Ive been running my hosting business now for about 5 months (starting as a reseller until I build my client base).

Ive been looking at the competition on the Internet, and cant help but notice companies offering plans like:

100 MB Storage
50-100 GB Transfer
Unlimited Email
etc, etc, etc

Im seeing prices like $1.00/month for plans like this!!!!!

How are these companies able to do this and turn a profit...Yes, I know, they obviously arent :) I know you get what you pay for.

It discourages me though, because it makes it hard on reputable companies like mine, who offer quality services and deliver on their promises.

Can anyone give me some insight and possible ways to get around companies like this?

They aren't simple as that. We probably get 5 customers/month from Webhostingtalk theirs always another company offering 60gb's of transfer for $10/mth.

How are they paying for Staff? Servers? Upgrades etc. They aren't they don't have enough cashflow. Their servers are heavily overloaded, always down.

Since the host decided to offer $10/year plans everything is fine in the first two months. He has 250 clients on a server loads are good he has $1000 cash and he has paid the two months of service in advance. After those two months he cannot load anymore people onto the servers (overloaded) hence has to buy new equipment. Hence loosing money.

All is good at HTTPme.COMmunity country. :D:agree:

Except that it can get too darn cold out West there Bob. :)

Gary

Originally posted by Editor
Except that it can get too darn cold out West there Bob. :)
:rolleyes: Sooks. :D

Speaking of cold - We built a few houses down Tenterfield [about 10 years back] and it was in the middle of winter. We leave the pub at about 6am and hit the job site and the come back for breakfast at around 9am. One morning we got to the site and the slab and all the timber was covered with ice. There was a steady westerly wind blowing too. Now that was cold.

Got back in the F100 and went to shoot pool at the pub we were staying at.

The name's Billy - not silly. :D:agree:

i tell you something....they really dont survive, promise us that u wont do the same as them :-)

Toowoomba was the first spot we saw up here after checking in to some motel in the City that the Army uses. We went out there to look at houses for a friend who was being posted up here right after us. It was darn cold. So we looked for own place as far North as we could.

Back to the topic...yep, what Jo said. :)

Gary

By the hair on their chinny... chin... chin...

It amazes me how smart some people are technically. Yet, what amazes me more is how so many of these same people lack the most basic of business skills.

Originally posted by localhost
It amazes me how smart some people are technically. Yet, what amazes me more is how so many of these same people lack the most basic of business skills.

Bingo. There'll be a shake out, but the bottom feeders will always be there.

Hahah

Isn't that the truth! :D



Originally posted by pgrote


Bingo. There'll be a shake out, but the bottom feeders will always be there.

some oddly equate customer numbers with success, rather than income. Ideally you want to have the maximum level of profit per customer, but have that income tempered with a price that will still allow for new signups.

There's a rough estimate that most serious hosting companies use, and that's the general level of pricing outside these bootom feeders.

Price will go up or down depending on a few factors - reputation for one. Using Verio as an example, I doubt many (if any) of us could use their pricing and maintain a decent sign up rate without their ad budget to go along with it. :)

Your best guide is to work out what each account will cost you, then add the price of providing support for that person. Add your projected profit on that of that, then add some more if you plan to advertise or market. Finally add taxes, and incidental costs The final number is what needs to go on the site.

It's not rocket science, but a lot of people seem to forget there's a bit of work in making money - it doesn't just drop out of the sky :)

Greg Moore

Enough banana bending stories! :rolleyes:

We stick to a simple forumula...

Promise the world and deliver nothing.

Originally posted by akashik
Your best guide is to work out what each account will cost you, then add the price of providing support for that person. Add your projected profit on that of that, then add some more if you plan to advertise or market. Finally add taxes, and incidental costs

It's not rocket science

But it seems to be :D
What the hosting offers here and you will know that many failed to add these costs...

hehe true.. but just think of how many of these businesses may have survived with a few hours of scribbling notes onto a piece of paper with a calculator nearby :)

It all comes back to pricing really. Pricing on your hardware, pricing on your business needs, pricing on your time.

If you work on spending enough to ensure quality resources, and maintain a level of cash in the bank to make the whole exercise worthwhile then half the battle is won. All you need to do then is get 'bums on seats', and grow that business.

The end result:
good uptime, good hardware, good support, good income.

not too bad :D

Greg Moore

$1 a month. Please let me know who is that? I would be interested.

Not to be one of those capitalists that everyone hates, but here's my idea... It takes some collective action on part of the larger companies.

I'm going to start buy $20/year plans with unlimited everything, and storing 20 gigs of backups every few hours. If we all start this, maybe we can increase the turn-around time on the destined-to-fail companies and thereby make it harder to get into the hosting market. That really is the problem here, its too easy for any 14 year old to buy a reseller plan for $10/month when his Mom pays for his internet connection and computer at home.

Originally posted by refcom
Not to be one of those capitalists that everyone hates, but here's my idea... It takes some collective action on part of the larger companies.

I'm going to start buy $20/year plans with unlimited everything, and storing 20 gigs of backups every few hours. If we all start this, maybe we can increase the turn-around time on the destined-to-fail companies and thereby make it harder to get into the hosting market. That really is the problem here, its too easy for any 14 year old to buy a reseller plan for $10/month when his Mom pays for his internet connection and computer at home.

ahha, thats a good idea :stickout

Originally posted by Secant
Ive been looking at the competition on the Internet, and cant help but notice companies offering plans like:

100 MB Storage
50-100 GB Transfer
Unlimited Email
etc, etc, etc

Im seeing prices like $1.00/month for plans like this!!!!!



LINK ME!!!!

Originally posted by sour


LINK ME!!!!

Here's a ridiculous example. How about unlimited transfer and storage space for $1.00 dollar per month? Give them a try and report back here about how things go for you. I encourage everyone to sign up there and give them your business and we will soon see how long they remain in business. :D

One Dollar Hosting (http://www.onedollarhost.net/)

P.S. If they do not deliver what they promise... be sure to issue a chargeback. The chargeback fees alone will bring them down. ;)

Have you seen the pricing policy.. Not only do you have to pay for a year up front, but you have to pay a $39.00 membership fee when you sign up too :) haha

Originally posted by TinmaN
Have you seen the pricing policy.. Not only do you have to pay for a year up front, but you have to pay a $39.00 membership fee when you sign up too :) haha

I don't see the $39.00 "membership fee" so when do they pop that little surprise on you? I'm sure it's there to deter people from wanting a refund later when they get the ultimate surprise.. unlimited transfer and space is a marketing gimmick to lure in the uneducated consumer that wants everything for nothing.

I like the addons there....

$24/year Personal Control Panel
Unlimited Emails, Unlimited ODBC, Unlimited Email Forwarding

$70/year Front Page Extensions

$5 per SubDomain...


So if you want to manage your domain and use frontpage to publish it, it's actually $106.00 year....

can't wait to hear comments from the people who signed up....

I don't think I can post a link, so just go to the site and click on "hosting" in the menu, then on the bottom of the page under "payment terms" it explains the $39 membership fee :)

Those addons are in place from their provider, so they would need to pass them on.

Cheers

Gary

Doesn't really matter who the addons cost is passed down from.... a $12 account isn't really a $12 account if you actually want to use it, is it? A vanity page? maybe..... a family page? I don't think so, you'd need a control panel so everyone gets their own email...another $24 a year. Now how do most families create and upload their pages? FP (boo FP) another $70.00 for what most hosts include for free....
IMO, $1 or $2 a month hosting doesn't really exist if you actually want to use it..... I bet most people leave shortly after signing up, when they realize how limited an unlimited plan really is. I would even go so far as to say most of them don't request a refund as after all "it's only $12.00" and the company counts on that and that is what keeps them going...turnover... not the best of business models, is it...

I agree. This particular system is just a bit unique in that these charges come down from their provider for each CP added or FP extensions installed, so that's what they have to work with by choosing that system in the first place.

We used it quite successfully for a while, then moved on.

Cheers

Gary

Hi,

My name is Ken from http://www.onedollarhost.net . We have seen a lot of skeptics in this forum.

<removed>

Sure you can moan and groan saying we can't do this and we can't do that. <removed>

Regards,

Ken

This should be fun :).

Hi Ken, and welcome to the WHT forums... nice of you to offer a free trial, but I am still a little skeptical. We'll see in a couple months how it worked out for those that take you up on it. I am worried that for that month, they will receive the best support and help available, but when they pay for their year, their account is suspended for using too much space, bandwidth, or whatever.
Here is hoping that you are genuine..... if you are, you're the first, and I'd like to talk to you about your business model...maybe even rethink mine :)

Originally posted by Onedollarhos
Hi,

My name is Ken from http://www.onedollarhost.net . We have seen a lot of skeptics in this forum.

<removed>

Sure you can moan and groan saying we can't do this and we can't do that. <removed>

Regards,

Ken

Franticly tosses the cushions off the sofa looking for 100 pennies. :D

<<Removed: Please see http://www.webhostingtalk.com/misc.php?s=&action=forum-rules >>

Originally posted by Onedollarhos
<removed>
Please don't break for the forum rules (http://webhostingtalk.com/misc.php?s=&action=forum-rules) by promoting your business like that.

Good long term business model you've got there -
Payment Terms
$1.00 per month based on 1 year pre-payment plus a one time $39.00 lifetime membership fee. Example: 1st year total cost, $12 hosting fee plus the one time $39.00 membership fee = $51.00 Each year after your total cost only $12.00 per year!!!
Pleeeeeeaaaaaasssssseeeeeee. :eek: :blush:

Hi Ken

Care to explain me how do you offer Unlimited Storage Space and Unlimited Data Transfer?.

Also, I would love to know how can you be profitable charging $1 per month.

I just realized their forum nick: That may say more than anything....j/k :laugh: sorry, I couldn't resist that, it just jumped out at me when I reread the thread.... One dollar ho's

Domain Name: ONEDOLLARHOST.NET
Name Server: NS1.LIVEDNS.CO.UK
Name Server: NS2.LIVEDNS.CO.UK


Anybody else found this nameservers familiars?
(shhh.. fasthost reseller)

:) :D AKASHIK has got it right, as with any business that intends on longevity, start by determining your costs then add in the minimum margin that you need to. As long you stick to that and assuming that your established margins are correct you will be making money. If you can't sell at those margins then it is time to look for something else to do.:bawling: :)

Build up a quaility stable local client base then expand from their.. alot of companies start this way and survive because of their local customer's, Then they have the capitol to expand their business further.

as a side note, it seems very hard to develop a "one price fits all" type solution. Even offering a 3 tiered solution makes it hard to please all of the people all of the time.

Personally, I do not host the "general public". Just friends, acquaintances, and people recommended to me through my various business contacts.

They are paying me between $10 and $450 per month for space on my dedicated server based on their needs and what I do for them.