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  1. #1

    Pricing gone crazy! What the....

    Can somebody tell me what is going on out there?

    $4.95 - $9.95 for 1000Mb????

    here's my logic: on an 80gb HD only about 74 is available after the server is set up and hardened. So if you're not going to max it out, only about 65- 70gb is available to sell. That means that these guys are either overselling the server or they are hosting 65 people per server. So at $9.95 per gb, you're making about $650 but having to pay about $180 a month for the server. Am I missing something?

    I'm starting to see this more but I do notice that many of us are still charging $19.95 and up for the same thing.

    Do tell because I am lost in trying to figure this one out. If not for volume, how is anybody making money? and are you also in the $4.95 - $9.95 price range for 1000Mb?

  2. #2
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    Overselling... that and maybe they have bigger harddrives and such... but mostly overselling.
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  3. #3
    so then that means they're betting the customer won't use all the space and what happens when people actually do start using the space?

  4. #4
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    Originally posted by LadyHost
    so then that means they're betting the customer won't use all the space and what happens when people actually do start using the space?
    Then either they start moving people to a new server or upgrading the current one to compensate... or they start getting bad posts and start losing customers.

    Overselling is key to full utilization of your servers, but you do have to watch it. We decided for our situation, we would rather not oversell our servers and deal with that problem, and just generate less revenue per server, than to have to watch them closely as they fill even AFTER we have stopped adding new accounts.
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  5. #5
    Understood but somehow the whole overselling concept just seems wrong.

  6. #6
    Oversubscribing (not overselling) has been around in the ISP days since the Internet was born. The consumers don't realize it but it actually helps them by reducing the prices to an acceptable level.

    The fact of the matter is that the majority of customers use nowhere near what they are alotted. As long as the provider can deliver what they promise to their customers, I dont see what the issue is.

  7. #7
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    Originally posted by LadyHost
    Understood but somehow the whole overselling concept just seems wrong.
    It is if you don't properly manage it, because then you have overloaded servers which crash/go flakey and nobody has any fun.

    If the average hosting client only uses 50% of their space and bandwidth, would you not agree that you could 'safely' consider selling 125% of your resources instead of just 100%, to fill out your server a little more and maximize your per-server ROI?
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  8. #8
    Originally posted by LadyHost
    Understood but somehow the whole overselling concept just seems wrong.
    i guess most of them just oversell, at 70% of server usage, once its over they will just get a new server and migrate them.

  9. #9
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    And I would venture 50% is a little high. We have a reseller with 60GB bandwidth who uses 8GB... and it seems similar across the board.
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  10. #10
    Ok so maybe I'm just misunderstanding the concept then.

    Overselling is a somewhat temporary strategy to boost revenue by volume and then you just go from there depending on your business plan?

    Ok, now that doesn't sound so wrong. I was thinking it was just an arbitrary stuffing of the servers so you get maximum dollar and the customer just takes the hit since they rolled the dice on the plan in the first place - as far as service goes.

  11. #11
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    Overselling is the name of the game.

    The trouble is, these companies are being entirely stupid about growing their profits. If you give a customer 1 GB of disk space, and on average they only fill up 400 MB of it, they why on earth should they ever need to upgrade?!

    $9.95 should be your entry level plan, and then build in a reason to upgrade. One way we build a reason to upgrade is to limit disk space on the cheaper plans so that as they fill the space up, they have to upgrade. That means more $ for the hosting company. A successful business absolutely HAS to be built on a growth model, or it will not succeed in the long run. That's just Business 101. There's no other way for a business to survive.

    Well now hosting companies are giving away disk space like it is an intangible and limitless. It's stupid, because it isn't limitless, it's a finite commodity. Plus the analysis above is very conservative because there isn't enough space allocated to logs. Logs are huge and the longer the server is online, and the busier the sites are, the larger the logfiles get.

    This whole thing is absolutely ridiculous, and as you can tell, really has me annoyed right now.

    Bailey
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  12. #12
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    It's not really temporary. It can be done properly and not have service effected.

    Say you told out all the space on your server with 50 1gb reseller accounts.

    Now say they are only using collectivly 20GB of space, and have been for the past 3 months.

    Would you continue to under utilize the server, or would you bring the server closer to full utilization (not stuffing, but cautiously adding more users on the server, making sure you don't end up in a severly overloaded situation).
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  13. #13
    Originally posted by bithost(NET)
    Overselling is the name of the game.

    The trouble is, these companies are being entirely stupid about growing their profits. If you give a customer 1 GB of disk space, and on average they only fill up 400 MB of it, they why on earth should they ever need to upgrade?!
    Bailey
    Bailey, I'm with ya'. That's why I asked how anybody is making money this way if you are constantly going to have to worry about each user on each server and gauge and guess on a daily basis what people are going to do with their accounts.

    It seems like more stress than is necessary to manage the environment.

    I'll stick with my own model. It works and its not too cheap and not too pricey.

    BTW Bailey, my start-off plan is $8.95 for 75Mb and no cgi.

    LH
    If the web closed at midnight, what would YOU do?

  14. #14
    Originally posted by WebOnce
    It's not really temporary. It can be done properly and not have service effected.

    Say you told out all the space on your server with 50 1gb reseller accounts.

    Now say they are only using collectivly 20GB of space, and have been for the past 3 months.

    Would you continue to under utilize the server, or would you bring the server closer to full utilization (not stuffing, but cautiously adding more users on the server, making sure you don't end up in a severly overloaded situation).
    Let's see, $19.95 x 50 = $997.50
    Honestly, I'd buy another server, but I might put "a few" customers (like 5 or 10) on there before I do..

    I can't see overselling to the point of mass migration though.
    If the web closed at midnight, what would YOU do?

  15. #15
    seems like this thread is made every week.
    I reserve the right to be wrong at all times

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  16. #16
    sorry for the redundancy.
    If the web closed at midnight, what would YOU do?

  17. #17
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    I go t aserver a while make. In Jan. I messed with it played here and there learned everything I could. I ran resellers but always just hosted friends sites.

    But when I got the server and I started making the plans I did not know how some offered high storage space for such a low price. I priced my packages as cheap as I could but I could not see going any lower as I thought I would shoot myself in the foot if something happened. I am one that has the 1000MB for around 20 bucks.

  18. #18
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    Originally posted by LadyHost
    so then that means they're betting the customer won't use all the space and what happens when people actually do start using the space?
    Then that server needs to be lightened, or have its capacity increased. I'm not a fan of overselling but it's common place in just about every industry, and very neccessary for most hosts to make their model work.
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  19. #19
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    i agree with bob. it is neccessary because even some good host are offering a lot of space for little price. most of host are betting on users won't use what is offer. i've a 1and1 account and i never reach the offer space.

  20. #20
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    Most hosts offer more disk space and bandwidth than the customer would actually use. Average client does not need 100's GB of bandwidth or disk space.

  21. #21

    Exclamation

    Originally posted by WireNine
    Most hosts offer more disk space and bandwidth than the customer would actually use. Average client does not need 100's GB of bandwidth or disk space.
    Ok, so back to the point about "if a customer does not need that much disk space or bandwidth, then why would a customer upgrade"?

    Still seems to me like you are keeping yourself from making more money by taking in the volume for the low-end pricing...and this works???
    If the web closed at midnight, what would YOU do?

  22. #22
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    95% of my customers use less than 1% of their alloted bandwidth and less than 20% of their alloted disk space.

  23. #23
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    What average customer really needs more than 10mb of space?

    I have 10 personal domains all using less than 5mb of space.
    With this space I run scripts and sell downloadable software.

    I can't imagine who would need 1gb or more.

  24. #24
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    For our company website we're only using 160mb currently, and i'm sure that could very easily be trimmed down to under 100mb It's all about percieved value. You have to weigh how much you want to put into support really, to figure out your overselling margin. As the lower your prices, the more customers you will have to have to make the same income with higher prices and less customers, which means a lower ROI for your support. If your going to lower your prices, be sure to have adequate FAQ / Knowledgebase and a system in place to force users to go that method first.

    Otherwise you will be supporting simple things more often and putting more effort into your support system, which cuts down on your margins and ROI.

    Sorry if I seem to keep beating the same drum, but there's really nothing wrong with it as long as you treat overselling with care.

    We decided that we would like to keep our support quality high, so we charge a little more than a lot of people, and we decided to keep our server quality high, so we don't oversell on our servers, so each of our clients can fully utilize all of the space and bandwidth we sell them.

    Other hosts have other priorities, which is fine, nothing wrong with that at all. It's all the choice of the host on which market they want to target.
    Jacob - WebOnce Technologies - 30 Day 100% Satisfaction Guarantee - Over 5 Years Going Strong!
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  25. #25
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    Originally posted by rondo
    What average customer really needs more than 10mb of space?

    I have 10 personal domains all using less than 5mb of space.
    With this space I run scripts and sell downloadable software.

    I can't imagine who would need 1gb or more.
    hobbies site with bunch video clip. like a old TV show...one customer use 1gb diskspace with a lot of old TV show video clip.

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