We are established and well known hosting company in our niche market and have several thousand customers with average account value over $18 per month. The numbers I’m bring in up are based on actual sales trends apples-to-apples comparison.

The trend analysis is based on sales for Q1 2007 vs. Q1 2008 all other aspects such as prices, services, customer satisfaction index remains unchanged for a measurable statistical impact.

New Sales:
The new account sales in 2008 are 38% less vs. same time in 2007. We have roughly the same amount of search engine and other highly targeted traffic, just less people buying new accounts.

Existing customers:
In 2007 our average customer was good for about 18 month. In 2008 average customer is good for 13 month, overall attrition rate has increased by 27%.

Fraud:
In 2007 our chargeback rate was 0.04% of total dollar volume, now it is 0.97%. Most of chargeback’s are not result of spammers/scammer activity, rather former customers filing fraudulent chargeback’s for up to 6 month back after closing their accounts. We have had instances where people were demanding refunds for payments they have made over a year ago claiming that they did not use the service we provided.


Overall as economy situation worsens, high food, and gas prices impact the consumer and businesses, the more people cut their non essential spending such a web hosting.


How has economy affected you so far?

I've only recently entered the hosting market, although in my other online enterprise (domaining) I have noticed a slow-down.

As always there may be other reasons (i.e. not the recession) as to what's causing the slow-down, although things do seem slower. Or at least, static.

Luckily I have sold my hosting business in '07. I suppose it would impact the industry, because most people are having websites to "try" if it will work out just awesome.

Most of these people ends up not making significant revenue or income from their website, so in time they will think keeping their website and paying every month for something that has no return is a waste.

While before it may not effect them so much, but now with all these, people would think twice of spending their money.

I would say, it would help web hosts retain their customers if only web hosts can teach them how they can actually make money online.

Don't give them an server allotment and some good luck with it... it won't work. They need guides... on what to do with a website. Otherwise they will just end up not needing it "anymore".

What do you think web hosts?

Milk: £1.70
Bread: £1.10
Egg Tray £1.20

Really expensive. Petrol let's not talk about it..

Regards

Well I've found alot of clients that purchased higher priced plans but never use the space actually took the time to downgrade there plan. Also new prosperous clients are looking for less in a host. last I remember you had to have fantastico rvskin rvsitebuilderpro tutorials and the whole nine yards. Sure it speaks to professionalism but I think people understand budget hosts may have some cutbacks (however It dosen't effect our quality)

Hey guys..

Economically speaking, the key thing in question is the income elasticity of demand of web hosting as a product, at least when talking about it as a personal expense. HOWEVER

As a business product, web hosting I would say is fairly necessary. More and more web presence is becoming a central part of corporate identity.

I think even in light of the recent economic events, it will be unlikely to see clients leaving, but the effect will be more of a reluctancy from businesses to expand. By expand I mean, opening new officies, hiring new employees, buying new hardware, etc etc.

For a small business the startup cost of a website is fairly low these days, with the majority of the cost in the design of the website itself.. around about $400 I would say. I can imagine business around america would be seeing falling sales as a result of the poor state of the economy and to me a website would seem a cheap option that could be taken to try to boost the falling sales.

Milk: £1.70
Bread: £1.10
Egg Tray £1.20

Really expensive. Petrol let's not talk about it..

Regards

yeah mate...

I'd swap UK prices for US prices anytime. :D

I used to drive a Merc S Class but stopped driving totally because I refuse to pay so much tax on fuel...it's criminal.

owm

What's wrong with the US economy? There are some bad things going on, but the economists aren't running around scared yet. It's still fixable before the economic growth slows down too much.

We have also noticed higher number of credit cards fail to be billed with return codes that indicate insufficient balance. That means more consumers use and max out their credit cards in 2008 vs. 2007.

What's wrong with the US economy? There are some bad things going on, but the economists aren't running around scared yet. It's still fixable before the economic growth slows down too much.
The US and CDN currency have become equal in the past months, yet we still have to pay ridiculously higher prices compared to US here in Canada.

Milk: £1.70
Bread: £1.10
Egg Tray £1.20

Really expensive. Petrol let's not talk about it..

Regards

Petrol - £1.12 a ltr > Whats going on ;)

I'm in India, and haven't been hit yet. But, for a content writer like me, if my clients are directly hit by the US economic slowdown, I may see some downfall in incoming orders as well... Or, is that just my presumption?

On the other hand, INR is coming down (temporarily), which means for every dollar earned, I'm becoming richer with a couple of Indian Rupees more per USD...

What's wrong with the US economy? There are some bad things going on, but the economists aren't running around scared yet. It's still fixable before the economic growth slows down too much.

I don't think the US is in recession as of yet, however economic growth has slowed to a level that has dented everyones confidence.
Business are reluctant to expand, and consumers continue to save because they fear there is trouble ahead, even though interest rates are being cut.

The funny thing is that this will only make the problem worse.
For growth to pick up, the economy needs more investment and consumer spending to boost demand.

Of course the growing food & fuel inflation are making things worse still, especially here in the UK.
Food prices are up something like 17% from last year

On the Fair side my offline Business which is a estate agency is running much better! The house price's have dropped so alot of buyers have bought homes within london. Just feel sorry for the sellers. Let's just hope everything goes to normal.

Any seen the price of a bag of rice! WOW

I spent £38 quid for that in Tesco's!

Any other wannabe economists like me here on WHT? :P

We have also noticed higher number of credit cards fail to be billed with return codes that indicate insufficient balance. That means more consumers use and max out their credit cards in 2008 vs. 2007.
I've noticed that too. Last mth's cc declined percentage was the highest it's ever been.

We're seeing more card declines, but at the same time, we're seeing more people sign up for the really small accounts because people that would never have thought of it before now want to start a part time online business.

I have gotten a few of the "lost my job, have to cancel" emails, but it's not too bad yet.

Yeah, our churn rate has always been insanely low. Our customers tend to be extremely loyal - heck, many have been with us for years and years. However, the last 6 months has been pretty bad for cancellations. I'm seeing a lot of people cancelling and apologizing with regrets on having to shut down their websites, due to economic hardship.

--Tina

That's somthing really bad. Loosing business is never good!

Yeah, our churn rate has always been insanely low. Our customers tend to be extremely loyal - heck, many have been with us for years and years. However, the last 6 months has been pretty bad for cancellations. I'm seeing a lot of people cancelling and apologizing with regrets on having to shut down their websites, due to economic hardship.

--Tina

Yeah, we have almost the same type of thing - we're small, but I have clients that have been with us for almost ten years and an obscenely loyal core. Watching some of them leave because they can't afford something personal they worked on is somewhat painful to see.

And it always amazes me when they apologize. The first time I got that, I didn't know how to take it. It does really make you realize, though, how difficult it is for them to give it up.

For me I am not dealing on the USA market, so it isn't affecting me much. Major issues on my sides are mostly escalating electricity bills and labor costs.

But USA economy being down has some benefits in the sense that our payment in USD costs much lesser in real time than previously.

A majority of our customers are US based and if anything our level of sales has increased. We've not done any additional marketing or offers this year that would give reason for such a large increase in activity...pot luck I guess :)

We've definitely felt some extra resistance from purchasing departments since December. ;)

At the same time, though, a lot of the people dropping by our website these days are looking to streamline what they're doing *because* of the economy. So it's also an opportunity.

. . . I'm seeing a lot of people cancelling and apologizing with regrets on having to shut down their websites, due to economic hardship.
Yep, same here.

Actually we see the business growing last couple of quarters. But there is some price pressure, though. It is the declining dollar impacting our business the most in the last few months.

Oddly enough, I'm experiencing the exact opposite but I think as we increase our presence in the market it was expected to 'increase' in sales. I have had a few users who have been with us for 5+ odd years (since our last rebranding) that have been leaving though or 'reducing' their monthly overhead and merging some accounts.

It's expected but the new sales have offset it and our growth rate has been exceptional. I can't complain. What I have noticed is a large number of clients moving from 'budget' level providers that might be feeling the impact more than us smaller folks -- we have the benefit of larger profit margins so the market crunch might not be having a nasty impact. (Markets are always volatile though, do what you do best and you'll make it!)

Blessed are we :)

What is this business that can't afford hosting fees for their websites???

We have actually seen a growth in our our business this year, both from our main market (China) but also overseas (including the US). Probably due to the fact that we started from a smaller base.

I've noticed a large increase in signups from Europe, mostly the UK. Perhaps the dollar has got real cheap and the Euro and pound almost being 2 to 1 on the dollar makes it easy for them to buy US based companies.

Does anyone track cancelling domains? I'd be curious to see if people are actually shutting down or finding cheaper hosts.

Large portion of domains end up expiring and are typically endup with the registrar for while.

We are primarily B2B and a large portion of our business is international, so we have not been impacted greatly by the economic conditions in the US. If anything, I think we have seen a huge increase in demand from international customers because the declining dollar gives most international customers far more bang for their buck.

I think it really depends on your target market. (ie: Are you marketing reseller plans to "hosting companies" or are you marketing normal shared hosting to businesses?)

Most businesses will not fold up shop when a difficult economy comes into play, so they will still need their web hosting account. However, most "one man band" resellers will not know how to market their "hosting company" effectively, and so they will be much more likely to cancel their reseller account since they can't attract decent business.

Most of our brands are targetted toward small businesses who want high-end hosting ($50/month and higher), and we've noticed a slight increase in growth so far this year. Nothing major, but definately more signups then "normal".

The only thing that really sucks about the crappy US economy right now for us... is the value of the dollar. I live in Europe, so whenever I pay myself I have to sit down and have a little cry.

Even worse, my company is incorporated in Canada, so I end up having to take a conversion hit at every fiscal year-end, too.

For the first time ever, I'm actually *seriously* considering moving all of my operations to a corporate-tax-free country. Sure, I'll still have to pay my personal taxes when I pay myself, but at least I won't be taking such a huge hit with corporate tax.

I have a feeling more and more folks in this business are thinking about doing the same thing.