I'd like to get a feel for what the industry norm is regarding the cost of customer support in the hosting industry.

From all your expenses per month, what percentage would you say goes to customer support? This includes answering support tickets, phone calls, direct email, etc.

I appreciate your input.

Vito

About 50%. It takes up ALOT.

That's what I figured. I knew it would be high. I appreciate your input. I would also like to hear from others so I can come up with an average. Hmm, perhaps I should have set this up as a poll...

Vito

I find it easer to look at it as $ per account than % . It cost the same to support a $4.99 account as a $9.99 account.
So I look at it as costing $1.50-$2.00 per account per month, more if you have a lot of hired help.

jtr

That estimate is wrong.. It does not cost the same to support a 4.99 account as it does a 9.99 account..


You will find that as your account price goes down your support costs tend to go up.. Its not really linear or anything but you would see a price/support relation if you graph it out.

Why? A person that has no clue about hosting, doesnt know what they are doing to begin with is more likely to go for the cheaper account.

Or you could say that a person who does not know anything about hosting is likey to go with a host that doesn't either? :stickout

Plan on 50% of the revenue being spent on HR and you should be ok. As you grow it seems to hold around that level give or take a few percents depending on what type of benefits et al you offer to the humans helping the company grow.

This of course also depends on your prices since it will take quite a bit more $99/year accounts to support one full time employee than it will $199/year accounts...

The easiest way I've found to begin making these types of decisions is to just jot down some rough numbers to get a general idea and then dig deeper into the reality as you go along (reality being how many people will you actually need, how many accounts will you realistically sell, will others work well for this or that amount, will they require health benefits, etc etc)

If you have 500 $99/year Accounts and only 1 person (yourself I assume) to pay, then 50% of the revenue will give you a $24,750 annual income. That equates to less than $10/hr for this person to service 500 accounts 24/7 in addition to every other operation the company requires. Many of the hosts you see around here that have hung in there since 1997/1998/1999 worked hard and for much less in the beginning to be able to grow to a point to hire more help. It's the hiring of more help that keeps those expenses up there however.

Once you have grown to a point of needing more help it's important to remember that your choices in humans is just as broad if not broader than the choices you made in backbone providers and hardware etc. You can get 'cheap humans' or 'expensive humans'. High-quality long-term loyal help or fly-by-night might show up might not help. These humans can improve your sales and overall company reputation far beyond your imagination or they can put you out of business faster than your Data Center burning down could ever dream of.

When selecting the humans try to remember that though they will usually claim to 'believe in you and your company' (they are in job hunting mode of course) they usually do not have the same loyalty and drive as you yourself do. For this reason it's important that you make showing up for work worth their while.

Offering a free hosting account or a low under the table wage may get you some short term assistance but it is doubtful that it will carry your company through the long haul.

HR is a huge expense and the ranges of support required goes from one end of the spectrum (what is a domain name?) to the other (I'm here to hack you) so the skillset required in the HR is in depth. Those qualified to help out with the more difficult issues that will arise usually are not willing to work for peanuts, but without them, the company becomes worth less than peanuts.

I'm babbling... sorry about that.

In short... yes. It takes up A LOT! If you're setting up shop with that in mind you'll be fine. It's those who forget about this area that struggle, burn-out, and disappear into thin air.

Now that's what I call an answer... :agree: :agree: :agree:

Thanks, Deb. ;)


Vito

I'd budget on the 50% mark also. The costs vary greatly depending on where you are and where you're getting your staff also. Someone in the United States will cost you more than someone equally qualified in parts of Asia.

Costs will vary greatly I've also found depending on what servers you're using and which data center they're in. If the servers or data center aren't up to scratch you'll find you get a lot more support requests from users. Paying a little more up-front for those can save you in the long run.

--Josh

Thanks, folks. I'm asking the question not so much for developing a business plan. Although I have a hosting site, virtually all my customers I get locally (which I feel, personally, are the best ones to get). And because local accounts tend to be very low maintenance accounts, my support costs are virtually nil.

I was more interested in finding an "industry average" because I have to put out a press release for a different site and I'm looking for some basic staistics on the hosting industry.

Unless I'm not looking in the right places, it's kind of hard to find some up to date stats on the industry...

Vito

I concur, In my case, no more than 20%.....(and yes we do have quality support) pays for support,
techs answer calls messages emails and tickets, admin systems, and we pay them between 8-22$ an hour.
But even in a month our connections and hardware for that month have cost us more than our techs. And Id say about half is sales, mangement, specialists, and other operating expenses.

but then agian we do alot more than webhosting

-Dan