ACQUISITION:

When you are buying web hosting customers, what rate (expressed in the number of months of generated revenue) do you pay?

Is it 3 months? 6 months? 12 months?


AFFILIATE PROGRAM:

Those who run affiliate programs: How do you establish the rate you are willing to pay for customers someone referred to you? Is the process the same or different?


Best,

When buying customers, I normally pay between 5-12 months revenue depending on the type of client, volume of clients bought, etc.

For Affilates, this is based on how you have your system setup. Some companies pay out a one-time flat referral fee, and others pay recurring. Personally, I have a flat monthly rate (depending on the hosting plan) that goes to the referral. It gets paid out once a month once their referral balance gets to $50+ (This is good as I don't have to pay a bunch of $2 referral fees each month, but rather can sit on the funds -- gaining interest --- and then just pay a lump sum each month.) Affiliate programs can be setup to your liking and what you feel is fair.

Just my two cents :peace:

So I take it nobody else bought customers before to share on the model? :)

Purchasing clients is generally around the neighborhood of 12 months revenue, for a solid customer base.

--Tina

Artashes - Its going to vary as bahjons explained. It really boils down to the amount of customers, how much the customer is paying, and how long the customers have been with the host (IE Solid customer base as Tina mentioned)

If you have a new host that built up a ton of low $ customers they wont get much when they try to Sell and Bail.

What so for one customer you would pay 12x months of his worth?

Artashes - Its going to vary as bahjons explained. It really boils down to the amount of customers, how much the customer is paying, and how long the customers have been with the host (IE Solid customer base as Tina mentioned)

If you have a new host that built up a ton of low $ customers they wont get much when they try to Sell and Bail.

As far as affiliate programs are concerned, thats going to depend. I think the least risk involves a flat rate that doesnt go beyond 1-2 months of what the customer is paying (And hold the funds 90 days to see if the customer stays) OR to provide a recurring monthly commission based on the sales the affiliate has (These are my favorite, and they are win-win for both the host and referrer) but everyone has their own way of doing things. You will have to decide which way is best for you.

Thank you all for some insights. Very valuable.
If you have a new host that built up a ton of low $ customers they wont get much when they try to Sell and Bail.
If we talk strictly about shared hosting, what is a "low $ customer"? Is a customer who pays $5-10/mo falls under such group?

On the side of acquisition, it seems that the prices that companies pay for hosting companies (clients included) can range from 8 to 12 months revenue) depending on the attritition/retention rates of clients. That is - if customers have been with the hosting company for a few months, they are not as valuable as those who have been with the hosting company a while. (If they are still under a warranty period, they might not be counted at all as they could still cancel!)

On the affiliate side of things, I've seen all sorts of affiliate plans where people pay residuals (for as long as referred clients stay with the hosting company) to 2 to 5 months the value of the hosting plan a referred client purchases.

Roj

As others have all ready pointed out, you should expect to spend / receive 6-12 months of revenue, depending upon the quality of the clients sold.

Once again, thank you everyone.
That gives me enough information to chew on.

We just purchased a small hosting "company" that has 52 customers. We paid 10 months gross revenue for each customer.

Our affiliate program pays 4 months (in cash/paypal) gross revenue for whatever plan the customer signs up with. (ie: customer chooses $10/month plan, then we pay $40. Payment is made to the referring person after 90 days waiting period.

I hope this helps.