I found this text in the ad forums, and felt like it deserved a public response, so I thought I'd open a new topic and respond to it here. :)
NO YEARLY CONTRACTS

Most hosting companies will try to lure you into yearly "discounted" hosting
contracts, offering big savings for your loyalty.

But what is the true purpose behind those big savings?

They are counting on you leaving before the year is up! You
are no longer using their services AND you have all ready paid. Sounds
great for them, but what about you?
(1). Hosts don't "lure" a client into paying yearly. Most hosts offer discounts for yearly payments, because it's obviously more cost effective to collect one payment, rather than 12 separate payments, with 11 extra cc processing fees. Some clients prefer to pay yearly, instead of monthly.

(2). The true purpose behind offerring yearly payment, is customer convenience and savings gained from less credit card processing fees and billing admin chasing possible late payers.

(3). Most hosts also offer pro-rata refunds if a client wants to leave before their yearly term is up. So if you pay yearly, make sure your host will offer a pro-rata refund, should you choose to leave mid term.

Just wanted to respond to that. :)

This is one of 10,000 reasons why people should stay away from WHMwebhost. Bad marketing - they don't know what they're talking about.

This is one of 10,000 reasons why people should stay away from WHMwebhost. Bad marketing - they don't know what they're talking about.
I didn't mean to refer specifically to that host. I just wanted to redress some statements posted in a public forum, about yearly payments, and maybe start some discussion. :)

Its an offer not a requirement. I have not seen too many hosts that only offer yearly pricing. However it normally works fair in both ways. The customer *normally* gets a discount. And the host only has to collect once. Does not have to worry about the payments. and saves on the fee's.

You forgot "time value of money."

Also, if you really do like your host and plan to stay a while, why not save some money and not worry about your billing? I think it works out for some and not for others.

Double edged sword really.
Yearly has the value of not having to pay cc fee and staff time to process those every month.

It has the a bad effect on the companies net value as I see it, yearly clients are a liability to the bottom line, the money has already been paid in but the obligation continues and the money has to be reported as income for the month in which it was earned but the expenses continue being reported each month. So it can lead to skewed net profit loss statements.

Our policy is no new customers can sign up for a yearly after they have been with us for 3 months they can then request a yearly option if they wish.

Our policy is no new customers can sign up for a yearly after they have been with us for 3 months they can then request a yearly option if they wish.

I was going to suggest this, but more from the point of testing a service before paying yearly. I now just pay monthly, as I don't think I have the option of yearly :p

We have always made it a policy to refund the prorate should the customer want to leave after making yearly payments. The only exception is if they are scammers or spamers. We didn't offer the yearly option for a long time and had lots of complaints from customers wanting to buy 1-2 years at a time it wasn't our idea.

I have read that little statement on that companies website and I found it quite funny.

I offer the option to pay yearly, at no discount, but personally and purely from a business standpoint, I prefer when people are paying monthly or quarterly. Still, I do have a few clients who pay yearly.

The garbage about "luring" and refunding customers who leave is pure nonsense though, in my opinion.

I, before hosting coming into hosting myself found the yearly payment was the best option, I had the money to pay for the site for a whole year, but might not have the money the next month, so I always paid annually. (at the time I was a school kid with no money ;) ) the annual payment option is good for people that have a site they know they are going to want for sometime, like businesses or sites that are gurenteed traffic :) annual hosting option = good idea.

Wow ... that's marketing at it's best! I'm going to put that on my site ASAP!

Oh wait ... can't detect sarcasm on the net can you :S

I agree with all the posts above. Another reason not to take the yearly payment is that you might get too tempted to blow it on advertising rather than budgeting like you'd do with a monthly payment. Not saying everybody would, but we'd all be tempted to!

I've had a bad run in with a yearly client for game hosting before. The guy emails me 2 months before the year is up and demands a FULL refund because he left it idle and didn't use it for "6 months" ... he was in there 24/7! Anyways, he accepted a refund of $50 and I told him good luck with the next provider.

Another good thing about yearly payments is that you don't have to worry as much about the client leaving and it's revenue collected at the start as apposed to over 12 months.

I never ask for a yearly payment, but many of my customers offer it. Around half of my customers pay yearly, 25 percent six monthly, and the rest monthly.

y give 20 percent or domain name fees for year, and 10 percent by six month,

There are many hosting companies who try to lure by initially giving incomplete information regarding yearly / monthly pricing structure.

There are many hosting companies who try to lure by initially giving incomplete information regarding yearly / monthly pricing structure.

What do you mean, exactly?

--Tina

What do you mean, exactly?

--Tina


This is from a well known hosting company.

On the Home page: Just $ 6.95 / mo, For : 50 GB Hosting Space & 1 TB Data Transfer , Free Setup. [They conveniently fail to mention anywhere on the home page that the 6.95/mo is for 2 year payment.]

Monthly paid price is: $14.95 / mo - $15 Setup [Can be seen only on the inside page]

I have seen many websites with this kind of pricing displayed on their home pages . [they post such offers in forums too]

I found this text in the ad forums, and felt like it deserved a public response, so I thought I'd open a new topic and respond to it here. :)

(1). Hosts don't "lure" a client into paying yearly. Most hosts offer discounts for yearly payments, because it's obviously more cost effective to collect one payment, rather than 12 separate payments, with 11 extra cc processing fees. Some clients prefer to pay yearly, instead of monthly.

(2). The true purpose behind offerring yearly payment, is customer convenience and savings gained from less credit card processing fees and billing admin chasing possible late payers.

(3). Most hosts also offer pro-rata refunds if a client wants to leave before their yearly term is up. So if you pay yearly, make sure your host will offer a pro-rata refund, should you choose to leave mid term.

Just wanted to respond to that. :)

Well from my experience with some scum bag resellers is that they buy a reseller account and accept all these clients at yearly rates. Then dont pay there bill, disapear and I am stuck explaining to there poor customers why I am cancelling all accounts.
DONT BUY YEARLY HOSTING UNLESS YOU KNOW THE COMPANY VERY WELL AND THEY ARE PROVEN TO HAVE BEEN OPERATING FOR MORE THAN 2 YEARS

This is from a well known hosting company.

On the Home page: Just $ 6.95 / mo, For : 50 GB Hosting Space & 1 TB Data Transfer , Free Setup. [They conveniently fail to mention anywhere on the home page that the 6.95/mo is for 2 year payment.]

Monthly paid price is: $14.95 / mo - $15 Setup [Can be seen only on the inside page]

I have seen many websites with this kind of pricing displayed on their home pages . [they post such offers in forums too]
Yes, unfortunately that strategy is all too common in the hosting industry. Hosts promote their low monthly rate, but you only get that rate if you pay 2yrs in advance. Very misleading IMO and not good for the industry as a whole. :eek3:

Yes. I not promote yearly payments, but many customers of business want in this way, and they see good service. At the moment only two of my non enterprise customrs pay in yearly manner, and all the business in yearly.

We offer monthly, quarterly, semi-anually, anual, bi-anual and even tri-anual options. Funny though, most of our clients (probably 98%) prefers anual renewals. Cause then they renew their domains @ the same time - one invoice, one payment, no problem :)

So, to a great extend it's up to the customer's as well how they prefer to pay

I've started a fairly new company to compete with other design/hosting companies in my local area and all of them have annual requirements. I've been promoting the fact that we do not require annual commitments as an advantage and that monthly billing provides them with more flexibility and control. That's a big part of our value proposition and marketing message.

I'm not saying annual billing is necessarily bad, I'm using this as a marketing tactic to compete with incumbent firms. I don't market this as "the competition is trying to trick you or lock you in" but that we're different in that we don't have this annual requirement - simply that we don't force anything on you. In fact we offer customers the option to prepay for their account in our billing system, with leftover amounts completely refundable.

I'm targeting local businesses and my question to those who serve the non-WHT, local business segment is: have you found that business customers prefer to pay annually? I'm debating this internally because I like the fact that I can charge once for a year - less administrative hassle, less overhead, less processing fees but then again I'd like to differentiate.

I'm targeting local businesses and my question to those who serve the non-WHT, local business segment is: have you found that business customers prefer to pay annually? I'm debating this internally because I like the fact that I can charge once for a year - less administrative hassle, less overhead, less processing fees but then again I'd like to differentiate.

In a lot of cases it would likely depend on the amount you are charging for your services. If you are charging £100/month then a lot of people are going to prefer paying monthly with some choosing annual, but when you get to the lower end of the scale <£50/month then it is less hassle for a business to pay annually.

One payment annually requires less paperwork on your side and it is also the same for your client. When you need to record 12 payments, they do on their accounts as well. They also need to remember to issue payment/make sure there is enough in their card every month to cover the hosting.

Through personal experience, offhand I'd say about 80-90% of the business customers we deal with are annual payment and about 30-40% of our customers with personal sites are on annual.