Hello, this is my first post and I have a number of questions that hopefully I can receive some good advice on. Alot of these have been discussed in other posts, but I am looking for additional qualified advice. I also understand that alot of the answers to these questions are highly dependant on the activities of the hosting company and cannot be answered with a definate yes or no, but I am hoping for some best estimates from your experiences.


1) In regards to payment processing, is using a 3rd party company such as 2checkout.com as good idea as comapred to integrating a payment gateway such as authorize.net? it doesn't apprear to me that there is a large financial gain by using a merchant account and authorize.net, but the benefit would come more from the ability to keep the users with your site during the entire transaction process?

2) Is Modern Bill the most effective billing software? The price of $24.95 certainly seems right to me, but it is the features I am unsure about. How does MB handle recurring billing? Is it possible for MB to handle auto account setup with Plesk 7? (although I have read it is not recommended to use auto activiation to prevent fraud)

3) Do most hosting providers start with small reseller or VPS servers and graduate to dedicated solutions as they grow? Do they move their customers over to the new servers, and is it a painful experience to go through?

4) More for curiosity sake, did you start your business with intentions of growing it into your own data center rather than continously purchasing servers and bandwidth from somebody else?
Is it common for small hosting companies that become relatively successful to move their business into their own data center?

5) How would recommend handling backups when first starting out? Using RAID in the servers, or using off-site backup? It would seem to me that off-site backups can be much more expensive and potentially beyond the financial capabilities of a startup host.

6) What paid advertising methods are the most cost-effective? Obviously there has been alot of Google Adwords conversation on WHT so I don't want to get into the argument of if it works or not, but I would rather hear how banner ad campaigns, local advertising, and other methods comapre to a succesful AdWords campaign.

7) Sticking with Adwords, assuming your campaign is has been well thought out, and is working well for you, what would be your expected conversion rate assuming your website and billing software are not preventing the sales process? I have 2% conversion rate as a number being thrown around WHT, which seems high to me. From my research it would seem that you can drive an average of 7-10 clickthroughs per $1 investment with a well designed ad and resonable click maximums. Using that math along with the 2% conversion rate, a $500 investment would return
70 new signups per month. That number seems high to me, but I am unsure of the actually true numbers that providers with well run campaigns are seeing.

Anyways that is it for now. Hopefully some of you will be able to provide some insight to these issues for me.

Thanks.
Mike

Welcome to the forum Mike...let me see if I can shed "some" light on your questions, as I'm sure others are doing right now it is just taking some time :)

1) Using your own true merchant account, in my opinion, is the best option. We've been on our own merchant account for about 18months now, and after seeing the PaySystems fiasco happen in real-time, I'm sure glad we made the switch when we did. Prior to our own account, we were using PayPal.

2) Most effective? This is subjective, but we certainly like it :) As a startup, you may even be able to find the 50 client license still from some of ModernBill's resellers. But either way, $24.95 isn't too bad.

3) We started with a small reseller account (1gb space/10gb transfer) and took it from there. After outgrowing that, leased our first server and things just kept progressing.

4) To be honest, I started the business to grow. One month at a time, it grows. While I certainly appreciate long-term goals (and have many of my own), I don't like to get to far ahead of myself. It is certainly doable, but as long as our customers are happy, I enjoy the work, and can put food on my table, I'm a happy camper :)

5) We use dual hard drives on all our servers. In the event of a hard drive failure, etc., we restore sites from the backup drive.

6) It really depends on the type of advertising. All I can say is "know your target market". If you're focusing on small to medium sized businesses, there isn't much point advertising in high schools, is there?

7) In the hosting business, I honestly think you'd be hard pressed to get 10 clicks a day totalling about $1.00. Not to say you can't pay less for clicks, they just don't appear very often, and are not placed high enough to be clicked that often. So I would agree that your numbers are high.

Hope that helps a little. Again, welcome aboard, and enjoy your stay.

As I am starting out on this road as well, this topic hit the nail on the head for me, but I was drawn to the third point you made.

I am based in the UK, and have seen many reseller accounts advertised for just a bit less than getting a dedicated server, I personally think that getting your own server would be a better bet, as I have seen a reseller package advertised for £50 per month, where as I pay $119 (£63ish) for my server - I just feel that this gives me more control of my hosting. Just take this as a example lets just say you get a reseller account but they don’t allow you to use the PHP GD library, so you MAY loose a customer because of this but if it was YOUR server you could simply install the module (This was only a example)

Not only that but some reseller accouts require extra payments per account creations.

While there may be reseller accounts priced at that amount, there are ones that are available cheaper (and same quality) just with fewer resources. When starting out, one of the major differences between getting a reseller account and a dedicated server, is that the reseller account's server is managed, whereas, a dedicated server may not be.

I would suggest, that if you go the route of a dedicated server, get one that is fully managed unless you are able to manage it 24x7 yourself or with your staff.

This is one man's opinion...take from it what you will :)

VanHost, :)

I tried to contact you through your website on your merchant services, but it has been 4 days nobody replied. :(

I am affraid you did not get my message?

Thanks,

Byte

Byte - I received a few messages this week regarding our merchant services...each was replied to within 1hr max. Please send me any questions directly, and I will get to them ASAP.

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