Just an idea I had while sitting here plotting out my soon-to-be web host company... Does anyone think it would be feasible to offer pay as you go hosting? As in, clients would only pay for what they use.

I've never seen a webhost offer a plan like this, so if anyone can tell me if this is a unique or original idea or if its been done in the past, that would be great. Or if its just a crazy idiotic idea, be sure to tell me that too.

The only problem I see with putting this idea into action is the probable lack of software capable of handling the billing for the accounts. In order to avoid me being screwed over completely I would have to charge clients based on the peak useage of each feature for each month (seeing as if they deleted fiiles or other features before the accounting is done it wouldnt be billed to them.)

Any input on this would be great.

You would have to charge a premium price in order to make this work. Then you'd have to figure out how to collect from your clients. Imagine, someone gets a bill for a large amount of bandwidth usage at the end of the month and decides it'd be easier just to move all his files rather than pay you.

--Tina

not too sure if this idea has been done, i know in fact it will be difficult to manage. In general I think because web hosting is so cheap these days, people would just rather pay a set amount per month for web hosting instead of going through the trouble of pay as you go. This reminds me of cell phone packages, they always seem to offer a monthly rate and a pay as you go, in general monthly rate plans always seem to be cheaper at the final outcome.

You would have to charge a premium price in order to make this work.


I wouldnt need to based on the pricing structure of my other plans. It would be slightly more expensive to use the custom plan rather than the premade plans I will have, but only to an extent. So it will be cheaper to use the custom plan then my cheapest package up until you reach the useage level offered in the package.

Then you'd have to figure out how to collect from your clients. Imagine, someone gets a bill for a large amount of bandwidth usage at the end of the month and decides it'd be easier just to move all his files rather than pay you.


That's why I'd track the peak usages for each resource and charge based on that.



In general I think because web hosting is so cheap these days, people would just rather pay a set amount per month for web hosting instead of going through the trouble of pay as you go.


Thats the idea though, to make it cheaper for them. If I offer you 600mb of space and all kinds of databases for $10 a month, and you only need 10mb of space for a little html website, you'd look elsewhere wouldn't you? So instead of loosing customers due to packages that don't appeal to them, I could have a package that would appeal to the people who aren't distracted by large numbers and know exactly what they need for their site. Sure I could always offer custom packages to people who want something different and have them pay for a set number of features each month, but I think it would be more unique and more attractive to people to offer it as pay as you go.

That's why I'd track the peak usages for each resource and charge based on that.


What if their peak usage ended up being more than the customer imagined it would be? You're going to run into people not wanting to pay 'after the fact'.

Further, in the years I've been doing this I can't even remember how many times I've heard "I hit my bandwidth limit and I'm sure I didn't use that much." when the logs prove otherwise.

Maybe if you had a cap on how much they could use, it might work. But I see serious potential for you getting burned by this.

--Tina

Further, in the years I've been doing this I can't even remember how many times I've heard "I hit my bandwidth limit and I'm sure I didn't use that much." when the logs prove otherwise.

Maybe if you had a cap on how much they could use, it might work. But I see serious potential for you getting burned by this.


I completely agree with you. I did plan on having it caped at about where my cheapest plan will start. After all, theres no sense in paying more money for something you could have bought from me for less money.

And as for the bandwidth complaints, well, you can never really controll how much bandwidth your site uses... you're at the mercey of of your visitors' refresh buttons :P

(and wow... whats happening to the site? it feels like its being ddos'd... did someone just offer free servers? lol)

Sounds like a great idea, just it might be a little confusing having to track all your clients usage and bills etc... good luck!

Sit down, with a peice of paper and pen. And then write out some ideas. I always find that the easier way to do things :D

Although I don't know how it would work out, I think it's a great idea! :)

How about, charge them a set fee - then refund them for what they dont use.

I was thinking of this same concept the other day.

My idea was that a client would buy a fixed amount of diskspace, which would be a one-off cost (my reasoning was that diskspace is not a recurring expense to the host, besides the opportunity cost of another client using that same space).

The client would then only pay for each month's bandwidth as it is. Essentially, on low-traffic months the client will pay considerably less, on high-traffic months, the client will pay more.

Obviously the bandwidth would be more expensive than a flat-rate plan, but the client has the advantage of using/paying less some months, and vice versa.

In the end I didn't implement this idea. I believe people in general want security of payment, that is, they want to know exactly how much they're going to need to pay each month.

Thats a good point, people probably don't want to be surpised at the end of the month when they get their bill. Then again, credit card companies do it to us all the time. They tell you you have X ammount of credit to use on your card, then they let you go over that amount without any warning and charge you out the *** for doing so. They assume you are going to be responsible enough to track your usage and make sure you don't get any suprises.

You could probably do this by having a pre-pay system (like mobile top up cards). The client would put $10, for example, on their account and it would gradually get used up as they use bandwidth. You would probably have to have a system which tracks their usage trends so that you could email them approximately 5 days or so before they run out based on that prediction. If / when they run out of funds, their site goes down until they 'top-up' again.

You could probably do this by having a pre-pay system (like mobile top up cards). The client would put $10, for example, on their account and it would gradually get used up as they use bandwidth. You would probably have to have a system which tracks their usage trends so that you could email them approximately 5 days or so before they run out based on that prediction. If / when they run out of funds, their site goes down until they 'top-up' again.
Good idea :) Proberly work :D

That is a pretty good idea wolseley

there are quite a few specialist hosts that do this, they mainly concentrate on adult hosting - see http://www.nakedhosting.com/index.html for an example

Awesome, you found one that actually has it. Now I have an example to go by if I actually go through with this idea.

Thanks bluedreamer

The solution we're implementing at the moment: Create a package customised on users selections when they sign up:P, and allow the user to change thier package at the end of the billing cycle.

Rgds,
Chris

The solution we're implementing at the moment: Create a package customised on users selections when they sign up:P, and allow the user to change thier package at the end of the billing cycle.

Rgds,
Chris

Are you able to do that with existing billing software or are you getting some software/scripts custom written for your site?

We are getting custom software, we are going for PEM on our new system (http://www.swsoft.com) and it'll be able to dance and sing for us but it is large part of a major investment on our part.

However, writting a CPanel addon to do what you want shouldn't be too difficult, i have written a addon in the past for someone to change their bandwidth based on their diskspace. Do a search for it on google, thats where i found my guidance:D

Rgds,
Chris

I have to say that we will encourage Developers/Designers to take a virtual server for testing etc as they will then also be able to install debugging tools on it.

Rgds,
Chris

The Pay-as-you-go hosting method can work quite well. But as someone previously said, you would have to have them fill up their account balance, and what they use will be deducted. So if they sign up, and deposit $50 into their account, then that might last them a year or so, as they use up their resources.

When their account gets low, they refill their balance.

I have customers that have done this, they submit a payment of $150 via paypal once, and it lasts them 4-5 months, until their account gets low. Then they fill up their account again.

I can't remember their name, but there was a company doing this, and they were charging by the MB disk space used and MB data transfer used. I think the domain had "fly" in it somewhere. They were discussed on WHT a few years back, but haven't heard anything about them since.

I'll search through the WHT posts, if we can search back that far, and see what pops up! :)

I can't remember their name, but there was a company doing this, and they were charging by the MB disk space used and MB data transfer used. I think the domain had "fly" in it somewhere. They were discussed on WHT a few years back, but haven't heard anything about them since.
Theye were called hostonfly.net, but that domain is not resolving. :eek3:

The Pay-as-you-go hosting method can work quite well. But as someone previously said, you would have to have them fill up their account balance, and what they use will be deducted. So if they sign up, and deposit $50 into their account, then that might last them a year or so, as they use up their resources.

When their account gets low, they refill their balance.

I have customers that have done this, they submit a payment of $150 via paypal once, and it lasts them 4-5 months, until their account gets low. Then they fill up their account again.

Sounds good to me. But I have one question, how do you charge them for the space used and when is the money deducted from their account? I mean, it sounds like if they delete files from their account and then upload them again it will cost them more money.

The easy way to do it is to take an average usage every 6 hours or so for the entire billing cycle and use this average to calculate the amount to be deducted.

Regards
Chris

Sounds good to me. But I have one question, how do you charge them for the space used and when is the money deducted from their account? I mean, it sounds like if they delete files from their account and then upload them again it will cost them more money.

With H-Sphere, on our A-la carte plan, the customer has to manually increase their disk space in order to allow them to upload more.

So the customer starts out with 10mb of disk space. Then say they need to upload a 12mb file. They would then have to log into their control panel, and increase their disk quota, which would then allow them to upload the larger file. It would also tell them that it is going to deduct funds from their balance to cover the extra 2mb used for the month.

You know if you manage to get some decent scripts for this idea, you could have a market for selling it to be used by new hosts.

Found this page which has some PAYG billing systems - you'll have to dig a bit :)

http://www.digitalpoint.com/products/isp/compare.html

With H-Sphere, on our A-la carte plan, the customer has to manually increase their disk space in order to allow them to upload more.

So the customer starts out with 10mb of disk space. Then say they need to upload a 12mb file. They would then have to log into their control panel, and increase their disk quota, which would then allow them to upload the larger file. It would also tell them that it is going to deduct funds from their balance to cover the extra 2mb used for the month.

Do they also have the ability to decrease their disk quota?

Do they also have the ability to decrease their disk quota?

Yes, and then it refunds them a pro-rated amount.

We've been doing this under a different brand for 3-4 months, but with not many customers.

The main problem we face is that we don't have sufficient customers to justify the cost / time of automating the billing. We don't charge per mb/Gb etc... we have selected bands, if the customer requires more resource, they have to submit a ticket and we increase them.

With automation and sufficient customers, then I guess it would work much better, but generally we find that it's the low budget / high maintenance customer that wants this sort of thing.

its quite a common way to do it in the adult-host-scene where bandwidth is king. Normally diskspace is "unmetered" and traffic is prepaid - and not on a monthly basis. Clients would buy 50-5000gb, and when they are used they would have to buy more to keep the site alive.

Hey,


I cannot imagine such bussiness module with >500 clients. Will you be able to monitor everyone? What about 1000? Can you imagine how many tickets will you get per day?
Weighting everything here.... do you really think its possible? :/

With automation it would be possible for larger numbers of clients.

We did it as a small proof of concept, hence the manual process for now.

However as I suggested, it does bring in the low end client trying to save every penny.

This is an idea that I've kicked around, as in principle, it's great. "Hey, I'm not paying for bandwidth I don't use anymore!"

But there are tons of problems.
- Collections. Almost necessitates a pre-paid model. Which partly defeats the purpose, IMO.
- Surprised customers. Initial reaction to signup is "great, I only pay for what I use". But when they get hit with a big bill one month, it may push them to another company.

Then, you're going to hit a point where clients who use a bit of resources are going to be able to get better deals elswhere. You may be able to attract a smaller crowd of static, html driven websites that you can throw 1000 of them on a server without a hickup. But, eventually, I think you're going to run into retention problems, as people will outgrow the feasibility of the pricing model.

There's a UK based company which already offers PAYG hosting. As far as I can see, they wrote the "platform" (that's the entire system including billing) themselves from scratch. Charges are based on diskspace (allocated per 1Kb) and bandwidth is measured to the nearest 1Kb averaged over 7 days. Billing charges are made to accounts daily rather than monthly so you can always tailor your requirements to exactly what you need (for example, if you want just 1Mb webspace, that's what you can allocate). They even have the option of being able to rate limit website bandwidth (so, for example, you can make sites and even parts of sites run at much throttled speeds so there are never any surprises with billing and over usage).

Granted, they are probably not the cheapest option availble since they are UK based but from what I've seen, it's a very well thought out system (Linux based hosting only though, they don't offer windows hosting). Just google for "payg hosting" or "topup hosting" in google and you'll get some results.

Cheers.

Oh my... now i believe what somewhere is "get paid for hosting with us" company... :cool:

Sounds like a great idea, just it might be a little confusing having to track all your clients usage and bills etc... good luck!

Actually - H-Sphere can do all of that automatically :)

Its a really easy thing to do actually. I founded and built www.bsdwebhosting.net (http://www.bsdwebhosting.net) with a friend several years ago and it was pretty successful until i sold it off due to overseas military deployments. Customers loved it though. Everything was completely automated.