If your hosting package is $3.95/mo + $2.50 setup fee, how much re-activation fee will you charge if you suspend him for late payment?

My reactivation fee was $25 -- even on the smaller packages. However, I always waived the fee on the first time paying late or if they let me know in advance that they would be late. If they've got a good excuse and contact you a week in advance, I don't see why they should be penalized for that. Everyone has financial issues every now and then.

The point of a reactivation fee is to deter them from paying late again. I recommend making it between $10-25. But again, if it's a first time or they contact you in advance, I wouldn't charge one at all if they have a good reason.

well, I have a customer since one year, every month he pays me to late without any prior notice to me that he has financial problem as you said. after 15 days late payment, I tell him please pay $3.95 immediately or your account will be suspended in 24 hours and there is %20 charge for re-activation, %20 of $3.95 is $0.79, but he never cares about this, so every month I am suspending him and he is paying me $3.95+$0.79, he really doesn't care about suspension and extra charges, so how much should I charge him this time in your opinion?

Letting him slide 15 days past due is not a smart move. I would recommend suspending past due accounts after 48 hours.

What does your Terms of Service say for late payments? I would recommend updating it saying you can charge a late fee of upto $25 at your discretion -- and charge it to this customer. He might reconsider paying late.

A year ago we started charging $10, same idea as Nick. we'll waive it the first time or if we're notified ahead of time. Many customer that chronically paid late stopped pretty quickly.

okay, according to your experience, I should suspend any late accounts only after 48 hours and not 15 days. and charge $25 late fee + $3.95 package fee.

I have no problem to go with it as you suggested, but a late fee to much more expensive than the real hosting package fee (ie. #3.95) is a good idea?

We suspend after 10 days, but we're thinking of shortening the grace period. Our fee is larger than our cheapest package, I see no problem with that. The point of the fee isn't to make more money, it's to get people to pay on time. For 79 cents I wouldn't even think twice about waiting until I wanted to pay (if that was already my mindset), but $10 might change my mind.

ok, agree for how many days are you going to shorten the grace period?

Not sure how many days, or even if we are going to.

Just to point out -- I had many customers who got mad because they had to pay a $25 late fee when their package was only $5/month. They ended up leaving and finding new hosts. Personally, I said good riddance -- you don't want customers that pay late all the time. It costs you money and time and it's not worth it.

From a customer side, a 3 day or 5 day grace period is the norm for most business (in general, not just hosting). After that a 10 day suspend sounds good. I like 5 day grace and 10 day suspend myself.... good numbers...

I was thinking of the same, this is why I said if late charge is more expensive than main price...

anyway $10 late fee after 3 days due invoice for a package of $3.95 would be good?

anyway $10 late fee after 3 days due invoice for a package of $3.95 would be good?
That sounds fair.

And a good rule of thumb...A customer might have financial troubles one month, maybe two at most...But never let it be a monthly thing.

Remember: Once bitten, twice blind.

as long as he really doesn't care about anything I will have $13.95/mo instead of $3.95/mo! :D

I was thinking of the same, this is why I said if late charge is more expensive than main price...

anyway $10 late fee after 3 days due invoice for a package of $3.95 would be good?

I would guess it depends on the amount of work you have to do in order to get these accounts going again. If 10 customers are always late, how much time does it take to get them going each month? Is $10 worth the lost time they cause? Would $15 be more like it? How about $25?

.79 is simply too low, as you know. $10 is good.... just make sure you let all your customers know in a "general" sense.... not just the person that is late all the time. My guess is you might lose a couple, and have a couple of people argue and complain, but it will all settle down after 10 to 30 days.... No biggie. Allowing one late waiver might be nice, but who has time to keep up with that? unless you have a notes file that you can see right away.

and how much would you charge per MB bandwidth overusing?

We do not charge our shared hosting clients for this. Their account simply remains suspended untill and unless they upgrade.

But yeah, our resellers can stay with 1 reseller package but use the bandwidth of the other by paying additional charges when they exceed the allotted bandwidth usage.

"....Should your account go over your allotted monthly bandwidth, you will be invoiced after the month is complete at the price of Rs.500.00 per 1GB bandwidth used, or part thereof. ( $12 for International clients ) "

We suspend after 3 days late and they can sit there suspended for 30 days before we delete them. I wouldn't charge a reactivation fee. It'd be easier for the client to move on to the next host, rather than pay me. If their account is suspended, what does it hurt you to leave it sit there? As long as you have your suspension/unsuspension process automated, it isn't costing you anything.

By the way, we realized years ago that letting customers slide for more than 10 days isn't going to jostle anyone into paying sooner. The longer your grace period, the longer clients will take to pay you. Make it 10 days and they'll wait 10 days...make it 3 days, and they'll wait 3 days. My advice would be to shorten that grace period.

--Tina

Remember: Once bitten, twice blind.

Very true...

We've shortened our grace period and imposed a small re-activation fee of $5.00. If a customer lets us know in advance about late payments, then we won't impose any fees. In some cases, if the customer has been with us for a while, I give a "credit" period. In one case I extended it 6 months for a customer that was having major financial difficulty.. in the end he decided not to pay and switched hosts. Luckily I was able to recover the funds from him. I had lost all sympathy. It happened again to another customer, but the period was much shorter. So I learnt this the hard way..

I've completely changed the policy now. If any customer wants an extended interest free credit period, they will need to send in some ID, sign our TOS and fax it back and sign a credit period agreement. This is only available for larger customers, and using this method, it allows me to pass on debts to a debt collection agency with all necessary legal evidence to recover funds. People will often fall into financial trouble, and so having such a system in place allows them to cope more easily. It's really customers that use web hosting as their main source of income that take advantage of this. But at the end of the day, business is business...

30 days before we delete them.

This was going to be my next question, how long does your host wait before permanently terminating an account?

I used to have a problem with customers being late. i'd alway's let one day slide they would just receive an email reminder giving them 48 hours to make payment or contact me for arrangements. That was my attempt to make nice. After the grace period they'd be automatically suspended. I would charge them a $5 reactivation fee. Worked nice for most customers, but some would just wait and pay the extra $5.

I actually found that encouraging these customers to switch to a prepaid plan worked out nicely. Most of them haven't been late since. Seems easier for people to make one large payment than 12 smaller ones and I give them a discount for prepaying. The discount was worth not dealing with the hassle of late pays.

I doubt that anyone is in such severe financial difficulty that they have to be late paying a $4/mo hosting bill. If they are chronically late it is because of laziness. You then have to make the pain of being late great enough to spur the late-paying folks to pony up on time.

Maybe you can call your "Due Date" the "Disconnect Date". Disconnect at the midnight on the disconnect date. Of course you should provide as much automated advance notice 7 days ahead of the date. Late fee is $20.

1st time late: Disconnected as stated, but will waive the reconnect fee.
2nd time late: Disconnected as stated, charge the fee, and place on "probationary" status.
3rd time late: Disconnected as stated, assess the reconnect fee, and cancel the account. Do not release files/data until account is settled. If they have just a static page they won't care, but maybe they have a forum and want the mySQL database!

I guess I don't understand why its such a big deal if they pay late IF you suspend them right away. Its not costing you anything to keep their account sitting on the server, dead to the world. I've always found that by suspending accounts right away, the majority of the late payers get the message right away.

--Tina

I doubt that anyone is in such severe financial difficulty that they have to be late paying a $4/mo hosting bill. If they are chronically late it is because of laziness. You then have to make the pain of being late great enough to spur the late-paying folks to pony up on time.

I know some people personally who can't afford to buy a $0.75 candy bar from a vending machine sometimes.

I found that when I am dealing with business customers if the bill is under $100 they don't want to deal with paying it. I have had a couple large corporations consistently 2 or 3 months late on a $25 invoice, but the same companies pay immediately when the bill was $500.00. I've never understood this but seems to be true with my customers.

One of my customers refuses to pay late charges, their reasoning is that their customers won't pay their late charges so they don't have to. Needless to say, I do very little business with them any more. Time is money and time spent dealing with late money is even more money.

A related question I don't often see discussed: when a payment is late (especially an automatic credit card payment where the card is being declined), how are people notifying their clients? I assume it's almost exclusively by e-mail and not by phone, paper letter, etc.

We've tried many combinations of grace periods and notification options, but haven't seen much difference in how likely people are to actually respond to reminder notices. As others have said, suspending the account is the only sure way to prod many people into action.

However, we have found that customers are much more likely to be angry when their account is suspended if the only method we tried was an e-mail notification. In contrast, if we've also tried to call them or send a paper letter and failed (because they forgot to tell us their new phone number and address too), they can't really claim we didn't make every possible effort to collect a few dollars.

So we try to call the customer before suspending the account if they only have a single e-mail address on file, and the reminder e-mail bounces, and they're not a "pay late every month" type. (This doesn't help with people who have silly spam filtering systems that shove the reminder notices in their spam folder, because we don't see the message bounce, of course.) But we'd really like to stop doing even that; few people respond to these calls (we usually get no answer, or "I'll call you tomorrow with my new card" or "the check's in the mail") -- it costs far more money than we get back. All it does is prevent customers from being able to say we didn't try really really hard to help them.

Of course, some people have different expectations. One person canceled his account after we suspended his service: we tried reaching him by e-mail and phone first (both bad), but he thought it was unreasonable that we didn't also try contacting him through the "contact us" address on his Web site, which was not the address we had on file. (We don't do this because our client may be, for example, a designer who is reselling the service, and they would not appreciate us contacting their customer and saying we hadn't been paid.) Other people have suggested we should look up their new phone number in the phone book. If we were charging $99 a month, I'd be glad to, but for a few bucks...

One idea we've been considering is some sort of intermediate step after the normal payment grace period, but before suspending the account. For example, if the site could have a little bar added to the top of each page that says "There is an administrative issue with this Web site that needs to be resolved; the owner of this site should contact x@y immediately", that might get the site owner's attention. Customers would complain about that, but it's better than "this site has been completely disabled for administrative reasons".

I know some people personally who can't afford to buy a $0.75 candy bar from a vending machine sometimes.


Then a hosting account should be the first luxury item to be cancelled.

As for the guy who says that hosting customers get angry if you only try to contact them via email about an overdue notice...."OH WELL" Pay your bills on time and your account won't get cancelled. Plain and simple. I don't take responsibility for other people's lack of action.

--Tina

@tigertech

So basically your saying that email is too easy of a method of contacting a person? Why should I have to go out of my way to breath down a client's back about a late payment? I could have a dozen outstanding invoices and you really expect me to babysit my clients by continually calling them everytime they forget? If a person cancels their account because of a suspension then it really shouldnt affect you. Obviously your not making money from them in the first place (or you wouldnt be suspending them now would you ;))

Customers would complain about that, but it's better than "this site has been completely disabled for administrative reasons".
Who cares if they complain about it? If they pay on time its not an issue. lol

Just my three cents

Just my three cents

Exactly. Add my two cents in there as well.

--Tina

Who cares if they complain about it?

Well, I do. You don't care if your customers are complaining?

I'm not saying it's a justified complaint, but I think we've all got enough problems without having customers call up and vent irrational anger on our staff people if there's a way to avoid it.

I dont see the cost/benefit in getting a staff member to call up someone about their pittance of a hosting bill, my staff have better things to do :)

Larger clients I find have more to lose and a suspension warning email has them in gear asap.

WTR suspensions you have to be a little lenient, for eg most of our SMB and SOHO clients didnt pay their invoices generated over Christmas until the 2nd week of Jan. We expected this and disabled the auto-suspend on the 22nd of Dec and sent an email to whoever was overdue COB the first Friday of Jan. A few days of grace gains a little good will, and saves of from a lot of hate.

Well, I do. You don't care if your customers are complaining?

I'm not saying it's a justified complaint, but I think we've all got enough problems without having customers call up and vent irrational anger on our staff people if there's a way to avoid it.


You can avoid it all together. Just give them free hosting if they decide not to pay their invoices. Then your staff won't have to deal with any unpleasantries.

Seriously. You let customers pay late because you're worried that someone might get pissy with your staff if you suspend them? If someone is late paying, and they neglected to contact us and make arrangements - the responsibility for their account being suspended is squarely on their shoulders. If they want to get abusive to our staff, I'll pack up their files and send them on their way.

--Tina

I'm not saying it's a justified complaint, but I think we've all got enough problems without having customers call up and vent irrational anger on our staff people if there's a way to avoid it.
What right do they have to complain to you about suspending their account if they refuse to pay for their services? Your TOS should light the fact that non payers will be punished.

You can avoid it all together. Just give them free hosting if they decide not to pay their invoices. Then your staff won't have to deal with any unpleasantries.

Seriously. You let customers pay late because you're worried that someone might get pissy with your staff if you suspend them? If someone is late paying, and they neglected to contact us and make arrangements - the responsibility for their account being suspended is squarely on their shoulders. If they want to get abusive to our staff, I'll pack up their files and send them on their way.

Took the words right out of my mouth :)

Seriously. You let customers pay late because you're worried that someone might get pissy with your staff if you suspend them?

I think you misread my message: we certainly don't let people pay late, and I didn't suggest we did.

I merely pointed out that customers *do*, in fact, get pissy about having their accounts suspended if they perceive that a company hasn't given them as much notification as they would like, whether their perception is reasonable or not. I mentioned that as a rule, we want to avoid pissy customers, so we've tried various ways to make sure that customers who aren't habitual deadbeats will feel that they got adequate notice before we suspend their accounts. I also wondered if others had tried the same thing.

The response of several people seems to be roughly "we don't care if our customers are angry because it's their fault", even if it's the first time that a customer has had a payment problem. That surprises me.

Within reason, it makes sense to spend some effort to prevent customers from feeling angry even if a problem is their fault, if only for the sake of a quiet life and encouraging them to continue paying us money instead of going elsewhere. Pissed off customers are bad for business and give me a headache when they demand to talk to me.

I'm not suggesting that our attitude is "we don't care if our customers are angry". What I'm saying is that they have a responsibility to pay their invoices on time. If they can't pay, they need to contact us and we're more than happy to let them slide. Heck, I've even been known to wipe out invoices completely if a good paying customer suddenly falls on hard times.

We send out invoices almost 3 weeks in advance. We then send out at least 10 reminders until the due date. If they don't pay, we send an email every day for 3 days warning them that they are about to be suspended. If they can't be bothered to contact us, with explanation, then they WILL be suspended. If they want to whine and stomp their feet after all of that...then, you're right, I don't care if they are upset. We don't want customers like that. We want customers who respect us as we respect them.

--Tina

definitely agree with AH-TINA but we don't send invoices in advance for hosting, we only send advance invoices to renew domains 30 days before expiry. we send hosting invoices only on due date, 2 days after we send reminder, 3 days after we suspend.

we charge $10 for this, clients could easily accept it

we send hosting invoices only on due date, 2 days after we send reminder, 3 days after we suspend.

That might work for you, but it certainly would not work for the majority of companies. What about a user who wants to send a cheque/check or make a bank transfer? What about a long weekend where the user comes back online and sees they have been suspended just because they didn't check their mail for 3 days? (There are loads of people that do not check email daily)

If you are going to suspend 3 days after the due date it's only a common courtesy to notify the client in advance. Suspending someone who is ignoring invoice reminders is one thing, but suspending an innocent user because they do not check their mail every few days is totally different.

In our case, we notify 15 days in advance of an invoice, then again on the due date, then each day for 7 days afterwards. We do not apply a reactivation fee, instead on 5 days overdue we apply a £10 late fee and then we suspend after 7 days overdue, unless we have been kept up to date about the situation by the user. This way the user is notified 3 weeks before any suspension, so they really have nothing to complain about if it reaches that point. (Although as always some still do)

This way the user is notified 3 weeks before any suspension, so they really have nothing to complain about if it reaches that point. (Although as always some still do)


My favorite complaint, after weeks of notifications and 3 days warning of impending suspension, is...

"I can't believe you suspended my account over a $19 invoice. If your company is so hard up for $19 that you have to suspend my lousy account, then that's pretty sad."

Some people just don't get it. :P

--Tina

My favorite complaint, after weeks of notifications and 3 days warning of impending suspension, is...

"I can't believe you suspended my account over a $19 invoice. If your company is so hard up for $19 that you have to suspend my lousy account, then that's pretty sad."

Some people just don't get it. :P

--Tina

We get the same thing. We are supposed to ignore the amount because it's so small, but:

1) They don't realise all those $19 accounts add up to a lot of money.

2) We are not providing them with a service where they choose when and what to pay.

3) If it is such a small amount, why did they not just pay it in the first place? :stickout:

$20-$25 is probably best. It should act like a small punishment for people who pay late and can help discourage it from happening again in the future. Your customers have to know that you like to get paid on time or else they'll contantly take advantage of you.