The bottom line is everyone and their dog are offering hosting because it seems like one of the best businesses to be in to ensure a continuous stream of income each month.

The bottom line is, if one company offers you this much for $5/month another company is offering more than that for $4/month, etc..you get the idea.

You will only survive in the hosting business if you know people who need hosting. Word of mouth. Your ads will not help bring in the volume of customers you are looking for (unless you have thousands at your disposal and can print full colour ads in major magazines and newspapers)

Here are some tips:

- Strike deals with local web designers where you host them for free, provided they bring you all their clients
- Partner with an ISP
- Offer web design/programming and offer a special deal if they host with you
- Ensure that your reseller plans are competitive, and let someone else sell your packages


If anyone disagrees with my points, i'd love to hear your reasoning =) (or add to them)

I don't disagree with you at all. I think you need something different to stand out. What that is, hard to find. What other types of businesses would you think are better than hosting?

This is correct. Everyone should get out of hosting. Myself and those that know better will appreciate it.

:D

I figure a little while longer and the bottom feeders will dry up. However possible it may seem for some mega company to form capable of offering real service for $2.00/mo, with the thousands of fractured niche industries it'd be next to impossible for this to happen. More likely the low ballers will disappear and those who want or need hosting will realize the value of communication.

Then again there's plenty generations of $2.00 hosts left. Who will live out the storm and come home with the fish? Only George Clooney knows.

Sincerely,

-Matt

Well without going into too much detail.

I think you have missed alot of key points. Plus in the hosting industry alone there are alot of markets.

First and foremost what ever main datacenter you choose make sure its a good one. That the core support is rock solid. 24/7 phone lines, emergency support, on hand techs, even your techs make sure that everything is in place.

Second suprisingly customers due see value and also do recognize good service. Being that Ive owned a company and worked for two others, customers have friends who have friends who have friends. You'd be suprised it usually works.

Third striking deals with designers is always good but not for free. Regardless of how many customers they bring it is important to make money. Get them on a deap discount reseller plan or some type of system, but income is your friend. Plus let them be there own hosting company.

Fourth, partnering with a ISP is usually a bad thing. Most ISP sell hosting anyway. If you are going to reseller there services its one thing, but partnering doesnt do much.

Fifth unless your really good with design or can outsource it quickly, offering it is good, but stay focused on your business plan. Getting into too many areas can cause problems.

Sixth, obviously competitive is important but make sure your profit margins are good. Its good not to be the cheapest, in many ways it degrates what you are offering.

Finally, find your niche, advertise locally their is alot of money right in your city. College is also important. You dont need a ton of money to run a hosting company if you run it efficiently and run it well.

Just my thoughts

Originally posted by JBIZ718
Finally, find your niche, advertise locally their is alot of money right in your city....
It's amazing how a lot of folks miss that market. They think because they have an internet business, their clients business must be "global".

Originally posted by Aussie Bob

It's amazing how a lot of folks miss that market. They think because they have an internet business, their clients business must be "global".

they dont have to be?? ;)

Well Aussie, suprisingly their are alot of people who seem to miss that element.

Originally posted by JBIZ718
Well Aussie, suprisingly their are alot of people who seem to miss that element.
Yep. It's a market that we're going to attack early next year. :)

I guess for any business to stand out, it needs to have a Unique Selling Proposition (USP) ... what is the one main benefit that makes your hosting plans better?

Be it service, uptime, features, additional tools/scripts, etc. Price wise, most under $10/mth plans perform well ...

I don't recommend differentiating based on overly low pricing alone as it'll cut margins painfully.

Price your basic plan with plenty of diskspace+bandwidth+features for eg. $7.95 or $9.95 and throw in a USP .. eg. you got super 24hrs support? or 99.99% uptime + recovery within 30 mins of downtime?

Greetings:

"The bottom line is, if one company offers you this much for $5/month another company is offering more than that for $4/month, etc..you get the idea"

This is called competing on price. No one ever wins when companies compete on price. The consumer doesn't even win because the only way to compete on price over time is to decrease all values served.

Companies that strive to compete on values provided for reasonable fees will continue to see strong margins they can in turn invest back into the growth of the business.

Thank you.

Three important points to compete:
1. Service
2. Service
3. Service

My primary business is not hosting, but it is a growing component of it. We charge our customers 5 to 10 times what the bottom feeders would charge, but we sell on service. Many of our customers don't even understand the stats thrown out about hosting plans (transfer vs. storage, etc), but they do understand business. We simply show them how it is good for their business to have us on their side, and they are happy knowing we are taking care of them.

Think local colleges are a good source for getting clients, a buddy and me got into an argument over this as most college students are poor and looking to make money not spend it on website hosting.

Derrick

A good person will not pay 2 / 9 dollars if they have a good site....


And for those market you can buy a 10 MB dedicated and host 2-3000 sites and charge 5 :)

I don't follow...

Originally posted by hostingsp
A good person will not pay 2 / 9 dollars if they have a good site....


And for those market you can buy a 10 MB dedicated and host 2-3000 sites and charge 5 :)

What is that supposed to mean? :eek:

What is that supposed to mean?


Get a server capped @ 10 MB it no GB transf. over charge...


And overhost those $ 1-9 accounts....


Beacuse if you don't oversell... they will :)


And if he want's better service he will pay more

Originally posted by hostingsp



Get a server capped @ 10 MB it no GB transf. over charge...


And overhost those $ 1-9 accounts....


Beacuse if you don't oversell... they will :)


And if he want's better service he will pay more

Hmm, that's a little better, but still hard to understand.;)

<<Removed>>

Rusko why don't you mind your biz you *

Let me try to put this on baby talk...


Many off those $ 1-9 acount that it's hard to meat there price/features they oversell there server our there bandwight...( backbone )


Let's say you get the 10 MB dedicated server it RS...


And you host 1.000 - 2.000 sites... of 1-9 bucks.. You are overselling... There for you can make money and try to get the other company's price's up our try to break the other biz...


Do i need to explain again your you two baby's get the point ?

I understood you hostingsp and its good logic.

End of the day ... offer a reasonable priced plan with standard features ... then establish your USP ... and you can prosper! of course, marketing counts! :D

Originally posted by hostingsp
Rusko why don't you mind your biz you *

Let me try to put this on baby talk...


Many off those $ 1-9 acount that it's hard to meat there price/features they oversell there server our there bandwight...( backbone )


Let's say you get the 10 MB dedicated server it RS...


And you host 1.000 - 2.000 sites... of 1-9 bucks.. You are overselling... There for you can make money and try to get the other company's price's up our try to break the other biz...


Do i need to explain again your you two baby's get the point ?


No I understand what your saying now it's just you're really hard to understand sometimes...Sorry if I offended you.

Originally posted by vSector
I understood you hostingsp and its good logic.


Thank god :(


No it's ok some times i write fast and i'm half american, but i'm in Brasil since 1994 so i'm making mistakes and forgeting somethings :)

The one i got real pisted was it rusko... but i'm glad we have chicken 24/7 :beer: :)

Thanks chicken ;)

Originally posted by hostingsp



Thank god :(


No it's ok some times i write fast and i'm half american, but i'm in Brasil since 1994 so i'm making mistakes and forgeting somethings :)

The one i got real pisted was it rusko... but i'm glad we have chicken 24/7 :beer: :)

Thanks chicken ;)

Ahh ok. :):agree:

The market is very competitive, epecially if you look at the market as just "the web hosting market"

The market is not nearly as competitive if you shift the market focus to multiple end user markets.

In terms of a USP - I think it's pretty hard to define a USP from a product perspective - whatever you do, a thousand other hosts are offering the same.

The competitive nature of the market also has some upsides - it is relatively hard for a consumer to find the right host because they have so many choices, and so few ways to get real quality information to guide their choices. This then means that a consumer may put many hours into the decision making process and doesn't want to go through it again or admit a bad decision on their part. So - when you gain a customer their willingness to become loyal is high.

Even with the market being so competitive - the pie is getting bigger every day - so any host will eventually get customers if they put in some effort. The real question at the end of the day will be how many customers did you keep ?

First things that comes to my mind:

1.) answer your sales inquiries FAST
2.) answer your support tickets FAST
3.) be honest and never offer more than you can deliver
4.) sell packages to make profit, not just to get customers (unless you really start out)
5.) print your company logo on the pen, cup or t-shirt and send to your loyal customers or who has more than one hosting account with your company
6.) sometimes giving a free t-shirt (for some limited time for new sign-ups) will help you to gain more customers ;)


Always remember ---> Quality and Support counts. Unsatisfied clients will scream and it's hard to hide in Internet newsgroups, web sites etc. Be nice!

Excellent advice from Apollo in 6 clear points.

Advice No.5 shouldn't be underestimated - a $2 t-shirt in the mail could easily be the difference between a customer that stays 3 months and leaves to go with a cheaper plan vs the same customer that stays for 5 years paying higher prices.

Point 1 & 2 from Apollo is very important in keeping customers ... during my initial experiences with hosting firms, their speed with support and general replies was a major determining factor in me keeping my business with them ...

And yes, my previous host from years ago, Adgrafix, always sent me nice little cards .... and I did stay quite a while with them until they pissed me off (can't really remember what) :stickout:

:) actually, maxim.net (now hostcentric.com) always sent out Christmas cards :) Probably, this year again :)

that's rite ... don't underestimate the little card ... it can build customer loyalty too .. especially in the online world when most people expects a cheapo ecard at most :D

For anyone who hasn't studied business I would recommend reading through some of the work of Michael Porter, he developed a model of competition and a very easy to understand version can be found at http://www.themanager.org/Models/p5f.htm#_Toc516553145

If you apply his model to the hosting industry you can see the reasons why it is so competitive:

Bargaining Power of Suppliers (dedicated server suppliers/colo's) is high:
1) The suppliers customers are fragmented, so their bargaining power is low
2) The switching costs from one supplier to another are high - moving thousands of sites isn't easy :)

Bargaining Power of Customers is high
1) The supplying industry comprises a large number of small operators - lots of hosting companies
2) The product is undifferentiated and can be replaced by substitutes - in essence web hosting is pretty similiar, diffirentiation is not easy on a product basis, just service etc
3) Switching to an alternative product is relatively simple and is not related to high costs - a customer can usually move his site in a few hours.

Threat of New Entrants is high
1) High initial investments are not needed
2) as already stated the world and his dog are able to do it

Competitive Rivalry between Existing Players is high
1) There are many players of about the same size
2) Players have similar strategies
3) There is not much differentiation between players and their products, hence, there is much price competition

The above is taken from the link given which also details, in simple terms, how to combat some of these.

A competitive strategy usually falls into one of 3 catergories, you can:

1) compete on cost - this is where the new enterants win, their costs are low, once you have been around a while, built up a customer base, your costs rise as you need extra staff for support etc

2) Differentiate - easier said than done and mainly relies on a long term strategy of providing good support, not something that will show results in a few months.

3) Segmentation (niche marketing) - attacking a well defined market segment can work, defining and accessing a true niche again can take time, effort and money.

Ok so you're probably bored by now ;) but wait there's more :eek:

Things I would like to see to reduce competitivness:

1) Established hosting companies grouping together to buy services from suppliers and so increase our bargaining power for purchasing - not easy and requires trust but would be good if achievable

2) The development of server migration tools that allow the swift and easy move from one server to another of all sites, so that dedicated server suppliers know you can move overnight if they don't provide a good service at a reasonable price.

3) A rise in the difficulty of new enterants into the market, some of the new visa regs may do this if it makes it more difficult for a new company to get merchant services.

4) make it more difficult for a customer to switch hosting providers, tie them in with extra services and bespoke offerings that other hosting companies cannot duplicate easily or would require a high amount of work or cost

ok enough, just my 2 cents and a bit more :)

^^ good post time-to-go - feels like i have just had a miny business studies lecture.

very interesting

:D

Originally posted by apollo
:) actually, maxim.net (now hostcentric.com) always sent out Christmas cards :) Probably, this year again :)

Do they send them via email or snail mail?

I think that's a great idea, but to me at least it might seem a little awkward, but like everyone else is saying, it could mean the difference between staying with the company and leaving.

The Webhosting Industry is a purely competitive market. Firms enter when they believe that there is a economic profit and exit when prices are lower than their average variable costs :) Since there are still many players here, there is still profit to be made.

I think hosts all play a kinked model game plan:

1) Hosts don't raises price levels when their competitors raises price levels.
2) Hosts participate in a price war until it gets sooooooooo low, they are forced to exit.

Originally posted by apollo
:) actually, maxim.net (now hostcentric.com) always sent out Christmas cards :) Probably, this year again :)

So do they just assume all of their customers are practicing Christians? Jews, Muslims, etc, need not apply? :)

Hopefully they are generic "holiday" cards like we get from a few suppliers. That seems so fake to me anyhow.

Kevin

Originally posted by sigma

Hopefully they are generic "holiday" cards like we get from a few suppliers. That seems so fake to me anyhow.
Kevin
I agree they should be "generic" in nature, but I do not think most of the clients who get a nice card from their webhost, showing the host's appreciation for their business, would think the card fake and totally disregard it.

I could be wrong, but our thousand or so cards that go out each year (snail mail) tell a different story :)

Happy holidays! :D

- John C.

Originally posted by JohnCrowley

I agree they should be "generic" in nature, but I do not think most of the clients who get a nice card from their webhost, showing the host's appreciation for their business, would think the card fake and totally disregard it.


Sorry, I didn't mean fake as in a forgery. I meant fake as in insincere. Although hopefully hosts have better relationships with their customers overall.

Kevin

Originally posted by sigma

Sorry, I didn't mean fake as in a forgery. I meant fake as in insincere. Although hopefully hosts have better relationships with their customers overall.
Kevin

Right, I also meant insincere ;)

We have built customer loyalty using methods such as cards to show our appreciation, and it seems to work quite well. At least that's what the retention numbers tell us.

- John C.

From the thread with the writings of P.T. Barnum (http://www.webhostingtalk.com/showthread.php?s=&threadid=93386) I downloaded and read the entire work. A quote from it is:

The basement is much crowded, but there is plenty of room upstairs . . . whoever excels all others in his own line, if his habits are good and his integrity undoubted, cannot fail to secure abundant patronage, and the wealth that naturally follows.
yjack

Wow... Deep Thoughts with P.T. Barnum. :D

Originally posted by infinityws


Do they send them via email or snail mail?

I think that's a great idea, but to me at least it might seem a little awkward, but like everyone else is saying, it could mean the difference between staying with the company and leaving.


snail mail with a nice card :)

I think it's more about relationships, and the tone you project, rather than price.

If the customer feels hurried whenever he or she calls, or not listened to, low prices don't matter, and the inverse is also true.

Wow, I was just going to start a thread about Holiday cards and how many hosts send them out. We finished our holiday mailing on Tuesday, and think it is a very valuable tool in establishing and retaining customer loyalty. With the price of the imprinted cards and return addressed envelopes, along with postage, the cost is negligible, less than $1.00 per client, each year. Worth much more than that in goodwill! We also have promotional items that we give away, mainly keychains, and have had some companies ask for 10 or 15 for their company vehicles... yeah they may be too cheap to buy any, but we look at differently. Someone new is always seeing our name..... :)

Well I just received a happy holidays email from ING Direct (bank).