How should I go about pricing hosting alone to the local market?

I know $20/month can be done, wondering if it could be done as high as $35/month.

This rate would not be including web design at all or work on the website. Some other company would deal with this.

I don't think specs matter because they'll be small. I'll probably allot 50-100mb for each and a few GB each month bandwidth. If for some reason they need more, I'll be flexible for the most part.

figure out your operation costs add in all your extras... figure out what kind of margin you want per account... add that to your base costs. You now have your pricing, now target people that will pay it. Some people will pay Alot some people will pay very little. You have to decide on what market you want. When I started out I went after a lower end market and tried to set pricing that I thought people would like. We have went through many changed since then and now we have some local clients that pay upwards of $100 per month. with some value added services included of course.

Depends on the customers...

I host most of my business customers on a rackspace server, which carries along a name that I can use to show the benifit of with specs like their network not being down in 4 years (so their techs keep telling me, only been there for a few months). That name allows me to charge more plus I offer phone support for these customers, that I dont with my basic plans.

I can charge $50/month for an empty bag if I can show how that bag can help them and their business..

I have local competing company aparently successfull selling very basic hosting accounts for $75/month. They target unknowledgeable cleints. They advertise as a internet marketing and interactive media company and don't list pricing on there site for hosting.

I'm not saying go cheap and I'm not saying go way out of line like this but if you feel that your service is worth X amount then you should charge X amount for it. Don't worry about what your competition is selling stuff for.

When going after local clients, you have to look at what other local companies are charging, look at what it will take to sustain and grow your business and go from there. Don't price yourself like you're competing nationally if you're a local market host. You'll only be cutting your own throat and your ability to grow and possibly expand later into other markets.

That's an overly simple answer, but take those basics and apply it to your own market's needs and that of your business.

Local people, especially small businesses, like to go with other local companies. I can run a whois on any given website I see that a local business has and can tell you that at least 75% of them are hosted by someone within 30 miles of them. Local business people understand that it is local people that sustain their business and they usually will buy locally as well whenever they can.

Originally posted by Coach
When going after local clients, you have to look at what other local companies are charging, look at what it will take to sustain and grow your business and go from there. Don't price yourself like you're competing nationally if you're a local market host. You'll only be cutting your own throat and your ability to grow and possibly expand later into other markets.

That's an overly simple answer, but take those basics and apply it to your own market's needs and that of your business.

Local people, especially small businesses, like to go with other local companies. I can run a whois on any given website I see that a local business has and can tell you that at least 75% of them are hosted by someone within 30 miles of them. Local business people understand that it is local people that sustain their business and they usually will buy locally as well whenever they can.

Thanks, those are all big reasons why I want to go local. I'd rather create a business relationship with people I can meet. I have no doubt local shops will pay the extra $10/month (or whatever it is) if they can have confidence in the company and meet someone face to face.

abstracthost, I thought about that and it's no cost to me really. I do some online work and that more than covers the cost of the hosting. With the web hosting itself, there isn't too much work for these accounts either.

Haddy, what kind of different things would they want? Maybe an online shop/store?

You can probably tell by this post I have a lot to learn, don't feel I'm going to try selling accounts tonight, I'm going to take my time and do it right the first time hopefully! :)

On the whole id say if you are operating locally you can generally charge slightly higher prices as there wont be as much competition!

Originally posted by AgaBoogaBoo
Haddy, what kind of different things would they want? Maybe an online shop/store? Your average local client will want solutions not just webspace. Ecommerce is a big seller of mine, web identity, maintence. Its all about addon sales.

Look at just about any large company, they dont just sell one product. I was watching tv, history channel i belive, last night and saw a program about the Mars candy business. They make snickers, m&ms, skittles, and a bunch of other really popular candies. If they just sold snickers they would have to sell a 1000% more of those little bars to come close to the money they make now.

Just like local hosting, dont just sell them a snickers, sell them the skittles and the m&ms to go with it to make a total solution.

Originally posted by Haddy
Your average local client will want solutions not just webspace. Ecommerce is a big seller of mine, web identity, maintence. Its all about addon sales.

Look at just about any large company, they dont just sell one product. I was watching tv, history channel i belive, last night and saw a program about the Mars candy business. They make snickers, m&ms, skittles, and a bunch of other really popular candies. If they just sold snickers they would have to sell a 1000% more of those little bars to come close to the money they make now.

Just like local hosting, dont just sell them a snickers, sell them the skittles and the m&ms to go with it to make a total solution.

Ah, alright, that makes sense. My plan right now is to just offer hosting and let the web design company charge whatever they want and deal with that side of things.

I guess I could do that work myself and charge for it, but in the long run if I want to manage a large amount on my own, web design would just be too time consuming

Originally posted by AgaBoogaBoo
Ah, alright, that makes sense. My plan right now is to just offer hosting and let the web design company charge whatever they want and deal with that side of things.

I guess I could do that work myself and charge for it, but in the long run if I want to manage a large amount on my own, web design would just be too time consuming Outsourcing isnt just for tech support ;) One thing I dont like to do is lose control of my customer. By refering them somewhere else I risk loseing the account. I guess in my case I am more of a consultant than a webhost...Its just one of the weapons in my arsenal

Originally posted by AgaBoogaBoo
Ah, alright, that makes sense. My plan right now is to just offer hosting and let the web design company charge whatever they want and deal with that side of things.

I guess I could do that work myself and charge for it, but in the long run if I want to manage a large amount on my own, web design would just be too time consuming

This is the same predicament that I sort of am in. I want to offer just hosting to the local market directly, but want to package it with design. However, I do not want to do the design part of things. I need to find someone to team up with and offer the package of course taking a commission from the design as I am the one bringing in the business. It just has been hard finding someone that I can rely on for the design side.

Originally posted by Josh Stein
This is the same predicament that I sort of am in. I want to offer just hosting to the local market directly, but want to package it with design. However, I do not want to do the design part of things. I need to find someone to team up with and offer the package of course taking a commission from the design as I am the one bringing in the business. It just has been hard finding someone that I can rely on for the design side.

Yup, that's my same issue

Sad thing is that I know people that do it for a living, they just don't live here locally. I want my customers to meet the designer without me being a middle man all the time.

Originally posted by AgaBoogaBoo
Yup, that's my same issue

Sad thing is that I know people that do it for a living, they just don't live here locally. I want my customers to meet the designer without me being a middle man all the time.

I actually agree with you and would even encourage you to go on with your original plan of concentrating on hosting alone.

Before I explain my reasoning, I want to comment on the remark made about Mars corporation.

First of all, if you notice, their candy isn't called Mars Chocolate, Mars Caramel, or Mars Peanut Butter. Each one of their products is a completely separate brand - marketed separately and sold separately. Yes, they do have a hold on the majority of the candy market, but it'd not a good idea to compare that to the hosting industry.

This isn't really the best place to get into a discussion about branding issues, so I'll just leave it at that.

Now, regarding tackling the local market. I do believe that design and hosting kind of go together, but I don't think that you should do both. If you have a designer that can take care of that aspect, then I think you should outsource all of that work to him and just concentrate on the hosting.

In terms of pricing, I think that you should come up with a custom plan for each customer, but I would encourage you to charge between $40-60 per month because you're not selling space and bandwidth - you're selling local customer support and because of the supply vs. demand, you can and you should charge reasonable amounts.

Hope this helps!

Boris

Originally posted by AdWatcher-Boris
I actually agree with you and would even encourage you to go on with your original plan of concentrating on hosting alone.

Before I explain my reasoning, I want to comment on the remark made about Mars corporation.

First of all, if you notice, their candy isn't called Mars Chocolate, Mars Caramel, or Mars Peanut Butter. Each one of their products is a completely separate brand - marketed separately and sold separately. Yes, they do have a hold on the majority of the candy market, but it'd not a good idea to compare that to the hosting industry.

This isn't really the best place to get into a discussion about branding issues, so I'll just leave it at that.

Now, regarding tackling the local market. I do believe that design and hosting kind of go together, but I don't think that you should do both. If you have a designer that can take care of that aspect, then I think you should outsource all of that work to him and just concentrate on the hosting.

In terms of pricing, I think that you should come up with a custom plan for each customer, but I would encourage you to charge between $40-60 per month because you're not selling space and bandwidth - you're selling local customer support and because of the supply vs. demand, you can and you should charge reasonable amounts.

Hope this helps!

Boris What I was showing is that they dont put all their eggs in one basket. I wasnt comparing the two industries as thats not exactly apples to apples...

Outsourcing, like I said, is a good idea, but why miss out on the ability to make more profit by offering the service yourself and then dealing with the designer, seo pro, and copywriter yourself. One stop shop

I am mainly doing local hosting - or better - offer hosting mainly to small businesses. I am currently having customers paying $33.00 per month for 1 GB disk space and 10 GB bandwidth. There is almost no need for support from the client side as long as the server stays up. So, local hosting can work out pretty well if you are doing it the right way.

Just because they're local doesn't equate automatically to higher prices. Or lower prices for that matter. Your pricing must be based on the market you are targeting (small business, personal sites, etc...), the price they are willing to pay for the service, software, or whatever it is you are offering, and the PERCEIVED value of what you offer. The key here is perception. If your company is perceived to be of higher value, or better than the rest, then you can charge more and it is justified in the eyes of your clients.

Most small hosting companies miss the boat when it comes to perceived value. It is this "white elephant" idea that, once captured and understood, can allow you to maximize your profits not only in a local market, but a global one.

Considering the local pizza shop spends hundreds of dollars per month doing local advertising, selling a complete hosted solution that costs less than $100 per month is not hard if you market it correctly and create an image of your company and services that fits this price tag.

We've been doing this hostin' thang for over 9 years, catering to a global client base, targeted to the SME(B) market, and have always kept our hosting > $20 per month at a minimum, and it has allowed for growth and profits while providing a service that our clients truly appreciate.

Develop an image for your company, come through on that promise of utopia 110% of the time to your few clients, and the word will spread that your outfit is the "best in town". :)

- John C.

Thanks for the comments everyone, especially AdWatcher-Boris and JohnCrowley!

I think I will initially be targeting small businesses while at the same time looking for opportunities for large business offerings.

JohnCrowley, thanks for the opinions, I'll have to work on how my company is perceived to business owners. I'll probably be putting this in the business plan, have any tips on making sure my company is perceived well?

Originally posted by AgaBoogaBoo
...JohnCrowley, thanks for the opinions, I'll have to work on how my company is perceived to business owners. I'll probably be putting this in the business plan, have any tips on making sure my company is perceived well? [/B] One could write a book on this topic alone, but a few pointers:

- Professional looking site, not too techy or flash(y). The less it looks like a tech hosting firm, the better many times.

- No grammatical or typographical errors on any webpage on your site or literature you send out. All language is professional, sticks to one tense, and does not mix we, you, I, etc... into it.

- Make the information on your site easily readable, and make sure it's easy to find.

- Don't act bigger than you are, but certainly do not draw attention to the size of your company when it's a one man show.

- Find that fine line between a personal feeling with your site/company and one of being big enough to appear very stable and reliable.

- Never compromise your pricing or policies to close a sale. Never make it about price, always push the service end of what you are offering. That doesn't mean not offering a better price in discussion, but have a price you will not go below and stick to it. This speaks volumes to potential clients even if they do not sign up.

Just a few off the top of my head thoughts. :)

- John C.

Originally posted by JohnCrowley
. . . We've been doing this hostin' thang for over 9 years . . .
n00b alert! :buck:

As always John, it's a pleasure reading your posts (http://www.webhostingtalk.com/search.php?s=&action=showresults&searchid=3520050), and taking advantage of your many years experience. :cool: