Hi guys I am trying to figure out how much bandwidth and disk space I should give away for $7/month webhosting plan.

Does any seasoned resellers out there have any advice or better still some equations to assist me inthe decision? I will appreciate it a lot.

Do you guys always get lots of high traffic sites? like 3 out of 10 signups are high bandwidth site? I know that my clients company website uses up like 5MB per month. If everyones like that I wouldnt have to worry and can be very generous in terms of Disk Space and Bandwidth.

Please help me guys!!!

I'd say 1GB, maximum of 2GB.

First, as to your $7/month plan. There are those who would argue against such a plan altogether. In fact, in a recent survey I had conducted, the average entry plan was 25MB/1GB for $8.95. On the other hand, many hosts I respect do have entry plans around $7.95 or so. But to do so as a reseller is very difficult. You must get a very well priced bulk account to make it work. Let's look at the economics of a $7 plan. First, credit card processing. Assuming you use a third party processor such as Revecom or 2Checkout, card processing will cost you on this plan anywhere from $.84-$1.28. So, now as an average we are down to $6 net revenue. As you can see, if the plan itself costs you $3, that only leaves you with $3 margin to cover your time and expenses as well as credit card chargebacks and fraud, paybacks on your 30-day or so guarantee, bandwidth excesses that you are unable to collect from customers, and other costs.

On the other hand, if your plan is simply to acquire accounts and perhaps break-even until you can get your own server and your own merchant account then maybe the $7 works or if you are providing other higher margin services it may work.

While a low priced plan may attract business, it also may have two negative repercussions.

1-Attracting the wrong type of customer-the customer only interested in price, unwilling to pay for quality, or the customer who will abuse your TOS and be on to the next host quickly.

2-It may actually scare away some of your potential quality customers as they perceive you to be a low cost/low quality provider and just don't believe they can get much at that price.

Now, as to bandwidth and traffic.

Again, your pricing practices will influence this greatly. If you underprice bandwidth, you will tend to get more of the high bandwidth users. The vultures descend on a deal that it too good. This is called adverse selection. Let's say for example, that the average account uses 40% of the bandwidth in the plan. However, if you charge high bandwidth prices your average may run 20-25%, but if you underprice your bandwidth (for instance a 100MB/20GB plan for $14.95 you will find yourself in trouble. Because although the average 100MB customer probably uses less than 2 GB of transfer, you will get a huge number of customers who will push the 20 GB limit. They will search and find you and spread the word. The word they spread will be, "this guy offers a great deal." The translation is, "let's take advantage of this sucker."