kids who have no overhead costs besides their little reseller account, and will rape you with their prices of 50 cents per year.


Agreed with the too many little kids and the "raping" part ;) But every business owner should look at how to cut down the overheads to as much as possible and still providing the same level of support and competative edge.

As for Word of Mount its a double edged sword..... Do good and it gives you wonders... do bad... and all is lost....

Now for the original poster's questions ;) I also find that charging low to get clients and then suddenly charging a lot again would definately put you to ruins....

The best way to determine your prices would be to calculate how much a server can take, divide i by the amount you pay per server and then do a mark up of maybe 20 or 30%
Of course taking into consideration what ever overheads you have :)
So if you see a $1/yr for 100GB webhosting plan, you know that it must be some moron trying to kill himself and his clients along with it.