Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : Has anyone ever successfully pulled off a budget/premium double play?

[advantagecom]

I'm looking for some business cases to support the concept of having a "budget" division and a "premium" division for hosting, VPS, and dedicated servers. In other words, are there any companies that have had both a budget and premium division and have been doing it for 4 or more years?

The reason I say 4 years, is that I've seen many a hosting company fail at year 2 or 3 when their psuedo ponzi scheme collapses. I'm looking for real companies with business models that actually work or at least seem to when viewed from the outside.

Some of you that have been active on these forums in the last few years may know a couple companies that have done that successfully. I've not been watching WHT over the last few years since our last attempt at budget hosting, so I'm not sure if anyone has ever made it work.

[drewnick]

ThePlanet has done it with their ServerMatrix / TotalControl line. This is at a server level, but it's the closest I could think of. It seems to me you're either tooled as a premium host or a budget host - but not both.

[CybexHost]

Many dedicated hosts have done this (as mentioned)... Many other web hosts have tried expanding as well. It requires much planning and research while utilizing your existing customer base very well.

[msh]

unixshell.com vs tektonic.net is a bit like that.

[mrzippy]

We do this with regular shared web hosting. Both brands have been in operation for over 5 years now and going strong.

We do not "mix" the two brands in any way.. so one brand does not know about the other. They are basically operated as two completely seperate entities, that just happen to be owned by the same company.



(We do use the same helpdesk staff for both brands, however... although they are on different servers and use different software.)

Hope that helps.

[PixelManual]

Originally Posted by mrzippy

We do not "mix" the two brands in any way.. .

Seems like the way to go. I haven't really seen any on the same time, because if you are one of those buying the budget one, it just might seem like you will be getting a lesser service and worse hardware, etc. Not a good first impression.

[advantagecom]

We do this with regular shared web hosting. Both brands have been in operation for over 5 years now and going strong.

We do not "mix" the two brands in any way.. so one brand does not know about the other. They are basically operated as two completely seperate entities, that just happen to be owned by the same company.

This is what we were thinking. Our first go around with budget hosting was a disaster. We ended up cannibalizing $80K/yr of our annual revenues from premium hosting into $30K/yr annual revenues from budget hosting. It wasn't anywhere near all of our revenues, mind you, but it was certainly an ouch.

Thinking our premium customers knew the difference between a budget offering and our premium offering was a big mistake. Many of our bigger customers just assumed it would be the same great premium service with a smaller price tag and switched. When things with our budget offering weren't as perfect and high touch as our premium offering we got a bunch of former premium customers cancelling from our budget offering and beginning the long pilgrimage of bouncing from budget host to budget host.

I knew about ThePlanet, but even a budget dedicated server is quite a step above budget shared hosting. I wasn't sure how applicable their model would be to shared or VPS hosting.

It sounds like it is quite challenging, but can be done with proper management.