View Poll Results: What is the acceptable Gross profit margin for webhosting biz.
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60+%
22 41.51% -
50%-40%
18 33.96% -
30%-20%
4 7.55% -
<20%
9 16.98%
Results 1 to 25 of 25
Thread: Gross Profit Margin
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07-25-2002, 04:28 PM #1Aspiring Evangelist
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Gross Profit Margin
In your opinion, what is the acceptable Gross profit margin for a web hosting biz.
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07-25-2002, 04:31 PM #2Web Hosting Master
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Re: Gross Profit Margin
Originally posted by matrosov
In your opinion, what is the acceptable Gross profit margin for a web hosting biz.
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07-25-2002, 04:35 PM #3Web Hosting Evangelist
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It's a basic business term, that anybody who runs a business should surely know...
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07-25-2002, 04:40 PM #4Aspiring Evangelist
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Oops accounting talk sorry. Gross profit margin is your revenues less expenses directly related to your hosting business like server rentals, backups, cp licences merchant account fees. (Does not include your salaries, publications, or travel and entertainment.), divided by your revenues and expressed as percentage so basically it is this formula
(Revenues-Direct expenses)/Revenues*100%
So as an example if your Revenues are $3200 and your Direct expenses are $1600 your Gross profit Margin is
(3200-1600)/3200*100%=50%
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07-25-2002, 04:41 PM #5Web Hosting Master
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Originally posted by ubergeek22
It's a basic business term, that anybody who runs a business should surely know...
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07-25-2002, 04:43 PM #6Aspiring Evangelist
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Well good businessman is not the one who knows what that term means but the one who can hire a good accountant to keep that businessman honest .
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07-25-2002, 04:52 PM #7Web Hosting Master
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I would have to say 30 to 50% would be ideal, as once all the other expenses are factored in, it will keep cutting in.
umbilly, I was following ya!
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07-25-2002, 04:53 PM #8Registered User
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Originally posted by matrosov
Well good businessman is not the one who knows what that term means but the one who can hire a good accountant to keep that businessman honest .
Seriously though, hosting has been infamous for its razor-thin margins. If there's a host out there with a GPM of >=20%, they are doing damn well.
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07-25-2002, 05:04 PM #9WHT Addict
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matrosov you'd really have to define your question about the GPM%. There are many types of webhosting services...those who provide only dedicated servers, those who provide ded servers and shared hosting and those who only provide shared hosting (did i miss anything?). the margins for these different types of services would vary differently. for example shared web hosting companies would have a higher GPM margin since they would not have higher costs involved compared to dedicated server providers like maintaining data centers and such...you get the point.
one thing i do know is that pure service based companies have a much higher margin, typically 40% or more based on what my accountant told me.spam --> /dev/null
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07-25-2002, 10:16 PM #10Linux Problems Solved.
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UmBillyCord
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UmBillyCord is l337
CongratsRonny Fang
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07-26-2002, 12:23 AM #11Web Hosting Master
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just for some contrast walmart's profit margin is about 3%
-Brendan
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07-26-2002, 10:19 AM #12Newbie
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Given sales of $226.7B , 3.1% are enormous.
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07-26-2002, 10:32 AM #13Web Hosting Master
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Originally posted by matrosov
Oops accounting talk sorry. Gross profit margin is your revenues less expenses directly related to your hosting business like server rentals, backups, cp licences merchant account fees. (Does not include your salaries, publications, or travel and entertainment.), divided by your revenues and expressed as percentage so basically it is this formula
Mike
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07-26-2002, 12:40 PM #14Web Hosting Master
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Originally posted by Duchz
Given sales of $226.7B , 3.1% are enormous.
-Brendan
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07-26-2002, 01:45 PM #15Web Hosting Master
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Originally posted by HRBrendan
About 1 out of ever 200 people in the US works for Walmart.
-Brendan
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07-26-2002, 03:01 PM #16Newbie
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278,058,881 Inhabitants ( according to the CIA Factbook )
1,383,000 Employees ( number provided by Yahoo! Finance )
equals to.... ?
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07-26-2002, 05:04 PM #17Web Hosting Evangelist
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heh. I went to one of the top 3 public accounting schools .. University of Florida baby !! and this even made me say.. uhh where is my accounting book hehe..
Thats what the teachers get for making me memorize every stupid term, since then I have created my own terms that make more sense because really I don't have anyone that cares until I need a loan or venture capital money or something along those linesJames R. Clark II
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07-26-2002, 10:51 PM #18Web Hosting Master
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I've just done quite a detailed business plan for the 12 first months. Launching very soooooooooooooooon Anyway,I'm projecting a 54% gross profit margin. Am I dreaming? OF course one of my concerns is that it will drop as I (wishfull thinking here) grow and so do labour costs for support etc.
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07-27-2002, 12:27 AM #19Web Hosting Master
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Originally posted by ISPCEO
Seriously though, hosting has been infamous for its razor-thin margins. If there's a host out there with a GPM of >=20%, they are doing damn well.
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07-27-2002, 12:33 AM #20Web Hosting Master
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Originally posted by ubergeek22
It's a basic business term, that anybody who runs a business should surely know...• WLVPN.com • NetProtect owned White Label VPN provider •
• Increase your hosting profits by adding VPN to your product line up •
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07-27-2002, 01:21 AM #21Web Hosting Master
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Originally posted by UmBillyCord
I know. Thanks. I was joking. If you hang around here long enough I think you will see my point.
So true and so sad.
If you are only seeing 10% GROSS you are dead in the water.
Wal-Marts 3% is NET not Gross.
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07-27-2002, 02:08 AM #22Web Hosting Master
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Originally posted by Monte
So true and so sad.
If you are only seeing 10% GROSS you are dead in the water.
Wal-Marts 3% is NET not Gross.
Which at the end of the day, that's what we're doing this for.• WLVPN.com • NetProtect owned White Label VPN provider •
• Increase your hosting profits by adding VPN to your product line up •
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07-27-2002, 02:10 AM #23Web Hosting Master
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Originally posted by Duchz
278,058,881 Inhabitants ( according to the CIA Factbook )
1,383,000 Employees ( number provided by Yahoo! Finance )
equals to.... ?
-Brendan
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07-29-2002, 11:59 AM #24Aspiring Evangelist
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Shouldn't sales commisions and wages for support employees be included in the above equation. They are variable expenses and directly related to sales volume.
matrosov you'd really have to define your question about the GPM%. There are many types of webhosting services...those who provide only dedicated servers, those who provide ded servers and shared hosting and those who only provide shared hosting (did i miss anything?). the margins for these different types of services would vary differently. for example shared web hosting companies would have a higher GPM margin since they would not have higher costs involved compared to dedicated server providers like maintaining data centers and such...you get the point.
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07-29-2002, 09:54 PM #25Web Hosting Master
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Originally posted by ISPCEO
I hired Andersen
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