How do most of you other hosts out there calculate your average cost to gain a customer. How do you put a value on what your target is for advertising, referrals etc.

I'm thinking about running a promotion, but I want to run numbers on it to see if it is a viable promotion. (IE, is the money going into the promotion worth the return)

What is your budget? Advertising can cost alot depending on which methods you use. Local advertising I imagine will be the cheapest and most effective (although I've personally never tried it). Google Ads can become quite expensive after awhile, however, averaging several dollars a click. Also you can use advertising by the impressions with sites like hotscripts.com, etc...

Well, I had a $1.99 promotion to start off my host. It was a success! As a result, I probably gained $1,000 in sales from referalls, etc.

Defaintely worth it. Even if its like giving away, just say the catch is simple... just try to hope our host grow by telling your friends about our great service and we will be more than happy to provide for you!

Advice from me... expand services as customers come so they will be happier, and tell friends/family/co-workers.

I recently obtained tollfree support. People are liking that, though our hosting isnt working well while tomsyer is screwing us over... BAD TOMSYER!!!

Was your $1.99 promotion total price or cost per click? Can you provide more details on your promotion since it was so successful. Thanks!

Well, I'm actually trying to think of how to figure the cost per customer to get them. IE, if you spend $1000 on advertising, and get 10 customers, those customers cost you $100 each.

What is a normal price range to expect to pay per customer?

I read in the magazine that The Whir publishes that the big time web hosts pay All-told somewhere around $140 for each new customer they sign-up.

Originally posted by CompleteSSL
I read in the magazine that The Whir publishes that the big time web hosts pay All-told somewhere around $140 for each new customer they sign-up.

That is insane... Of course, they have the infrastructure to afford that much.

IMHO it would be a bad business decision to spend more money than a client will bring in for a year to gain that client. Small businesses need to see shorter turn around on their investments since they are working with much less capital to begin with.

Originally posted by CompleteSSL
I read in the magazine that The Whir publishes that the big time web hosts pay All-told somewhere around $140 for each new customer they sign-up.

If that is correct then they need to taje a serious look at their adveritising and hire people that know what they are doing.

They may be able to afford to pay that, but there are underlying problems if they are paying that much.

underlying problems that made them huge?

Huge does not mean successful.
Cash flow does not mean profit.

Originally posted by Wullie
If that is correct then they need to taje a serious look at their adveritising and hire people that know what they are doing.

They may be able to afford to pay that, but there are underlying problems if they are paying that much.

Every market is different. Of course $140 seems like a lot to you, however to the larger and often more successful hosts, that's not the case. I don't know what Lunarpages spends, but my guess it's in the $100ish range, and I'd slide them into that "successful" catagory.

Originally posted by HP-Kevin
underlying problems that made them huge?

Just because they are huge, doesnt mean they make wise business decisions. IE Enron.

Originally posted by HP-Kevin
underlying problems that made them huge?

The original quote was:

the big time web hosts pay All-told somewhere around $140 for each new customer they sign-up.

Its says they are paying this now, it doesnt say they started out paying $140 per signup so don't jump to conclusions that $140 per signup made them huge in the first place.

The only time I would expect shared providers to pay this type of money would be when they are trying to break into a new market. 1&1 in the US for example.

Originally posted by Mark_TVI
Huge does not mean successful.
Cash flow does not mean profit.

This is so true. Most people do not think this way though, they see a huge company and assume because they bring in loads of money, they are financially sound making huge amounts of profits.

Originally posted by nickn
Every market is different. Of course $140 seems like a lot to you, however to the larger and often more successful hosts, that's not the case. I don't know what Lunarpages spends, but my guess it's in the $100ish range, and I'd slide them into that "successful" catagory.

For other services such as web design for example I would put a higher price on it because of travelling to potential customers premises etc for pre-sales discussions. However for hosting which is pretty automated a lot of the time and less time consuming for pre-sales (I bet most pre-sales don't take more than about 5-10 minutes of your time) then I would put a much lower cost on it.

Sure you have brand awareness building to consider but take your Lunarpages example (I realise its fictional figures).

They have 50,000 websites so lets say about 30,000 clients. 30,000 at an average of $100 totals $3M advertising. Lets say 25% of those customers were refferals and they are paying $52.00 for their referral commisions. This starts to put the figure they are paying for non-referral customers up considerably above the $100 mark.

For that type of advertising budget, (assuming the figures are correct) then in my opinon they should have more clients than they currently do.

Obviously the above figures are totally off for many reasons, but they give a general idea of what I mean. No offense to Lunarpages, I was just using you for a fictional example.