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  1. #1
    Join Date
    Jan 2003
    Location
    Los Angeles
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    11

    Web hosting is a commodity business... GET OUT!

    Attention webhosts, a great number of you are in the commodity business,, GET OUT!

    So you are asking, what do I mean by commodity business? Well, hosting has been reduced to a commodity like hamburgers or pizza, where most compare and buy on price and nothing else. The public’s perception of webhosts is that they are a dime a dozen, none really better than the other. The internet is saturated with all types of hosting businesses from gamers with some extra server space, one man operations to enterprise level hosting services. Everyone knows someone that does hosting.

    To top it all off, how many times have you seen some host with rock bottom pricing? Way lower than yours? Many times I bet.

    Things like bandwith, uptime, dedicated servers, virtual servers, backbone, etc mean nothing to most website owners without attaching a benefit to using them.

    This puts YOU in a precarious spot.

    Here is what you can do to take yourself out of the “commodity” of hosting and move into the business of hosting and providing something special for your clients.

    Provide value added service. No, I’m not talking about giving people an extra email account. Provide them with an on call programmer, to assist them with their site pages if needed. Give them tools like autoresponders, contact managers, stat trackers, conversion trackers, ad rotators, content management systems or forums. Give them ebooks, articles, tips tricks to assist them in their business.

    Provide great customer support from day 1
    Have an 800 or another toll free number for customers to call to get assistance. I cannot believe the number of hosts that do not have an 800 or other toll free number. At least put up your local phone number so your customers can contact you.

    Have an online live chat support system in place so people can talk with your staff about what service is best for them.

    How about if you call your customers a week later from signing up and thank them for coming on board? None of your competitors has done this I bet.

    Just because a customer buys hosting from you doesn’t mean that is all that is needed. They have a greater value than most people think. Your customers have a greater value than you think. If you are getting $10 per month from someone for their hosting account, that is not all they are worth. Think of ways to take that $120 per year and turn it into $240, $360 per year. It can be done with the right back end sales approach. Create different services, offer it to your customers, make it easy for them to buy those products and implement them on your servers.

    So there you have it. You can provide extra value for your clients and separate yourself from the rest, make the effort most remotely think of doing, make more money, or you can stay in the commodity business, fight it out over price. Bend over backwards to beat your competitors on price alone? Clamor and try to be available to a customer at the right place at the right time. Which one makes more sense to you?

    There are exceptions to the rule a handful of hosts that understand the lifetime value of a customer and know how to harvest them into more money, maybe its you, I don’t know, if so well done. For the rest of you, hosting is a commodity business these days. I recommend that you get out.



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    Last edited by SoftWareRevue; 10-19-2004 at 04:21 PM.
    Is your website an art project or a money maker? :: increase your profits :: optimize your site :: turn your site into a lead generating and money making machine easily. WE CAN SHOW YOU HOW. Contact us today. Logical Media Web Design

  2. #2
    Join Date
    Mar 2002
    Location
    Orlando, FL
    Posts
    12,207
    Very nice but it belongs to the Offers/Requests forum.

  3. #3
    Join Date
    Feb 2002
    Location
    Reading, England
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    4,240
    Not a bad article, however you should edit out the bottom bit since you are advertising your company.
    Steve

  4. #4
    Join Date
    Jan 2003
    Location
    Los Angeles
    Posts
    11
    ok done =]
    Is your website an art project or a money maker? :: increase your profits :: optimize your site :: turn your site into a lead generating and money making machine easily. WE CAN SHOW YOU HOW. Contact us today. Logical Media Web Design

  5. #5
    Join Date
    Mar 2004
    Location
    Pakistan
    Posts
    2,752
    Wow , finally something worth of reading
    I'm Zafar Ahmed.
    I provide
    SEO Services & eMarketing consultancy
    I'll be glad to hear from you

  6. #6
    Nice article, perhaps, it should be moved to the Running a Hosting Business article section?
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  7. #7
    Join Date
    Jul 2002
    Posts
    3,374
    uh...so what? if you're a web developer it mean you can offer something that you can't before by getting a server and offering web desgin along with webhosting. people like to shop at one place for everything that they need.

    PC is also a commodity business. However, whitebox vendors still have a big chunk of market share and why? whitebox vendors offer perosnal service instead of Dell's robotic script reading tech support. you need me to fix your computer today at 3pm. just call my cellphone. try to do that with Dell, you have to get out alive from endless phone menu hell then get someone who they hired to read tech support script. if script support can't fix it or worst you got a Indian script support who can't speak clear English. you have to wait for another 30 minute to get Second level tech support and on and on that we go.

    commodity business mean you can integerated it into your existing business for cheap! and offer all the solution in one place that you can't do before.

  8. #8
    Join Date
    Aug 2002
    Location
    Canada
    Posts
    377
    Competition is inherent when entering any business, unless you've seen some unique and amazing opportunity that you capitalize on and make oooodles of money.

    It's not about how "commodtitized" a business or market is -- it's how YOU capitalize off it by seeking new opportunities and being DIFFERENT from everyone else.


    JP
    JP
    Justified Existence - my blog on blogging and writing for a living.

  9. #9
    Join Date
    Jan 2003
    Location
    Los Angeles
    Posts
    11

    *

    "PC is also a commodity business. However, whitebox vendors still have a big chunk of market share and why? whitebox vendors offer perosnal service instead of Dell's robotic script reading tech support"
    uh, then you agree.

    "It's not about how "commodtitized" a business or market is -- it's how YOU capitalize off it by seeking new opportunities and being DIFFERENT from everyone else."
    i feel that
    Is your website an art project or a money maker? :: increase your profits :: optimize your site :: turn your site into a lead generating and money making machine easily. WE CAN SHOW YOU HOW. Contact us today. Logical Media Web Design

  10. #10
    Join Date
    Feb 2001
    Location
    West Michigan, USA
    Posts
    9,687
    Originally posted by johnder
    Competition is inherent when entering any business, unless you've seen some unique and amazing opportunity that you capitalize on and make oooodles of money.

    It's not about how "commodtitized" a business or market is -- it's how YOU capitalize off it by seeking new opportunities and being DIFFERENT from everyone else.


    JP

    Exactly!

    --Tina
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  11. #11
    Thanks for the tips

  12. #12
    Join Date
    Oct 2004
    Location
    Brisbane, QLD Australia
    Posts
    2
    There is very little business areas left in Technology industry that havent become commodity industries.

    I beleive one of the biggest factors in people looking for the cheapest price for web hosting is the fact they cannot physically see somthing for the money. Of course you can see the website that is hosted on it. But unlike say a subscription to a magazine they dont have somthing they can touch and do things with. It comes down to they cannot see the value of a service.

    Also that is very true about the Whitebox compared to Dell. In so many cases the difference in price is insignificant but dell gets the business because it appears cheaper. But then you also get the customer who can relise the value in a better waulity White box which has better support.

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