Web Hosting:
$19.95/year personal site (20meg) (500meg transfer/mo) (1 email)
$4.95/mo small site (50megs) (1000megs transfer/mo) (5 emails)
$9.95/mo medium site (100megs) (2000megs transfer/mo) (10 emails)
$17.95/mo large site (200megs) (3000megs transfer/mo) (20 emails)
$35.95/mo super site (400megs) (7500megs transfer/mo) (50 emails)
$49.95/mo e-commerce site (1000megs) (20000megs transfer/mo) (unlimited email)

Web Hosting Resellers:
$75.00/mo small reseller (2000megs) (30000megs transfer/mo) (70 sites)
$100.00/mo medium reseller (3000megs) (45000megs transfer/mo) (105 sites)
$125.00/mo large reseller (4000megs) (60000megs transfer/mo) (140 sites)
$150.00/mo super size reseller (5000megs) (75000megs transfer/mo) (175 sites)
Dedicated servers available

This is my current plan on pricing... I've seen people offer my super size reseller at like 20bucks a month... or my e-commerce site for 5.95 a month... maybe I'm a 'little' overpriced, but I offer amazing service - but I CAN NOT understand how people charge pennies for a half a server.....

Oh yeah.. anyone wanna post on what they think my prices SHOULD be? or if i should offer higher bandwidth for these plans?

And, can someone explaine to me how some people charge like 10% of what I charge? Do they just have extreamly crappy service? Or what.. I'm baffled here! :confused:

tehy can offer such low prices becasue they oversell like crazy. dont worry, theyll be out of business soon

Best advice to deal with hosts offering the world for pennies - ignore them. They won't last. If you offer a quality service, people will be willing to pay the price.

So, are my prices fine? I am overselling bandwidth a bit, but I can afford to pay for the overcharges if a customer actually utilizes his full BW...

Am I overpriced, underpriced, right out there?

We offer TRUE 24/7 support via ticket system, online chat help, icq, msn, aol, irc, 1-800#, emergency pager-setting-off email.. all of it...

So, it that a good price?

Originally posted by Lirath
And, can someone explaine to me how some people charge like 10% of what I charge?

Well, how well are you doing at those prices, are you growing steadily?

its not prices i'm offering yet.. its what i was planning on offering..

i wanted to be in the middle of the price war.. i see places like hosting.com offering a tiny plan for 50 bucks..

or some guy locally here offers hosting (one plan only) at 45/mo

then i see people who offer almost a dedicated server for 19.99/mo... so, i just wanted to see if my prices were okay

Lirath here's the advice from an accountant :).

When developing your pricing structure do not look around at other hosts.

1) Look at your costs and the profit margin you are willing to live with.
2) Develop couple of pricing models and do some what if scenarios thats why Microsoft created Excel :).
3) Do not price your plans below what it would cost you to provide them (this is what I call front end overselling).
4) Talk to your accountant about pricing model that you developed
5) After that go to any big hosting searching site and see what they are charging for the similar features.

No one on this board will be able to tell you if your prices are reasonable because we do not know how much you are spending to run your business :) If you offer an amazing service you'll have a happy customer base who will be willing to pay a little extra for it and to reffer new clients.

Lirath,
I think you're plans are reasonably price. If you provide quality service and great support than your customers will pay for it. All those companies charging everything for $5/year... jus ignore them as they're be going out of business very soon.

- Mike

I was one fo those screwed over by Cyberwings and thus when look at hosts, if it seems to good to be true then it is. I think your prices are reasonable even though they may be higher then some other hosts.

Also one comment on the reseller plans, I would not limit the number of sites they can have. You limit thier disk space and bandwidth and it should be up to them to divide those resources into the plans and number of accounts they want.

As someone said, many of those hosts that offer everything for nothing will be gone. Honestly, I do not even consider them as hosts, I call them scams, as many of them ask for a yearly payment, and once they are out of business they never refund the money.

Here is my 2 cents:

1. Don't offer anything under $6 or $7 a month... why bother?
2. Don't accept annual payments... just my opinion if you ever go to sell, those annual customers are no longer assets - they are liabilities.
3. Ignore what everyone else is charging. Sounds like a dumb idea in any other business in the world - but I could care less. Who am I in a price war with? The 14 year old selling hosting for $1 a month out of his bedroom... I don't think so! If you don't pay my fees, go somewhere else and see how poor their service is...
4. Whover made the comment about margins hit in on the money. It doesn't matter if you are selling hosting or apples. Business is Business. How much is going out, and how much is coming in - real simple - yet this somehow gets lost in the hosting business...

just worry about your income/outflow and see short/mid/long term if your plans will stay in the black after a reasonable amount of time, and then continue to grow. Make sure that your business plan, accounting, and your marketing plan all jive.

Don't make the mistake of lowering your prices to get customers quicker. It's hard to make it up later, and you'll have to redo your whole plan to increase your prices. There are many hosts that are MANY, MANY times your cost, and they have no problem getting clients. It just obviously took more marketing/branding and maybe longer to get to that point. Just take this time to learn as much as you can about business and build relationships with the current customers you have.

If you don't have a newsletter for your clients that has useful information, start one.

Consider offline marketing if you haven't already, the top line is higher.

Maybe you're not getting the point across in your marketing and website about what makes you worth more. Doesn't matter what you say, it matters what they hear.

Maybe focus on local markets. WHT pricing is not the norm out there. What about your own city?? How many hosts are servicing your city?? What do they charge??

Also, seriously consider your target market. Don't be just another me-too host hoping people will come along and find you on the net. I started hosting 3 months ago and the local SBE market (Sydney, Australia) is where the money is for me. Serious small business people with serious websites who want serious hosting. In fact, starting next year I will start a new brand for this market as my prices are currently way under what this market will bear.

si,

SBE and SOHO are almost untapped markets. Especially the ones who aren't tech related. Here is where the hosts that deliver service really shine. You have to tell them what they need, and then tell them what you have to deliver it. After a while, they just do what you say. If you come to them with answers they will listen. Then you start a kind of 'doctor'/'patient' type of relationship with them instead of a supplier/customer type of relationship. That takes work and dedication, but it pays off bigtime in the long run.

It's a whole different world than 90% of the hosts that post here.

Originally posted by freakysid
....In fact, starting next year I will start a new brand for this market as my prices are currently way under what this market will bear.
We're launching into 2 Australian cities next year with hosting specifically branded for those cities. [not Sydney ;)] Just putting the finishing touches on the sites and organising promotion at the moment. Will start with 1 city around January and then launch the other city a couple of months later.

I think your prices are fine. don't worry what everyone here does. This is the bottom of the hosting heap. If you offer a good product with good service and you think those prices are reasonable then go for it.

Aaron

I am targeting local markets.. big time

That is our main plan SIMPLY because you can type "cheap web hosting" in google and find a place for 5 bucks a year and other ridiculous stuff...

There is only 1 other person in town (besides local ISP's) that host sites, and they currently only offer ONE plan (which is 45/month) have local servers on a cable modem with a local ISP - they do it just because they are a web design company (which we are too, but we wanted to offer real hosting)

I'm not having my prices barely undercut them because I wanted to compete online aswell.. But when I look at the Web Hosting Requests forum and see someone asking for 3gb of space, 50-100gb of bandwidth and an ulimited cpanel license for 15 bucks a month... AND PEOPLE REPLYING WITH OFFERS - i almost wet my pants...

Or someone asking for 1000gb of bandwidth a month for $100-$150 bucks... I don't understand how that is even feesably possible for ANYONE - regardless of service... People respond to that so I just wanted to make sure it wasn't ME who was overpriced, but them who were underpriced...

heres an easy way to determine if you're overpriced:

determine what you're paying your colo provider for rackspace and bandwidth together, per month.

Let's say you pay a modest $175/mo for 1Mbps traffic (300GB) and a guess at $250 for half of a rack (21U). So that's $425/mo.

So, with that, you can offer packages providing 10GB of bandwidth for $15.95/mo and make $50/mo

This is assuming no other monthly bills, which obviously doesn't represent real life.

So.......

<midnight rant>

Web hosting is a commodity product. All hosts offer basically the same thing, disk storage and data transfer. Sure, some offer bells while others offer whistles and some even offer bells and whistles but in the end you are selling disk space and data transfer. A low price is not a guarantee of bad service and a high price is not a guarantee of good service. You got to test the service to find out if it suits you or not.

There are other high tech commodity businesses. Making PCs is one of them. Just as in hosting, a high priced PC is not a guarantee of a good machine while a low priced model is not a guarantee of a bad machine. In PCs DELL is the market leader. What can we learn from DELL? As far as I'm concerned the lesson to be learned from DELL is rather simple, become the low cost provider so that you can kill your competition in a price war. Becoming the low cost provider does not mean skimping on the essentials like fast access and 99.9 uptime. But you should not waste your time, effort and money on nonessentials.

matrosov's advice is very good, make sure that your selling price is above your cost. But that is not enough. You have to squeeze every penny that you can out of your costs so that you can be the low cost provider. That is the only way to guarantee that you'll be left standing after a price war kills all your rivals.

Of course, there are other selling points besides low cost. Each one of us has to find that something extra that we can offer our customers to keep them happy and loyal. That something extra is one of the few things that will justify a price above the lowest common denominator. If you are a me-too host then all you can expect to charge is the lowest rate.

One of the reasons some newbies charge too little is because they don't put a money value on their time. By ignoring the value of their time they might pay for their out-of-pocket expenses but they won't be making a real profit. Unfortunately for the professional host, these underpricing newbies do put a lot of pressure on the market. One has to resist the temptation of offering services below cost just to beat out these newbies. Let the underpricing hosts go broke and then pick up their customers.

</midnight rant>

No disrespect intended, I absolutely agree with 99% of your post captainccs, except the part about all hosts offering the same thing. It's not all about space and bandwidth, there is service. We proactively help our clients to be successful on the net, by doing things like emailing them with things we find that could help their business, sending them referrals, helping with business introductions, etc. There are more than bells and whistles that some hosts give.

If someone's business is just web hosting, then I agree, not much difference between one host or another other than the quality of the server, connections, and support. Not all hosts though just offer this. These other services don't come cheap, but they don't have to be expensive either. It all comes down to your other good point about how much your time is worth. We try to spend any non-productive time by focusing on things that would make our clients talk about us when they get home - in a good way. We also try to allocate time in our 'productive' schedule. This makes sure everyone knows that they shouldn't be just sitting around surfing or chatting. Obviously though, we couldn't possibly justify this kind of service if we were charging $4.95/mo for a 1G/10G.

Neither Space and bandwidth is the same, you can offer space on IDE HDs or in SCSI HDs, offer Multi-homed bandwidth or a single cogentco connection.

Offer 24/7 support or be a one-man show bussines.

Nothing is the same.. all is different.

Originally posted by skelley1
If someone's business is just web hosting, then I agree, not much difference between one host or another other than the quality of the server, connections, and support. Not all hosts though just offer this.
You are quite right that some hosts offer more than others. The question is, How do you charge for it?

I'm still making up my rates and I think I will unbundle the hosting from the service. I know what I want to charge for my time and I also know what my market will bear (not too much just now that we are in such a political mess). I can set different mark-ups for the various services, domain registration and hosting. By unbunding my prices I can offer my services to customerrs that host their sites elsewhere.

No disrespect intended...
I searched your post all over for disrespect and I couldn't find any. Must have gotton lost after you posted it! :)

Well my host charges very little for a lot of space. He charges $12/month for 1.2GB bandwidth (reseller). I actually pay $4/month for my reseller account for 400MB.

I know his dedicated server costs $100/month.. So I think that is why his prices are low.

Simple as pie: if you do not have much you pay to run your hosting business, such as dedicated server, etc, you do not have to charge $14/month for 50MB.

Originally posted by Jedito
Neither Space and bandwidth is the same, you can offer space on IDE HDs or in SCSI HDs, offer Multi-homed bandwidth or a single cogentco connection.
You know that. I know that. The end customer usually doesn't know and doesn't care. He just wants his site up and running like clockwork. That's what he hires us for, to keep his site up and running.

originally posted by captainccs
I'm still making up my rates and I think I will unbundle the hosting from the service.

we've been going back and forth internally, trying to decide how to break this up as well. One camp says to break away with a different site offering pure hosting for cheap, and refer between the two, and the other camp says to offer basic hosting only and add for each service.

Both camps have valid arguments for and against each side.

Our biggest concern is ignorance on the part of clients. We couldn't possibly offer a non-suported hosting option and then have clients start getting mad when they want support. Our target market isn't exactly web-savvy, so ignorance plays a big part in how we have to set things up so they get both what they want and what they really need, which isn't always the same thing.

Originally posted by captainccs

You know that. I know that. The end customer usually doesn't know and doesn't care. He just wants his site up and running like clockwork. That's what he hires us for, to keep his site up and running.

and it's your job to tell him why he needs hosting service on a multi-homed network...

Originally posted by skelley1
Our biggest concern is ignorance on the part of clients. We couldn't possibly offer a non-suported hosting option and then have clients start getting mad when they want support. Our target market isn't exactly web-savvy, so ignorance plays a big part in how we have to set things up so they get both what they want and what they really need, which isn't always the same thing.
That sounds like a wonderful audience for someone willing to teach as part of the total service package. Maybe you should think of yourselves as web consultants who also offer web hosting. That's how I look at my audience.

BTW, IamTheGuru.com is available! ;)

I remembered in the old days, I always wish to find cheap dedicated / colocation servers at WHT, I tried many cheap companies and got lots of bad experiences, these experiences are painful, their unreliable services just kicked my existing customers off. Sure, I always thought that cheap hosts should not 100% equal to unreliable, just have a high percentage of risks behide, and I thought I maybe luckly to find someone is cheap but reliable who only lower the profit margins... so silly :o. Now, I have no confidence to try cheap services anymore especially when I am doing business.

Apply same principle to my business, for example, I won't sell .com domain registration about $35, but I also won't sell it as low as stargate @ 7.95.

Originally posted by Aussie Bob

We're launching into 2 Australian cities next year with hosting specifically branded for those cities. [not Sydney ;)] Just putting the finishing touches on the sites and organising promotion at the moment. Will start with 1 city around January and then launch the other city a couple of months later.

As long as it's not Adelaide ;)

I shotgun Adelaide :D




But yes, It's a great relief reading this thread! I was thinking geez, how am I going to be able to compete in this market at all with pricing! I'm a bit surprised at how your average host offering 20gb bandwidth for $5 a month actually survives! :)

I've read this advice many times before and I am now in a position to give it myself, having experienced the validity of it.

If you do not respect your time, no one else will. The bottom line is to be honest and have honest prices. If you charge a reasonable amount for your services, whatever they are, and deliver them the best way you can manage, your customers will notice. And when they notice, a relationship will form where they become loyal to your business and refer their friends to you. You gotta give to get in this life. Giving them everything for nothing will leave you sour and feeling taken advtange of and capsize your business. In retrospect, charging a lot and caring little to expand your business and offer exceptional service will leave the customer sour. Find the medium and stay there.

Many, many successful businesses have thrived simply by starting with word of mouth and by targetting local markets. Keeping your overhead as low as possible and doing business with integrity and innocuous expansionistic foresight is a nearly fool-proof means to success. It doesnt happen overnight but it happens.

Thats just my 2 cents.

Originally posted by intraweb
Don't accept annual payments... just my opinion if you ever go to sell, those annual customers are no longer assets - they are liabilities.I have to disagree here. one reason I choose my current host was the availability of annual payment combined with a liberal discount. I currently maintain seven accounts with this host and have barely opened four tickets in the past twelve months.

Interesting thread.

The money in this industry is in the small consumer who "doesn't know what he needs". That means it takes EFFORT to get up off your chair and market yourself to your community.

I've discovered that 90% of the small companies I approach will purchase our premium hosting services, even though we charge a very high price. (Above $100/month for 200MB account)

These companies are looking for LOW RISK. It is about sales. If you are able to SHOW THEM that they will LOSE at least $100 per month if their website is down, or they don't have email, or whatever.. then they will sell themselves on your service.

It's reverse sales, really. You begin by helping them understand how valuable their business is. Show them how their website gives them at least $100/month in revenue.. walk them through the understanding that a website is critical to their business image and reputation.

Then explain to them that in order to maintain that excellent reputation and image, they must have a website that is never offline. Email must always work, even if they don't check it every day, or their customers will think poorly of them and sales will be lost.

Once the customer realizes the value of their website and email services, it is very easy to tell them that they can MAINTAIN their excellent reputation ONLY FOR $100 PER MONTH! "That is a fanstastic deal", you say. "Where else can you find such an opportunity to build and maintain your business product and reputation that costs so little?" etc.... you are helping them see the value in your services.

After it's done, they will BEG you to host them for that price.

OH... but what about when they tell you they're only paying $10/month right now and it works fine?

Good question. But does it? Do they have access to a 1800 number? Do they have 24x7 true support in their LOCAL COMMUNITY? Can they expect someone to walk them through fixing an email problem, or helping them upload files, etc? Go back and help them understand that for the sake of $90 per month, is it REALLY worth it for them to risk the reputation of their business with even ONE potential customer who visits their website when it's down, or sends them email when their email is broken? Again.. let THEM sell themselves on why it is important for their business to use the BEST SERVICES available in their city.

(And by the way, if you're charging $100/month and NOT offering personal support, 24x7 support, 1800 number, etc.. then you are a poor business person and are just plain greedy.)

Customers want to know that their business is 100% safe-and-sound. And I've found that almost EVERY person I've approached has purchased at least our minimum package ($100/month). You just need to explain to them that it is the "least risk" option for their business. Let them realize they would be nuts to pay less.

It works, but it does take time, effort, good business presentation, and most importantely, the ability to get off the couch and out into the real world. (I find most people here are techies, and not capable of this kind of personal sales interaction.)

Cheers!

absolutely mrzippy

it's all about benefit-based selling instead of feature-based selling to get them in the door with a high enough margin to be able to maintain great customer service - which costs money.

We are trying to maintain a balance of becoming a 'total internet solution' without our services becoming diluted. A small business needs a whole lot more than just disk space and bandwidth. Some people would like to specialize in just that and leave the rest to other companies, but we've found that it's the rest of it that is so profitable. We only host on our own servers because it allows us to be able to support our clients better. We certainly don't do it for the profit.

Sales is all about hitting hot buttons. For small business owners, a large percentage of them value profit, recognition, stability, relationships, etc. Making sure you bring that into a presentation - on a personal, not general level - will increase sales tremendously. Value is only a perception. That perception can be molded. Finding their reasons not to buy is critical. Then turn that into a positive, and there you go!

When I used to sell cars many years ago (please, no hissing) I specialized in Ford trucks for a while. I used to have customers that would complain that the doors on Ford Rangers wouldn't shut unless you slammed them. I thought about this a while and figured it was due to air pressure. I then started working this into my walkaround. When someone first got into the truck, I said, "Now I want you to pay attention to something. When you close this door, you're really going to have to pull hard. The Ranger is built so tight and secure that it seals the air and makes it a bit harder to close." The customer then closed the door and we continued on. She didn't buy that day, but came back about a week later and said, "You know, I went to check out those Chevy's and you were right. That door closed REAL easy. I don't want that. I'm here to pick up that truck."

I built lots of subtleties into my presentation, which started the moment they saw me walking across the parking lot, and continued with each and every contact I had with them.

You have to get that psychological with your service as well. Just because you are giving them a fantastic deal doesn't mean that they will perceive it as such. You could be giving them a mediocre deal, but if it is what they were specifically looking for, it is a great deal to them. They might even be able to get what they are looking for somewhere else, but if that somewhere else isn't telling them that they do that, then they lose the sale. You need to also make sure that clients (and potential clients) see value in the services that you sell, even if they didn't think they needed that in the first place.

Excellent post. I liked the story about the ford ranger.. :D

I am reminded of something when reading this stuff again.. many large SUCCESSFUL design firms (the ones that charge thousands for simple web pages) are successful because they sell SERVICE, and not just product.

Most of these companies don't list their prices on their sites. Why not? Because they realize that to their target customers, pricing is secondary to service. They are selling themselves and convincing the customer that they are the company for the job.. and THEN they show their pricing. At that point, if the sales has been effective, the customer is willing to pay, regardless of the cost. They have the mindset that if they DO NOT hire this company, they will LOSE business, risk their reputation, etc... all because they are cheap and don't want high quality.

We need to approach this industry in the same way. It is almost impossible to do this without personal contact. But that's the road to a successful hosting company, IMHO.

BTW, I was just thinking about your comment to be the "complete internet solution".. this is similar to what we are trying to do. We are positioning ourselves so that when our customer thinks "internet", they think "our company". Then, we facilitate whatever they need. We put them in touch (or contract out) to other companie with the same philosphy as ours, for design work, installation work, computer sales, etc... but WE are the ones they call for help or advice. This is difficult to do, and we include this as part of our service as a selling feature.

It is amazing how many companies don't know anything about technology.. they thank us all the time for giving them the ability to call us up and ask about whatever.. "is this a good deal?", "what do you think of this", etc..

Sometimes we give a free consultation (maybe 1/2 hour), and then we move right into a sales pitch... "I think it's great you are asking about high speed internet for your business, blah blah blah.. here are all the benefits and how it can help your business increase productivity, etc...". When you're ready to move forward with this, just let us know and we'll take care of everything for you right away." .. and then... "Isn't it amazing how much increase you can get for your business for only $500?"

So then the customer is hiring you to "install" high speed internet for $500. The actual cost is usually only $50 or so for network cabling, etc.. But they are getting VALUE, because they don't have to worry about anything.. and you've proven they are going to MAKE money as a result of this decision.

What fun!

Lot's of good suggestions here. It boils down to this:

It doesn't matter what you charge for your service, Free to $5,000,000 per month.

1/3 (33%) of potential customers will say "why so cheap, something is wrong..."

1/3 (33%) of potential customers will say "why so expensive, i can get a better deal..."

1/3 (33%) of potential customers will say "damn good price, i want it now..."

So set your prices with whatever profit margin you would like to see and test/track your advertising.

If you want "cheap customers" set cheap prices. (usually brings more problems than what it is worth)

This is usually why most business fail in the first year. There is always a fool who sells product/service for 10 times less than the cost. After a few months, wonders why there is negative income and cant pay the electric bill.

Good Luck.