OK, I'm pretty new to the whole "selling" thing.

I've done free hosting for almost 2 years now, and we're now happy enough with our product that we think we can charge for it. To further extend our services, we have invested quite a bit of money into getting some full racks at a Premier Verio Datacenter.

We have yet to sell 1U of rack space, and I can't help but wonder why.

I recently posted two deals on WHT for our Co-Location services and had one response. A lot of views... but only one response, and that didn't lead to a sale.

You can view both offers here (http://www.webhostingtalk.com/showthread.php?s=&threadid=51170) and here (http://www.webhostingtalk.com/showthread.php?s=&threadid=51631)

Now, I'm looking for some feedback into why these are not selling. The prices are very competitive from what I've seen, and the product itself is good.

Is WHT just the wrong place to post these deals?
Is nobody interest in Co-Location anymore?
Are the prices too much?

This post is really a last resort. If we can't work out why these aren't selling, then we will be forced to re-evaluate our options and ditch the co-location services.

I sincerely hope that I get a response to this and that with some constructive criticism, we can sort out what needs to be sorted and get the space sold!

- Davey
Owner
The Explosive Network (http://www.its-explosive.net)

I think it's because everyone is expecting rackshack bandwidth and pricing. It's just like the hosting delema, everyone is offering 20gig of bandwidth for $5.95 a month with poor quality bandwidth and no support. Then when a quality host with great support try's to sell the same thing for $20 few people will buy it.

Another thing is that many startups are coming here with very limited budgets and they want the lowest possible price(cough rackshack cough) and they may not realize that rackshack offere's completely no support!

Just look at howmany people come here and ask: "I dont know anything about the internet or servers but I want to start a webhosting company, I also want to be very very rich very quickly, please help me!!" Now morons like these will buy the cheapest everything! So what can we do? I'm trying to figure this out! Take the processor war for example,

AMD has processors that are faster and cheaper yet they only have 14-20% of the market! (I know this is the exact opposite of the hosting business but the solution is similar) and what is the solution? Education! I'm not sure how we can educate consumers but it will happen one day! Maybe after 10 crappy host's some people will wisen up and pay more for better service!

I think your offer is good, provided that you convey that its a premium offer at those prices.

Perhaps you are suffering from the 'new kid' syndrome - its harder to attract business if people think they will be your first customers. And no doubt this fear is for good reason.

So... your posts leave nothing to the imagination, this is a new line of business for you. No matter what your skill or intent is - you've bared all.

Bravo for that. Be open and up front by all means.

But when marketing, you need to avoid scaring away people until you can draw them into a more personal connection with your firm.

Don'ts
... don't experiment with a PHP script that 'might not be working' for a sign up offer (you may have been joking about this but its not professional, and you want to attract professionals right?

... try to avoid leaving the "too young for experience" impression. Style of writing, etc, unless you want to attract a certain crowd only.

... not only do your offers contain some of the inexperience red flags, so does your web site "OK, so 5 days on and I'm no clser to fixing my computer than I was on saturday". Hey, not what you want to hear from your colo provider that may have to provide remote assistance! ;)

Do's

... at your price point you are competing against established co-location vendors. Hard to break in but you can if you keep at it. So keep at it.

... Leave a positive impression and impress the heck out of your first customers, and every customer after that. They will help you grow. Once you have a few the going will be easier. Its the same in any tech business where you aren't competing strictly on price and features.

Finally, I think its possible that WHT is just an OK forum for your marketing purposes. Certainly it seems that the ratio of colocation buyers to hosting buyers is low.

I'm running a poll on sites (not hosters / colo) that make revenue. My thought is that revenue generating sites are much more interest in service than price alone.

http://www.webhostingtalk.com/showthread.php?s=&threadid=53183

A colo buyer is spending orders of magnitude more $ than the large percentage of visitors here, my guess. Your costs; their amortized server costs; insurance; spares; etc. Since they are dealing with larger $ to begin with I would assume most are fairly discriminating.

could be speaking just for myself.

It will become harder to get going as a web host there are more places like this company see thread (http://www.webhostingtalk.com/showthread.php?s=&threadid=51797&perpage=15&pagenumber=1) poping up every month.


Plese Read!

Greetings:

Please keep in mind the following concerning co-location:

1. Co-location tends to be very geographic centric. This means the location of the data center to the customer is generally important to the customer. Remember, they are co-locating "their" equipment.

2. When not geographically close to the data center, co-location customers will be concerned over equipment repair and upgrade times.

3. While there is a growing and fast trend to people not understanding value and as a result wanting quality without being willing to pay for it, most solid businesses do equate a level of price to quality.

If you are too cheap in your pricing, you will be viewed as being cheap.

Do some pricing research of your competitors. If you are cheaper than your competition by any large degree, you may be viewed as a company without the knowledge of what you are doing.

The same goes if you are too expensive.

The best route, we've found through our experiences, is to be some where in between.

4. Verio has an excellent reputation in the dedicated server arena and a growing reputation in the enterprise arena.

However, in the past six months they have closed co-location data centers with as little as two weeks notice to their co-location customers; and often without providing suitable alternatives.

Their past track record of not caring about co-location customers, puts any co-location customer in a Verio data center at a higher risk than average compared to other data centers.

Lastly, keep in mind that co-location generates the least amount of gross margin than dedicated, managed dedicated, and managed services.

Thank you.

Firstly, thanks for your comments thus far.

I would just like to reply to what has been posted so far:

You may see us a the new kids on the block, but we are fast approaching our 2 year anniversary of being in business (16th June). Our Co-Location services may be new, but having been on the recieving end of Co-Location for the best part of a year, I know what I expect and I would offer no less to my customers.

The Explosive Network is not striving to be like Rackshack, with too many clients buying such low cost servers, that we cannot afford to pay for a large enough support team to support them all properly in an efficient manner. All of our companies support comes through me, if I cannot help myself, I will pass the client *directly* to the member of staff who is able to do so as quickly as possible.

I have done my research, as I do for all my services. I have seen Co-Location at prices far higher than mine and of far less quality (Cogent Lines, inferior data center). Knowing (quite obviously) the price I am paying wholsesale for each 1U of space, we have a minimal profit margin, which covers our own expenses and leaves a little extra to invest into new projects.We have several new ideas in the works which we hope to launch soon.

I have made it my policy to be as up-front and honest with my clients as possible. The PHP script did indeed fail. and I am deeply embaressed about that. I consider myself a very competent PHP coder, to have such an important script fail even after testing was an unfortunate problem, but I rectified it as soon as possible.

I treat each and every client of mine extremely well in my opinion, we don't have any limits on whats supported and whats not, if we know about it (and someone in our staff usually does), we'll help. If not, we'll do some research, only then do we say we can't provide support. It hasn't happened yet.

I had alot more to say but thanks to IE I lost my first reply, and when re-writing I decided to remove alot of unneccessary stuff...

I sincerely hope that by being this honest, people will take note of the company and will buy the product because they know what they are getting.

I have 2 more special offers in the pipe-lines, need to do my homework, get some feedback, perhaps one of these will provide the key into the arena from whence I can sell my product.

- Davey

Greetings:

"All of our companies support comes through me, if I cannot help myself, I will pass the client *directly* to the member of staff who is able to do so as quickly as possible."

Is it possible the lack of true 24x7x365 support will and is hindering sales?

"I have done my research, as I do for all my services. I have seen Co-Location at prices far higher than mine and of far less quality (Cogent Lines, inferior data center). Knowing (quite obviously) the price I am paying wholsesale for each 1U of space, we have a minimal profit margin, which covers our own expenses and leaves a little extra to invest into new projects. We have several new ideas in the works which we hope to launch soon."

Three points:

1. Most business client's don't have enough technical knowledge to be able to determine wether one bandwidth provider is a higher quality than another.

People buy solutions to their problems; they don't buy technology or products or services --- they buy answers to their problems.

2. You state you know of companies who charge far higher than you, but don't state whether you've done home work to see where your prices fall.

Are you too low compared to your competition? Who is your competion? Why are they the competition? What makes you better other than price?

3. In my opinion and experience, each business line should be self sufficient.

Most companies do not have the luxory of Microsoft pocket books that they can subsidize product and service lines until they become profitable.

New ideas are great, but if your existing ones do not provide the ability for you to grow; then you may die as easily from a new idea as soon as grow from it.

Our parent company started off in shared hosting, invested the profits so that when they started providing dedicated hosting they had some breathing room, priced that service to be profitable from the start so that as sales increased the combined revenues allowed them to get into managed dedicated and then form We Manage Servers -- the managed service and managed security company.

Each product line was geared to allow growth in and of itself; and several together allowed for even more growth.

While I don't believe in "live for today for there may not be a tomorrow" in terms of partying or the morals of how we live our lives, I do believe that all business ventures should be based on "what we make today will impact tomorrow."

Meaning, don't count your chickens until they are hatched ;-)

Thank you.

The unrelated and annoying ad popups don't help either. Makes people wonder what you're really up to.

The most frequent comment comming up is about my low prices... are you saying that because of the price, people don't think they will get the quality? How can I remedy that? make it more expensive? Doesn't seem like the best marketing solution to me... "Nobodys buying... lets make it MORE expensive!".

As for the ads, they are gone, they were a waste of time anyway!

Perhaps lack of advertising is the problem? Just no enough people know about us? I don't know...

After doing my research, I decided to target the lower price scale of the market with a higher price scale product, and because of the great deals I got for the racks, I am able to do so... Perhaps I was relying on the customers too much to do their own research into more than price...


- Davey

I don't think its pricing which is your primary problem. There are established companies with reasonable reputations that are priced less or near you. I have no experience with either of these, no doubt there are plus and minus opinions on both.

VenturesOnline - 105$ for 1U w 50GB.

DataPipe offers what appear to be a higher level of service for a little more than what you are offering, special offer not withstanding.

http://www.datapipe.com/colocation.asp
1U = 19'x25'x1.75', 25GB of transfer included per 1U
1U - 4U - $100/month per U

24 Hour Monitoring - Included
24 Hour Support - Included
100 MBPS Connection - Included
Ethernet Switch - Included
Remote Reboot Capability - Included
(1 time $25 setup fee per server)
Up to 5 IP's per server - Included
DNS Services - Included
myDataPipe Account - Included

It wasn't apparent in your materials if you offered things like remote reboot, on-site 24*7 support, DNS, etc.

Also - is your bandwidth capped or not?

All these are factors some buyers would take into account.

If your approach is primarily on price then you will attract a certain type of customer. If its on value, you will attract a different class and dare I say more reliable customer.

In the case of the former I would imagine that you just are not cheap enough to attract them. In the case of the latter, you are not "deep" enough to attract them.

?

As a person who evaluated your offer.. two primary factors where missing from the evaluation..

- Decent Price
- Test IP/Download (burst and ping check)

Greetings:

"The most frequent comment comming up is about my low prices... are you saying that because of the price, people don't think they will get the quality? How can I remedy that? make it more expensive? Doesn't seem like the best marketing solution to me... "Nobodys buying... lets make it MORE expensive!"."

Here are some buying rules we've learned over the years (seven to date):

* People buy from people they like and trust

* People rarely buy based on price as the #1 factor

* People have a perception of quality that is often associated to their understanding (or lack there of) of the value they are receiving for the price.

* People buy solutions to their problems; they do not buy products, services, or technology -- they want answers, not gimicks.

In May 1998 I went to a face-to-face meeting with a medium size insurance provider to talk about automating their benefits on the Web. At the time we were charging $100 per hour which we knew to be within industry averages.

Because of being in a small county, I was thinking on my way to the meeting of ways I might have to discount this and that in order for the "price" to be competitive.

During the meeting with the president and his staff, I kept getting questions that led me to believe they did not believe I knew what I was doing. The president even led me out of the meeting to his office to show me a simple login screen and ask me if I could program that type of authentication.

When we got back to the meeting, I asked them all point blank why they even invited me to the meeting if I they didn't think I knew what I was doing; and, what gave them that impression.

They stated they invited me based on our reputation (we did the programming for an on-line bank in 1997), but they started doubting us when they got the proposal in the meeting.

I asked what was wrong with the proposal... was the price too high. They stated we were too low.

To make a long story short the average bid they received was based on $195 per hour. We were so much lower than the competition they felt there had to be something wrong with us.

A few months ago my wife and I were talking about how people do not buy based on price. She was arguing stating everyone bought based on price. She stated most things are a commodity, and what difference does it make.

I asked her if automobile gas was a commodity, and she jumped on it and stated, "sure... gas is gas." So I asked her why she uses Mobil and refuses to use the gas at the one super market which is the cheapest in the county. No answer.

In ending, my suggestion is not to raise your prices, but to do your home work to see where your prices are at. Maybe they are ok. Maybe they are too low.

And in that case, then... yes, you should raise your prices.

Thank you.

P.S. While we no longer providing programming services, when we started out we were at $25 per hour. We hardly got any customers. We found that as we raised our prices to be more in line with the competition, not only did we get more customers, but we saw our gross margins rise to allow for growth.

P.S.S. You stated, "Nobodys buying... lets make it MORE expensive!"

Instead of thinking cheap and expensive, why not think "more of an investment" or a "better value for the investment." As long as you think of something as being expensive... even when priced perfect for the market, you are going to have a tough time selling it.

dynamicnet thanks for your great feedback, that'll require a longer reply than this, so I'm gonna post this and work on a reply to you. :)

Originally posted by Ophelus
As a person who evaluated your offer.. two primary factors where missing from the evaluation..

- Decent Price
- Test IP/Download (burst and ping check)

OK, I'll get a test IP and/or download setup as soon as possible.
As for a decent price, what sort of price are you looking for? which deal are we talking about? the first co-lo offer, or my birthday one?

- Davey