Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : How to reduce price?

[gangcai]

I found it is difficult to reduce price.
For example, we currently charge $20/month. In order to get more customers, I like to reduce to $10/month. I would get more customers. However, our existing customers want to reduce price too. In the end, we lose money.

What would you do?

[humawebdesign]

Tell your customer that it is for new customers or for new packages. It is not available for existing packages with the existing clients. Existing client have to take new packages or something like that

[Rhino-Nick]

You can do the following. Instead of pricing it at $20 run a coupon that knocks 50% first month then 25% recurring (Or just 50%). Then make it so it only applies to new clients.

[Tin]

You can just do a promotion that takes the price off. Also, you could always do the price adjustment to customers requesting it, and leave the rest as is.

Sure, you'd lose money, but showing great customer service will keep those customers.

[bqinternet]

Originally Posted by gangcai

However, our existing customers want to reduce price too. In the end, we lose money.

So don't reduce prices. Problem solved.

[Yujin]

This is simple...live with your parents and let them pay all your bills.
This is true to most of the kiddie host in this board.

If you are a real biz person then you should have a better understanding in CAPEX.

[Tin]

Aw, come on guys, be nice.

If it were me, lower the price point, as long as it's still a good profit margin, and fulfill the price adjustment requests from your current customers.

If you lower the price, but don't consider the adjustment, then you run the risk of losing your customers.

[Hsunami]

If you must lower the price point of your products and not go with the discounts route, you should really apply the new pricing to your existing client base without them having to ask. I would try to find a balance so that the new pricing will net you sales, but also not lose too much from applying this to your existing clients.

From a customer's point of view, it feels really annoying to find out that your host has a new pricing scheme in place, yet a loyal client like yourself, is not rewarded and have to ask for it. You don't want to make them think you're doing them a favor by agreeing to reduce their price. Also, if you don't apply it to existing clients, it really shows instability in your company as they'll end up feeling like they have to keep checking up on you to see if you've lowered your prices again and then having to ask again.

Trust me, you really want to take care of your existing clients. Word of mouth advertising pays off big time and each happy client will net you many more new ones. Never leave your customers behind.

[SamBarrow]

I've had this problem a couple times. We wound up splitting off into budget/premium brands.

[Hoopla-Brad]

Be nice to your customers and give them a cheaper price like your new customers.

The other options is to grandfather your old plans and create newer better cheaper plans and give your existing customers the option to change to your new plans.

[David Anderson]

Originally Posted by Tin

You can just do a promotion that takes the price off. Also, you could always do the price adjustment to customers requesting it, and leave the rest as is.

Sure, you'd lose money, but showing great customer service will keep those customers.

Agreed, doing a promotion for a specific period of time is the best option. This will boost up your both new and existing sale.

[NoSupportLinuxHostin]

Originally Posted by gangcai

I found it is difficult to reduce price.
For example, we currently charge $20/month. In order to get more customers, I like to reduce to $10/month. I would get more customers. However, our existing customers want to reduce price too. In the end, we lose money.

What would you do?

Be very careful when considering any price changes to an existing brand.

If your current customers are happy with the value you deliver at your current price point, then I would suggest creating a new budget brand for the lower price point. Changing prices in an existing brand can be dangerous. You might drop the price on plans in the existing brand and find that the change did not increase sales. In effect, you run the risk of simply cutting your existing income in half.

The worst case possibility would be that you cut your revenue in half, get no new customers, and then need to let staff members go to cut costs. Then when you let staff go, your brand becomes less reliable or responsive, and suddenly existing customers are unhappy for reasons other than price.

[iTom]

Most hosts will just create a new package, with a few small changes, but the lower price.

However expect some (not all) clients to question the price difference

[billaa]

Sudden reduce of price is not good if you have old customers.
For new customers better to allowance a promotional discount of 50% or whatever depends on your convenience.

[HostGamma]

Originally Posted by gangcai

I found it is difficult to reduce price.
For example, we currently charge $20/month. In order to get more customers, I like to reduce to $10/month. I would get more customers. However, our existing customers want to reduce price too. In the end, we lose money.

What would you do?

Two options:
1) Give more resources to existing clients and create a lower package at $10 per month
2) Create a completely different brand for the plan @ $10