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  1. #1

    Question Competing Companies

    As any of you who operate webhosting business's may be aware, it becomes tough to compete with other companies who are overselling, offering 20g of disk space and 500g bandwidth for 5$ per month, when its obvious that these companies are overselling and most likely dont provide very good service and support. What do any of you do when you get a potential customer that says "Well 'thiscompany' offers 20g space and 500g xfer for 5$ a month, what can you offer". We dont 'cave in' and give them a better offer, we simply explain to them that the service at the other company will be very poor and they most likely wont get the space and bandwidth that they are paying for. They always seem to go with the other company anyway, does anyone else know what to do in such situations?
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  2. #2
    Join Date
    Mar 2005
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    Yes, it happens. You have to over sell a little, and when it comes time to add more drives or servers, you do so. But, we focus on local customers, and so it's pretty easy. It probably depends on who you focus on.
    Jason Canady
    Unlimited Net, LLC • AS11990
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  3. #3
    Unfortunately, with a lot of people they aren't going to understand until it truly has an effect on them. For many people who don't care too much about their site, this may even be fine for them.

    I would try to be honest with your customers like you currently do. Construct your response so you don't give too much sympathy to yourself and explain that when they go with a service like that, it will affect them. Try to think of all the points and maybe provide some links (like webhostingtalk.com if you're not too afraid of the competition ). Here are a few I can think of:
    1. Cheap provider is not really offering that. They often cancel accounts well before the limit is reached.
    2. Even if they do provide that, they might move the account and cause downtime.
    3. You will be affected by disk space. The host does not have unlimited HD space and you may find that you're using 1gig and FTP is complaining that you can't upload a file because there isn't space left on the device.
    4. At the price they're paying, the company is probably overselling their servers to a point that performance will become an issue. Web scripts are going to go very slow (Bulletin Boards, Shopping Carts, etc -- make sure to explain it to them with examples that they'll likely need), mail will periodically be slow or inaccessible, etc.

    I think all the small hosting companies need to put up a page or two explaining the problems with the hosting industry (like ArielHost does) and try to get the information widespread. It's strange how long hosting has been around and yet customers are still very uninformed and manipulated. Then again, I guess the auto repair industry has been around longer

  4. #4
    I agree with just about everything HostingEnth posted especially the Auto Repair Industry part lmao.

    We have had a few customers talk to us Via our Live Help Chats telling us they found another company offering unlimited this and that for dirt cheap prices. We then have to carefully explain to them what that means.

    Like the previous post stated theres no harm in being honest. Tell them what it is they may be getting into and that with everything else in the world you will get what you pay for.

    If you have indeed been around for quite some time put that in the conversation somewhere. It will add credibility to your statements.

    Explain to the customer that there is no such thing as unlimited bandwidth or web space.

    Try to make a lasting impression on the potential customer. If that customer ends up going with company B you can rest assure that when company B fails to meet the customers reuirements he/she will remember your company and come back to you.

    Just some things off the top of my head

  5. #5
    Join Date
    Feb 2003
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    Connecticut
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    You're marketing to the wrong group of people. If they go by numbers alone, they will ALWAYS choose the better deal.

    Try refocusing and finding customers who don't dig around the bottom of the barrel.

  6. #6
    Join Date
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    Location
    Northamptonshire, UK
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    Be dimplomatic about it. Just say to the enquirer 'Our service is based on value, not just price. If we charged the same rate as [that other company] then we would also have to provide a lower level of service too, rather than the high level we do provide.'

    If they do indicate they are going with the other company then a good response is 'I wish you every luck with your decision sirmadam. If, however, you find that the level of service does not reflect that which you expect then we would be pleased to help you in the future'.
    Mick Beeby
    www.reyaltec.com - Quality Helm Dedicated, Reseller & Shared Windows 2003 Hosting. UK & US based servers.
    www.aspbite.com - Modular ASP Content Management System

  7. #7
    Join Date
    Oct 2005
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    I always explain what the competiters are doing. If say keep saying can you match this, and at what price. I give them a custom package with a £5 extra fee for making it.

  8. #8
    Quote Originally Posted by Nexeo
    What do any of you do when you get a potential customer that says "Well 'thiscompany' offers 20g space and 500g xfer for 5$ a month, what can you offer".
    I'll ask him to do 2 things:

    1. let him read their terms of service
    2. let him check creation and expiration dates of the other host domain name.

  9. #9
    Join Date
    Nov 2003
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    324
    i lost 3 clients to godaddy recently because of their plans..... thanks for the advice given in these forums though.. i look forward to reading more input.

  10. #10
    Join Date
    Mar 2005
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    Indiana, USA
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    Yeah, I'm looking for ways for us to resell domains. I always refer people to GoDaddy, but now GoDaddy has very low priced plans with very high disk space and bandwidth.
    Jason Canady
    Unlimited Net, LLC • AS11990
    Responsive, Reliable, Secure
    Dedicated Server Hosting

  11. #11
    Join Date
    Oct 2005
    Location
    Surrey BC
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    Well I was thinking if I can't compete with the big domain registrars I would sell the domains for cost or a few dollars profit then give the customer $2 or so off for the first 6/12 months of their webhosting if they register the domain with me. Then after 6/12 months the price of the hosting account goes up. If they cancel before that have it in the terms stating a deactivation fee of the value of the domain.

    Baiscally give them the same value as if they went with someone else but this will at least keep them with you and you still recover your loss/discount from the domain sale.

  12. #12
    If you have a 'deactivation' fee, you're begging for a chargeback. If you're going to offer a free domain, you should charge up front (eg 6mo or 1yr) and then if you refund a portion of the money, you can subtract the cost of the domain from the refund.

    Alternately, you can charge your higher price and then, after 6 months, charge them a heavily reduced monthly payment (eg if you charge $10/mo and the domain costs $8, charge them $2 for the one month) so they get the money back. But if you try to charge someone after they cancel their account, you are going to get a *lot* of complaints.

  13. #13
    Join Date
    Oct 2005
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    Surrey BC
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    Quote Originally Posted by HostingEnthusiast
    If you have a 'deactivation' fee, you're begging for a chargeback. If you're going to offer a free domain, you should charge up front (eg 6mo or 1yr) and then if you refund a portion of the money, you can subtract the cost of the domain from the refund.

    Alternately, you can charge your higher price and then, after 6 months, charge them a heavily reduced monthly payment (eg if you charge $10/mo and the domain costs $8, charge them $2 for the one month) so they get the money back. But if you try to charge someone after they cancel their account, you are going to get a *lot* of complaints.
    Well the above is just an idea but still shows that you can compete and make money if you have to.

    With my current job we have to do smiliar things to be able to compete with retailers who sell items close to cost and launder money or make money through thier business in illegal ways. (I work at a hydroponic retailer with 8 stores)

    We sell items that are needed 100% by the customer at about %15 profit and make up for it with other items. We also make sure out staff is more knowledgeable then the other retailers. This is one of the other things that mde us so succesfull.

  14. #14
    Ye its a good topic to talk about.

    I usually also stick with the "Other company is crappy" thing

  15. #15
    Join Date
    Oct 2004
    Location
    Ohio
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    1,641
    Quote Originally Posted by Profit|Jacob
    Ye its a good topic to talk about.

    I usually also stick with the "Other company is crappy" thing
    So you go around bashing other hosts that you have no experience with to make your little company look better? Nice ethics, thanks for showing us your true colors.

  16. #16
    he has it in inverted commas, changed the meaning completely...

  17. #17
    Join Date
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    Quote Originally Posted by mickd
    he has it in inverted commas, changed the meaning completely...
    Why does that change the meaning? It's a quote, doesn't change it at all. Now, maybe if he'd added a sticky out tongue smiley then we'd now it was meant in jest, if that's what was intended.

    As for me, I took it as it was written, a quote of the general way he explains lower priced competitors to potential clients.

    I agree with ResellersHQ, you can't just rubbish a competitor, which is why I stated earlier on that you should deal with a potential client in a professional and diplomatic manner, whilst letting them know that YOU will still be around to help them in 6-12 months time when they are most likely ready to leave the cheap host.

    No, that's not to say that all cheap hosts are bad. There are some that do provide a good service at the prices they charge. However, generally, unsustainable low prices equals poor service in the long term.
    Mick Beeby
    www.reyaltec.com - Quality Helm Dedicated, Reseller & Shared Windows 2003 Hosting. UK & US based servers.
    www.aspbite.com - Modular ASP Content Management System

  18. #18
    Join Date
    Mar 2005
    Location
    Derby, UK
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    There are fly-by hosts who are really cheap and just want your money.
    There are hosts who are cheap, but can offer a great service.
    There are hosts who are cheap just to get a client base.

    There are many reasons to why a hosting company can be cheap. If I were asked the same question, I would never automatically reply, "there service will be poor compared to ours".

    All hosting companies are equal in my eyes. I would refer each potentional customer to do their research by using Google, and the WHT search functions.

    If a potentional customer decided to go with another company, I would let them go. Owners value their business (and I do). I would never negotiate my prices because of a competitor. I only negotiate requested custom packages.

  19. #19
    Quote Originally Posted by mjb-is
    Why does that change the meaning? It's a quote, doesn't change it at all. Now, maybe if he'd added a sticky out tongue smiley then we'd now it was meant in jest, if that's what was intended.
    it’s not a quote... if it was it wouldn't be written like that. writing "the ... thing" at the end is a give away that its used in the other way (i can't remember what its called when something is written like that (you get to the point in a few words, normally, i'll say in an informal way). i just know how to interpret it).

    This may be a quote:
    i normally stick with "others are crappy".

    This wouldn't:
    i normally stick with the "others are crappy" thing.

    i maybe wrong, i'm not the best student in english (and i'm only 15) so if i am, people correct me.

    by the way, i do agree that you shouldn’t put the other hosts down without knowledge about them previously and if it was me, i would personally say something along the lines of "it's you choice but i would suggest reading their terms of service as there is always a limitation on such plans." i would also mention that most are overselling and the cons involved in that.

  20. #20
    Perhaps the best strategy is offering them free account to test your services... I don't think it's a good idea to flame other companies.. :p

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