Web Hosting how is it profitable? Business discussion.
Okay so here after being in business for 7 long years, I find myself trying to figure out the future of web-hosting.
How do we compete with people selling bad hosting at very low prices?
How do we compete with people that have financial resources higher than we can even imagine?
I find people come to me every day and say your prices are too high, the prices are high because of support, if someone calls me and says, my webpage needs something changed before tomorrow and I dont know how to do it, I will do it for them or have one of my coder's do it. But yes, my prices are around 30+ a month.
As well, my servers really have never gone down for more than a couple hours... I change hardware every 3 years.
I have clients that are very happy, but the new ones, accustomed to godaddy and the like seem to never sign up.
I dont understand why this business has become so cuthroat that people are willing to lower their rates down to the prices of 1and1, godaddy, and so forth and then give horrible support to end users, so that they leave after a couple months.
Is this some kind of business model I am not aware of? I know new hosting companies are forming every day by the discussions on this board, and I don't honestly know how you guys do it.
Do not fall into the trap of competing on price alone! The bigger companies like godaddy, 1and1, etc have very, VERY deep pockets, and by offering really low prices they are investing in the future. It is much more difficult for smaller hosts to do that, and still make a living today.
As for competing with bad hosts who sell at very low prices.... DON'T. They typically cannot keep their customers for very long, as their service is sub-par.
You can also think of them this way.... as long as there are sub-par hosts that exist who do not provide good service to their customers, there will always be customers out there looking for better hosting. A constant supply of hosting customers. So just because there are lots of hosting companies offering very low prices, doesn't mean they are successful. They could in fact be helping you out
Our hosting biz remains profitable. It is nowhere as lucrative as it was before the dot.com bust in 1999/2000... but it is still profitable.
We have never lowered our prices to compete with the super-cheap web hosts. Why? Because we look at our books and know what it takes to make a profit. Lowering our prices decreases the chance that we will remain profitable. I understand that these "Super-cheap" web hosts will not remain in business long so we don't go there.
Instead, offer excellent service and excellent uptime. Your customers will appreciate that because, just as in the pre-2000 market, quality customer service in web hosting is still hard to find.
Define your market and do advertising accordingly. It is possible to have clients pay $35 or more per month to you, when they could get the same package somewhere else for a fraction of that price. Keywords are "value added" as an example.
Quality customer service is still hard to find because so many hosts are trying to compete on price. You get what you pay for. So to me, paying $35/month for a hosting account for my business is nothing, if I get great uptime and support.
I would also suggest that customers who are willing to pay a little more for better support and uptime, will be customers of yours for a long time to come.