Are people interested in small plans that offer very little space and bandwidth or are most willing to pay $35.00 a month for every feature and a lot of bandwidth that they will never come close to using? Lets say a 25-50MB of space and 2Gb of transfer for something like $3.00 a month. With most of the common features found today. I sell mostly the largest of my plans but I dont offer anything small to really know if people are interested in them. If any hosts here have a plan like this can you please tell me how they sell compared to your other plans.

Note to moderators: Ironlung is asking for this information.

We have a plan that is $4.95/mo for 20MB and 1GB transfer for that exact reason. It sells very well, although more people choose the plans with more features.

People like to have choices, and if their site grows, then they know they can always upgrade.

This thread is very, very borderline - it borders on the surveys clause in the rules and the post can easily be construed as a survey unless you read the question carefully (like I did about 5 times). I'll see where this goes, then decide whether to close it or not. You may continue posting for now.

Problems withthis thread aside:

I think it would be very difficult to do this, make money and provide a reasonable level of support.

You need to sell a mix of large and small packages to reach a reasonable average profit in order to support the business.

You could do this with virtual hosting off a cobalt raq and make a good profit, but I am not convinced of the reliability of the raq for virtual hosting or even if its capable of setting up control panels etc for domains.

Gordon

Well there are hosts using RaQs for this, and I'd say they are reliable so long as you don't overload 'em. Not sure what you mean about the client CPs (as they have a client CP).

Anything priced in the under $5/mo range would sell very well... the only problem is, that you are selling them exactly what they need, nothing more. That's good for them, but not for you.

The average site uses less than 25-50MB of space and 2Gb of transfer. Keep in mind that you have to pay yourself as well. How much time and how many support requests are you willing to do for a $3/mo account?

Now, there are of course places that give away a starter account like this for free (not many, but I know of at least one that does). Same theory.... they obviously use it to draw customers in, and hope they'll outgrow the small space and upgrade.

Like Gordon said, if that's the only or most popular plan you end up offering it could lead you to an early death. Loss-leaders are fine, grocery stores use them successfully as does many other businesses, but in the hosting biz, your customers just click and shop. If your more expensive offerings aren't competitive then your customers may move when they outgrow their package, not upgrade.

One of those things that could work, or could fail miserably.

Yes Chicken
I know someone who is using the RAQ for selling hosting and it seems to be OK so far. Its just I hate risks.
Witha Raq I would have to learn everything from scratch and I wouldn't have the confidence in it that I have with other systems.

Interestingly the budget host Hostsave.com is owned by Affinity.net but does not offer an upgrade path through Affinity.

They obviously see the budget hosting as a seperate market.

I know that we have started selling more of the cheap plans over the past week or so since we started advertising them.
People buying these plans often need more support than advanced users so that adds to the support burden as well.

In all, I would not want to be in a situation where I had to reduce the level of support offered because people weren't paying enough to make it viable.

Gordon

Originally posted by GordonH
People buying these plans often need more support than advanced users so that adds to the support burden as well.

I was going to mention this as well, but it would have been a generalization on my part (since I don't have hundreds of $3 accounts to back up that statement). I felt it was true, but I'm glad you said it!

Nothing like selling cheap packages, where customers use almost exactly what you sell them, and then them requiring more support. Do the math.

I think $3 is extremely low for that 2 gig/mo offer. The $5 for 1 gig (what Weinbar mentioned) seems to be a bit more reasonable. Still very cheap, but at least you aren't almost paying your customer to host with you :)

This is slightly off topic but along the general lines of this thread.

I used to produce a personals ads system for general sale, my competitors were selling something similar, only NOT using Mysql, not having anonymous email features, amongst many other lack of features on their part for arond $149.00 while I was selling my feature packed personals ad system for only $37.50.

Well, what I found out in the end was this, most of the people who purchased my program required extensive hand holding to get through even the simplest of tasks, i.e. insert your domain name on this line, dont include http://www. just your domain name, theyd still ask, what goes here.

So, the end result was that I was burning up more time in support to help these newbies that purchased the program than was worth my money and basically losing money on almost every sale.

So, how does this relate to this subject thread, well as I see it, you have to take into account all expensies in any business and then price your products and or services accordingly. For example, I am still a newbie to webhosting, and I only got into it because I needed a ded server for myself, so figured why not sell some of the bandwidth and space to others, anyway, in webhosting, you have to take into account, your support staffs time, how much your paying them (for myself it's just myself, so I have to evaluate my time, and what it's worth to me, could I be making $55.00/hour designing a clients website or supporting a hostee for $11.95/month), then theirs advertising, even the smallest amount, say $100.00 a month has to be accounted for, then consider what your server can handle, were on a raq, and while I have no first hand knowledge about any problems, we still refuse to put anymore than 75 accounts on it, at that rate, if we could fill up each server with 75 accounts, we'd be making an extremely nice profit, enough to pay the house note. So, you add up all these expenses, then take what your server can handle, and figure a pricing plan that will work to make money, now If I offered $3.00/month accounts, at 75 accounts per server, that would pay for the server, and leave about 35.00 left over for supporting these people, so in a months time I'd have to put out less than 1/2 hour of support to all 75 people (dont think thats gonna happen).

So, I hope you see my point, too many of us, myself included get into this hosting biz, thinking that its a snap, hey, I can get a cobalt 4i for only $199.00 a month, certainly I can sell enough accounts to make a profit, hmmmm I dunno, I've been looking at the hosting market, and quite honestly theres a lot of hosts out there that offer accounts less priced than our own, can I lower my prices, sure, a wee bit but not a lot.

Anyway before I trail off too far off topic, I'll end here by saying,
Consider all your expenses, including your time, then figure out a pricing structure that you can live with, then market the heck outa your service to get people there.

Good Luck to all
Bbox

[Edited by brainbox on 11-24-2000 at 02:23 AM]

I agree with Brainbox in that someone may be attracted to your service because of the cheap price but if they plan to setup any kind of decent site they're going to want more features. You will have to either give massive support (time is money remember) or tell them if they want a feature they have to pay extra for it. Can lead to unhappy customer relations.

My newest strategy is to see what the really successfull hosts are offering and undercut them, offer the same features or a little more, and offer it for less money. Since I handle all support myself, I do know what will be my limit of handling support in a professional, courteous, and quick manor. When I can no longer offer that support, I will no longer take on any clients unless I get someone else to work for me to take some of the load. But until that time, I guess it's really like free enterprise, undercut your competition if you can afford to do so, this brings down the prices for others, although the big boys will Im sure not be bringing down their prices, since they have a very ample customer base existing.

Bbox

Yes,
I think we all do that to some extent.
I know that when I set up my $7.95 plan it was to provide more features than people like Hostsave.com, with no set up fee.

To some extent it has worked but the problem with the free market is you need big bucks to advertise like they do so any growth will be restricted no matter how much you undercut or how many extra features you add.

Gordon

Strangely enough, most of the hosts that I read about on this site, either registered users own sites or ones that they talk about, I've never heard of! I only heard about Alabanza by word of mouth by my partner in Michigan who suggested using their servers for our hosting business, where he heard about it, he did some computers for one of their bigger clients who told him about it.

So, I dont know, but it seems to me rather strange if these companies are using any advertising at all, that I think i should have heard of at least some of them over the past 6 years on the net.

Im certainly not debating that advertising works, for it does, its a given. But where are they advertising that works? The only host that has ever sent me soemthing through the us mail was someone I think named interland or somethign to that affect.

Im seriously thinking about targeting my small community to start, theres only like 250 to 750 people in my area, two small lake towns next to each other, and putting flyers on everyones mailbox since the mailboxes are all in a row at the bottom of the hill, and seeing if'n that brings anyone in, then perhaps a billboard (down in LA, preferably on Santa Monica Blvd near the freeway) for a month to see what that does, if anything. But gotta find the right billboard in the right location, not easy to do if you need to get started like yesterday.

Bbox


[Edited by brainbox on 11-24-2000 at 03:29 AM]

Brainbox,

Make sure you think long and hard about taping flyers to mailboxes. I did that in my town and I had a bunch of angry people. Although a bunch of people were happy to find out about my business, over 20% called to tell me it was a wrong way to do business. Most of the comments were of me being invasive to their privacy. I never thought anyone would complain myself. I figured they would just throw it out if they weren't interested. Boy was I wrong! :)

Just letting you know ahead of time.

Not that I'm trying to be retentive, but I thought it wasn't legal to tape/insert anything on/into a mailbox? Some federal law of some sort no? I know you can mail things directly obviously but... Here, I get food menus attached to my screen door. From the same 3 places, almost daily. Guessing this wouldn't go over that well though.

I'm not a lawyer but I dont' know of any law or regulation that prohibits you from putting fliers into a mail box (I assume you mean going along the street and stuffing your hosting pamphlet in people's and business's street boxes).

Wish I had a $1 for each time some chinese take out place or Dominos left a flier or leaflet or business card on my door or in my mail slot uninvited.

Bottom line I think is that no matter what you do someone somewhere will be PO'd at you. You shouldn't go out of yoru way to make anyone upset but some people will be upset no matter what.

Until you get served with "Cease and Desist" papers IMHO and non-legal opinion go for it!

No actually according to our local postoffice up here (total of 2 employees - One postmaster, one drunk delivery worker), the postmaster up here told me that it is illegal for me to put anything inside of the mailboxes, but not illegal for me to put them on the outside, in my case considering putting them between the little flag found on most of our postboxes and the box itself so as not to even entertain the idea of putting it directly into the box.

As far as getting calls, well, I have no plans on actually having a phone number on the phamplet, Im not big enough to be manning a sales phone line on a single line, afterall, you get a busy signal, and I personally dont call back, I'll try someone else, I was thinking more along the lines of the web address, email etc as the only means to contact through the phamphlet. Up here it is quite regular to see a flyer which is a single piece of paper that says somthign like "Balloon Barn now open" for all your needs, and then just an address to someones home up here. I like most people just throw it in te bin unless it's something interesting.

Anyway, I guess trying it will only tell how well or bad its going to work.

Bbox

Originally posted by brainbox
it is illegal for me to put anything inside of the mailboxes, but not illegal for me to put them on the outside

That is what I was looking for, thankx. Makes sense.