I was wondering what everyones opinions are on pricing strategy. Each pricing strategy is very different and can obtain different results and I would like to see what has been sucessful. It seems that most companies in the hosting industry offer a very low price and hope that by obtaining a large number of customers they will still make a profit. Other companies charge a higher price and need fewer clients to do so. Then there is the issue of quality. The more quality service you offer the higher your prices must go to cover costs. However, I don't know if the trade off for quality is benefical in this market. By charging more to cover your costs you are providing the customer with a better service, but do customers actually see this and pay more? or do they go with the cheaper service?

The reason I am asking this is I am considering the option of restructuring my pricing strategy. Currently I am offering a superior service built on high quality servers, great support, etc. To do this I am ONLY targeting my local market. However, I am having a tough time getting clients. When I speak with them they seem impressed by my offerings but in the end the decided to go with (or stay with) a provider that offers hosting at a very cheap price.(without the quality). Should I stay where I am at and keep working at it? or should I lower my prices?

Feel free to post your opinions and experiences. Thanks.

if you are going for a local market you have to know your local market...

is your price structure meeting their needs? if not you need to make some adjustments... either match what they are looking for or go for a different demographic...

it is obvious that a change is necessary... but which one is more feasible for you to make?

Do the math - what it costs what you nede to make and what the market is willing to pay.

don't go cheaper than you can afford just to undercut rivals, companies do not always choose the cheapest option and those that do well they probably aren't worth the trouble.

However, I am having a tough time getting clients. When I speak with them they seem impressed by my offerings but in the end the decided to go with (or stay with) a provider that offers hosting at a very cheap price.(without the quality). Should I stay where I am at and keep working at it? or should I lower my prices? While I don't know your target market, my initial guess would be that you are focusing on the wrong types of clients in your local market.

Do the people you are contacting rely heavily on their web sites? If not then they wouldn't really be as concerned about high reliability from their web host.

If you offer high quality services then you need to target the market that would be more interested in the quality of the service than the price...

This is basically what this industry is all about. What you need to do is research your target audience. You need to find a niche in the market and then brainstorm on the very best way to target your new clients. Being that you are on online entity (even if your target is local) your entire business depends on a good marketing strategy.

Right now it appears you are targeting business clients with a need for more "mission critical" web hosting (business class reliability - excellent service etc) and those who are willing to pay extra for this. If this is who you want to target then it seems to me you are making a mistake in approaching (targeting etc.) smaller businesses with a non-mission critical needs.

You want customers like your local builders or a local medical clinic where they can afford to pay more money and they demand reliable support for multiple employees etc. But if you try to go to the local Mom and Pop antique dealer and start talking about routing protocols and quality bandwidth it won't make a bit of difference to them. All they will remember is your service costs 3x more then the service with the flashy banner ad they saw on MSN.

It's challenging because people who don't understand the technology aren't going to be able to see the benefit in using your services. And unless you have lots of connections with large business owners in your area it's going to be really tough to get your foot in the door as these are the customers who won't be changing their hosting providers very often.

You need to work at finding a way to get an earful of info to the decision makers for the larger businesses in your local area. The local chamber of commerce is an excellent place to start as you will get a list of all new members and you can send them a nice form letter welcoming them to the chamber of commerce and explaining your services and why they need them.

Also how about adding packages for the customers just starting out so that they can take advantage of your great service and then as their business grows over time so will their hosting needs and your profits will grow. Because there is no better advertising then a satisfied customer.

One important thing to remember is longevity. Longevity is what will make the difference. It will take time to build your customer base up. As when we started with PMH it took a few months to get a new customer but as time went on even when we don't do any advertising at all we still have a steady steam of new signups. It just took time. I don't know how long you have been in business but your need to be proactive as customers aren't going to just find you, you need to find them.

How about a post-card campaign with follow up telephone calls (make sure to target the larger business and send it to someone on their staff who will really know what web hosting is and so forth - maybe personalize it with info about their current website and needs)?

Good Luck.

PMH- Thank you for your reply. It was extremely useful and exactly described my situation. I appreciate the help and will take your advice into consideration.

Our pricing strategy is to charge whatever we need to charge to make a decent margin and expand our company. Quality wins out every time over price.

What makes you a good hosting Company:
Good Prices
More Features
Good Support Options
a Good Uptime Frame * 90% or better (3hr downtime the most per month or better)
... like if you offer 100mb space, email support, small features your not gonna charge $10 monthly...

90% uptime?

lol...90% uptime would be 3 DAYS downtime a month... 3 hours per month would be 99.58% (rounded to two decimals after the comma). Personally I think 99.85 would be a good percentage.