Being stable, almost 100% online, backed up, full with features and value added services is good for business costumers but...

I was thinking what about the low price hunters. The guys that design their own sites. What if I set up special web site with no SLA guarantee and Value added services. Pure old cheap hosting with free domains and only yearly prepay all ranging between 20-100 usd/yr.

Is this wise? Is this feasible. Since I dont have a large budget on marketing - is it wise to cross-sell/up-sell between two identities? Is it wise to put banners with "cheap hosting click here.." type of ads on my main "business grade" which is being promoted? Would I compete against myself? How would the business costumers feel if they see totally different price structure? How would I explain the cheapsters why the business costumers have more stable service and phone support?

Uh... A lot of questions I guess :)

Anybody has a solution?

This is my first post after regularly coming to this forum for a few years - never too late huh? :) I thought I'd start by weighing in on something I am also looking into.

I am also considering creating a completely new brand targeted towards the general online market with low pricing (but not as low as your average overnight startup). I'm a bit hesitant about entering such a saturated market though.

I would advise against cross-selling because it serves no useful purpose. Business customers and "bargain" customers are 2 different segments with different needs and purchasing power. If you cross-sell cheaper hosting on an SMB-focused service (SMB = small and medium sized businesses), they will wonder why you charge them more for the same basic IT service.

Granted, you're probably providing additional services such as design, more support, etc. and the cheaper service has a lot of value-added services stripped out. This does differentiate the offerings but the fact is hosting is the core product and clients can misconstrue it as price discrimination. Conversely, cross-selling business class hosting to bargain hunters doesn't work either because they're simply not looking for business class hosting.

For example, in the auto industry, car makers create entirely different brands to serve different market segments. They do not cross-sell. Toyota isn't going to market a Camry to their Lexus customers and vice-versa.

In conclusion, I feel that cross-selling between business and bargain users is ineffective and is not beneficial. It also defeats the purpose of creating 2 separate entities. You might as well just add low-end hosting to your current offering if you intend on cross-selling. Either way it would dilute your brand image. Keeping the two brands separate and distinct is the best way to do it, IMO.

Thanks - you have addressed my main concerns. I was also wondering about the option of upselling the value added services on my budget-oriented brand.