how can we increase sales in hosting as there are thousands of host in market.
is live chat on website is good?

Support through all medium are good. It gives option for different type of customers to use the one in which they are comfortable to contact support/sales.

My advices are
1) Start having a blog on your website and write contents which are useful for your targeted customers
2) Get on to Twitter to post your update there
3) Keep your website updated every month
4) Run sales promotions and have adds of it on forums like WHT, WHIR, etc
5) Give your customers Free Hosting for one month or so. So that they will get to know what they are going to get before signingup.
6) Give special pricing for initial few months to push them to decide to stay with you

etc etc

Also, it is very important to implement an affiliate program. Attract partners and pay honestly for all sales generated from their websites.

Livechat will help, but doing some marketing ads on a few website like WHT will help a lot.

As each customer is hard-own and the value of the customer is so high, you'll want to make sure you have the support service that keeps your customers happy. You should probably make the customer service priority with email answered in fashion and well trained technical support. Concentrate more on providing the satisfactory service to the existing clients this will help you to get the reference for others from the existing clients.

Also, I would recommend to launch PPC advertizing campaigns in the major search engines like Google, Yahoo and MSN if your website is not well optimized. Definately it will bring some ammount of targeted traffic to your site.

Unless you come-up with a new strategy or a different business plan, you cannot drive much sales. Hosting is very very competitive right now!

Yes,I think so.Guarantee of money,free domains and dedicated IP will help.
I am selling web hosting too and I give free domains and dedicated IPs.
Hope you have good sales soon.

Do advertising campaign in all big forums and set your google adwords will help also :)

If you have a couple of customers currently, TREAT THEM LIKE GOLD.

I think it's fair to say many of the guys around here are where they are due to word of mouth. I found the greatest quality when dealing with clients is honesty and being "human". Don't stick to the book... If they want to rant on about hockey pucks for 5 min, let them. It helps build the relationship. I find many hosts are nothing but canned replies and outsourced replies. You can take advantage of something as simple as a ticket by making it a client to business personal interaction.

Anyways, that was ranty... sorry.

Providing high quality service you will manage to receive a good reputation and reviews. Existing clients will begin to recommend your company to friends and other people. Definately this will result in more sales.