I'm seeing a lot of web hosts charge MORE and MORE as you upgrade their plans.

For example:
Plan A - 100MB Space, 5GB Transfer - $5/month
Plan B - 200MB Space, 10GB Transfer - $15/month

I see some companies charging more (in proportion) when the clients want bigger plans. Other companies charge LESS when their clients want to purchase more. (Instead of 15/month maybe only $7.50/month)

What do you think this indicates about the host? What's the reason for charging more and charging less?

As far as I know, it's a simple way to make more money.
I worked in a grocery store when I was young. And was amazed when I noticed the owner putting things on "sale."
Something like "SALE 3 FOR $5.00" (normal price was $1.48 each) :rolleyes:

LOL! :stickout

Originally posted by AcuNett
I'm seeing a lot of web hosts charge MORE and MORE as you upgrade their plans.

For example:
Plan A - 100MB Space, 5GB Transfer - $5/month
Plan B - 200MB Space, 10GB Transfer - $15/month

I see some companies charging more (in proportion) when the clients want bigger plans. Other companies charge LESS when their clients want to purchase more. (Instead of 15/month maybe only $7.50/month)

What do you think this indicates about the host? What's the reason for charging more and charging less?

I've seen that too, and it doesn't make sense. My guess is, whoever comes up with plans like those doesn't have good common sense, or the first plan is an introductory special. When thinking up plans, I try to make each plan a better value than the last one.

Some hosting companies charge more because they know that they have to cover their costs to stay in business. If a company invests seriously in the right equipment, there should be considerable fixed costs (racks, servers, etc.), not to mention high variable costs (recurring monthly internet access fees).

I have always told my customers that with technology, you get what you pay for. There are horrible web hosts at every price level, but my guess is that you will find more reliable companies charging $15.00 per month, as opposed to $3.00.

thinkcomp,

If you reread the original post, the question wasn't why some companies charge more than others. The question was why some companies give less value for their higher plans than their lower plans.

And the answer, frankly, escapes me. The only thing I can guess is that they believe the higher plans will require more support. But my experience is that the plan type doesn't really predict the amount of support required -- some of our yingiest customers have the lowest plan, some have the highest.

If you want to go on a more advanced plan (additional space and transfer) it is because you are using more of what you are paying for. Some people on the lowest plan will barely use any of the resources offered to them. These people will join the plan because what the company is offering looks very desirable. If the customer uses everything the host gives you on the plan, there is a very good chance the company might actually lose money. It’s a game of balancing. You try to get many customers who do not use much and in turn they cover the customers who use almost all of the resources offered. The host can be pretty certain that the customers signing up on the higher plan are actually using most of what they are paying for -- hence the reason they charge more. It is a little strange, but I think it makes sense. Then again… why not just get another basic account and store your bigger files in that space?

It's pretty clear to me. The reason is cause smaller plans take up very little resources. 5GB of bandwidth for $5 seems fair, but what about 500GB of bandwidth for $500??? Is that fair? Sure if the place is hosting by rackshack, or some other cogent provider, but not all hosts use cogent, alot of them have their own equipment, and their own servers, and stable reliable connections from good providers, so they can't afford to offer the rock bottom prices that cogent places offer. Also, I think in a way it's part show.... I mean, wouldnt it be boring if your hosting prices page looked like this.....

100MB / 10GB / 5 MYSQL - $10 month

200MB / 20GB / 10 MYSQL - $20 month

300MB / 30GB / 15 MYSQL - $30 month

You get the point.... I think it's just become standard practice for companies to charge more to users who need more bandwidth, and will use higher server resources. Personally, I wouldn't run a hosting company this way... but I can understand those who do.

EluZioN

I personally try not and run my company like that either but it is definately understandable... Think about it this way too..
A site doing <1gig/mo is probably using no cpu, no support, etc.


a site using 15gig/mo is probably also using a lot of cgi, etc, etc, etc.. also probably uploading and maintaing more frequently (more bandwidth that some hosts dont track)

also probably receives more email (another thing a lot of hosts dont track)

more cpu usage, etc... It all factors in. (in some cases)

ah now those are very good explanations. Thank you all :)

Originally posted by EluZioN
It's pretty clear to me. The reason is cause smaller plans take up very little resources. 5GB of bandwidth for $5 seems fair, but what about 500GB of bandwidth for $500??? Is that fair? Sure if the place is hosting by rackshack, or some other cogent provider, but not all hosts use cogent, alot of them have their own equipment, and their own servers, and stable reliable connections from good providers, so they can't afford to offer the rock bottom prices that cogent places offer. Also, I think in a way it's part show.... I mean, wouldnt it be boring if your hosting prices page looked like this.....

100MB / 10GB / 5 MYSQL - $10 month

200MB / 20GB / 10 MYSQL - $20 month

300MB / 30GB / 15 MYSQL - $30 month

You get the point.... I think it's just become standard practice for companies to charge more to users who need more bandwidth, and will use higher server resources. Personally, I wouldn't run a hosting company this way... but I can understand those who do.

EluZioN

...but what's preventing the person from getting another basic account and load balancing between the two? :) Well, I guess not everyone knows how to do that. If they want to attract low-usage clients, they could just make the first plan an introductory special, then it'd make sense.

Originally posted by FocusOn718
I personally try not and run my company like that either but it is definately understandable... Think about it this way too..
A site doing <1gig/mo is probably using no cpu, no support, etc.


a site using 15gig/mo is probably also using a lot of cgi, etc, etc, etc.. also probably uploading and maintaing more frequently (more bandwidth that some hosts dont track)

also probably receives more email (another thing a lot of hosts dont track)

more cpu usage, etc... It all factors in. (in some cases)

It really is sort of a catch-22. I personally offer a very good rate for an "introductory" plan that includes 10GB of bandwidth. I do this to stay competitive, and I have everything worked out in my business plan (so don't be giving me some long lecture about over-selling... :rolleyes: ) Now, if a customer of mine uses all 10GB, I am actually losing money. When they want to add additional bandwidth, I obviously am going to want to charge them more than what I pay for it. (I pay $2.73/GB for very high quality bandwidth :) ). So, I charge $3.50 per GB. Many times people are shocked by this. They say "Well, I got the first 10GB for only $X , why am I paying $35.00 for the next 10 GB?

It really makes me feel kind of stupid, but they just don't understand that they are getting an awesome deal on the first 10GB.

Maybe I should just bite the bullet and offer the additional 10GB at a loss also, but it is just so hard for me to convince myself to do that :)