View Poll Results: Plan upgrades, what to do with existing clients?

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44. You may not vote on this poll
  • Nothing, New clients only.

    2 4.55%
  • Upgrade all existing clients free of charge.

    27 61.36%
  • Offer the upgrade to existing clients for a one-off fee.

    6 13.64%
  • Nothing, wait until requested by existing clients.

    9 20.45%
Results 1 to 28 of 28
  1. #1
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    Mar 2005
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    Plan Upgrades - Existing clients?

    Hi all,

    So, sooner or later the majority of us will upgrade our plans/packages and there prices to offer our clients more "bang for buck"

    When doing or this (or when youve done this) how do you handle existing clients?

    The way i see it is you have 3 options:

    1. State/Make clear that the new pricing/packages are for new signups only.
    2. Upgrade all existing clients to use your new plans free of charge.
    3. Offer existing clients the chance to upgrade with a one-off "upgrade fee" depending on there current usage/billing period/next renewal date.


    I await your suggestions

    Cheers

  2. This is interesting. Can you please add a poll to the thread?

    I would reccomend as a 4th option adding, "Only upgrade the clients that notice the plan change and request the upgrade".

    Look forward to viewing peoples opinions.

  3. #3
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    Great idea, poll added

  4. #4
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    Jul 2004
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    I have not doent his yet, but I say #4 is probably going to be the most common option. Think of it like any other business service. I can't remember the last time Verizon called me to tell me that they had a new plan and were going to lower my cell phone bill by $20.

  5. #5
    Join Date
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    I said upgrade all clients including existing ones because their your best asset and have been with you over the years. I would consider it as a gift to your loyal customers. Also you doing this without them asking for it will certainly give you better word of mouth marketing with your existing clients.
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  6. #6
    If the pricing structure is the same, and you're adding more features then you should add it for both new and old customers. If you're dropping the features, it would be best to only drop them for new customers because then you might lose old customers.

  7. #7
    Join Date
    Apr 2002
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    USA
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    Every time we upgrade plans we upgrade the existing clients also.

    Now if you change pricing say for instance up your price $3.00 a month per plan but also double the bandwidth and increase your space allocation then you can use it to your advantage by writing your existing customers and giving them the option to go to the new package or stay where they are. If they go to the new one you have just increased your revenue stream if they stay on the old then you are not out more resources.


    Either way a win win for all.

  8. #8
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    May 2002
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    My vote is to upgrade your current clients free of charge or like Techark said to upsell them slightly and add on a few dollars a month,

    My Reasons:
    1. If you upgrade them for free they will be very happy and are more likely to recommend you to friends as long as its not affecting server stability.

    2. Most likely they are not actually using it, its more a marketing gimic at this point in shared hosting. CPU and mem usage is what really matters.

    3. Its hard to find new clients cheaply, its much easier to do all you can for current clients and making them happy, they pay you and send you free referels.
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  9. #9
    Join Date
    Feb 2006
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    I usually charge $5 one time to upgrade old plans. This fee is because I may have to move customers to a new server as otherwise HDs may get full or systems may get overloaded (if you upgrade all customers then your servers may get filled up or loaded so be careful). So far everybody took the offer. Some even commented that they are very happy about the low price for the upgrade. No customer did ever complain about the fee or say that it was inappropriate. Most of the big hosting companies do not upgrade at all but you have to cancel and sign up for a new plan...

  10. #10
    If you are 'grandfathering' your old prices, then i would write to the clients and say if you want to move to the new plans, drop us an email and we will upgrade you, but be aware that this does mean your payments would be increased.

    If your prices are not changing, just the plans, then you should relaly upgrade everyone.
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  11. #11
    Join Date
    Jul 2005
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    Milton Keynes, UK
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    We always upgrade existing customers if we change the plans. As said above their your best asset.
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  12. #12
    Join Date
    Oct 2004
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    Germany
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    I usually upgrade all accounts free of charge, but if there are major improvements and more costs are involved, I kindly ask my clients if they would like to pay a higher monthly fee.
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  13. #13
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    Quote Originally Posted by Plutomic-Andrew
    I said upgrade all clients including existing ones because their your best asset and have been with you over the years. I would consider it as a gift to your loyal customers. Also you doing this without them asking for it will certainly give you better word of mouth marketing with your existing clients.
    If you had a gold mine, that would be a really good asset to have. Right? But would you mine it or burry it?

    If you provide excellent customer service, support and reliability. Then your customers will be "more than happy" to pay you more money for an upgrade when they need it. If you give it away everything you have to offer when they don't need it, it is like burying a gold mine because you are assuming what you have to offer is worthless.

    Up selling to your existing client base, is how you get out of the hole and build profitability. If you keep giving them more when they don't need it, you are leaving all your profit on the table. You need to examine your objectives. Do you want to make money, or just offer hosting?

    IMO too many newbies start hosting companies without a clue on how to make money at it. They just offer more and more resources for less and less cost, without actually considering how that is going to be profitable in the long run. When hosting packages were 50 MB, you had hopes of upgrades to 100, 200, 500 MB in the future to get the price up to where it needs to be to make money.

  14. #14
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    Quote Originally Posted by ServersAndDomains
    If you provide excellent customer service, support and reliability. Then your customers will be "more than happy" to pay you more money for an upgrade when they need it. If you give it away everything you have to offer when they don't need it, it is like burying a gold mine because you are assuming what you have to offer is worthless.
    Doesn't really work that way usually, people are demanding and from what I have seen in many real world examples customers do demand it for free no matter how well they are taken care of.
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  15. #15
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    Jan 2006
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    I agree bwb, most people would not pay unless on a more premium service.

    If I was lowering my prices, I would inform every client and automatically lower them (keeps them happy). If I was increasing prices I would leave them on the cheaper plan and just inform them that prices have gone up, yet they will be able to continue paying the previous prices.

  16. #16
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    Quote Originally Posted by bwb
    Doesn't really work that way usually, people are demanding and from what I have seen in many real world examples customers do demand it for free no matter how well they are taken care of.
    You have got to be kidding. If that's the case then we must treat our customers too well. Because they have asked to pay us more money simply for being so helpful and reliable! I've offered customers cost reductions and had them tell me "no thank you", that I don't charge enough for my services. This has happend more than once! That is when you know you are providing a service that is more valueable than just a hosting package.

    We host thousands of websites and it is a very rare occassion that a customer will leave us rather than pay a little more for an upgrade. Nobody EVER demands anything but good reliabilty. If we were to give away the upgrades we sell, or lower prices across the board for older customers who still have the more expensive, smaller, older plans. It would cut our revenue 50% or more. That would be financial suicide! Granted, when we had 10 customers, it was no big deal. Now, there are thousands of customers and it can't be done without giving up tens of thousands of dollars in revenue. That would be stupid to say the least. We get lots of referrals by WOM without giving away the farm.

  17. #17
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    Quote Originally Posted by ServersAndDomains
    You have got to be kidding. If that's the case then we must treat our customers too well. Because they have asked to pay us more money simply for being so helpful and reliable! I've offered customers cost reductions and had them tell me "no thank you", that I don't charge enough for my services. This has happend more than once! That is when you know you are providing a service that is more valueable than just a hosting package.

    We host thousands of websites and it is a very rare occassion that a customer will leave us rather than pay a little more for an upgrade. Nobody EVER demands anything but good reliabilty. If we were to give away the upgrades we sell, or lower prices across the board for older customers who still have the more expensive, smaller, older plans. It would cut our revenue 50% or more. That would be financial suicide! Granted, when we had 10 customers, it was no big deal. Now, there are thousands of customers and it can't be done without giving up tens of thousands of dollars in revenue. That would be stupid to say the least. We get lots of referrals by WOM without giving away the farm.
    Not sure how to respond, I've dealt with a lot of customers, owned several hosting companies and worked for several. All have great reps and I just I kinda doubt they actually want to pay you extra just for being helpful and reliable or that they were happy to pay an upgrade fee to upgrade to a hoting plan they were already paying the same monthly fee for. People are people and telling them that you upgraded the specs for a $20.00 a month plan but can't give them those new specs even though they are paying $20.00 a month still just doesn't work with people. But if that is the case that is great news for your company as you guys are doing something I've never seen before !
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  18. #18
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    Nothing makes a loyal client want to switch more then when they load up your site and see new signups are getting a better deal than them.

    After that, iff they asked about the new packages, the worced thing you could do is say "new signups only". One better would be the "upgrade fee". The responce that will keep the client would be "Sorry about that, we'll upgrade you know" maybe a free month too..

    Treat your loyal customers with some respect, or they won't stay customers for long.

  19. #19
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    Quote Originally Posted by bwb
    People are people and telling them that you upgraded the specs for a $20.00 a month plan but can't give them those new specs even though they are paying $20.00 a month still just doesn't work with people. But if that is the case that is great news for your company as you guys are doing something I've never seen before !
    It's called the "Desiato Effect". I just answer the phone their problems are solved. Really, a lot of our clients are novice web masters and just need a little hand holding. They will appreciate the extra time we give them for years to come.

    Also, I never said we don't give them a plan if they ask for it. Of course we do! We even let customers downgrade to less expensive plans that have the same space or more than what they have now. My point was that we don't just "do it" across the board for everybody because that would be like giving away tens of thousands of dollars of this years revenue for nothing. What would I have left to buy groceries with?

  20. #20
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    Quote Originally Posted by ServersAndDomains
    It's called the "Desiato Effect". I just answer the phone their problems are solved. Really, a lot of our clients are novice web masters and just need a little hand holding. They will appreciate the extra time we give them for years to come.

    Also, I never said we don't give them a plan if they ask for it. Of course we do! We even let customers downgrade to less expensive plans that have the same space or more than what they have now. My point was that we don't just "do it" across the board for everybody because that would be like giving away tens of thousands of dollars of this years revenue for nothing. What would I have left to buy groceries with?
    Gotcha, that makes more sense, so if they ask for the upgrade you give it to them for free correct?

    The line that was confusing was "If we were to give away the upgrades we sell, or lower prices across the board for older customers who still have the more expensive, smaller, older plans."
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  21. #21
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    Quote Originally Posted by bwb
    Gotcha, that makes more sense, so if they ask for the upgrade you give it to them for free correct?

    The line that was confusing was "If we were to give away the upgrades we sell, or lower prices across the board for older customers who still have the more expensive, smaller, older plans."
    Yes, of course. Our billing software pro-rates the package to the existing due date on all upgrades and add-on plans. So it's not exactly "free". But it's even possible that the customer will end up with credit in the account when they change plans. It goes both ways. We make it very easy to change plans if a customer wants to. But we don't change it for them if they don't ask for it.

    However, changing our products to offer more resources for less money is always somewhat of a risk. If everybody decided to downgrade to get a better price, it would cost us a lot of money. Luckily, most satisfied customers don't want to change a thing.

    When we made the transition from selling single domain websites to multi-domain websites, we sacrificed quite a bit of profit. But we've sold a lot more multi-website plans since then. Where single website plans were getting harder and harder to sell. Just recently, we even started offering multiple website plans on our Alabanza servers, where there is a dedicated IP for each website.

  22. #22
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    I just love how everyone (including us, and me) is so anti-business around here.

    Really.

    People want it one way, but don't want it the other.

    It's natural, but it's still funny.

    Say, for example, there was a 50mb plan for $1/month, which was upgraded to 100mb. The clients would want that upgrade, free of charge, right? Of course, we all would. We're paying the same as everyone else, so why shouldn't we get it?

    What if that plan later goes back to being 50mb? or even 75mb? I think we can all agree YOU BETTER NOT CHANGE MY ACCOUNT OR I'M LEAVING!

    Funny, no?
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  23. #23
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    Not really funny or surprising, that just the way it works. If current customers are getting 1/2 of what new sign ups do for the same price, that's incentive from them to leave and find the same deal some where else.

    You never want to give people incentive to leave.

  24. #24
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    I would reccomend as a 4th option adding, "Only upgrade the clients that notice the plan change and request the upgrade".
    If it's a new pricing structure, I'd do this.

    If it's same pricing structure, just adding more features/storage/bandwidth, I'd upgrade them free of charge. Obviously, it depends on what your servers can handle. If the plan change necessitates a move to a different server, you should give them the option.

  25. #25
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    If it is a permanent change, we upgrade all clients free of charge. If it's a promotional change, it only applies to new signups.

    If you do not upgrade existing clients due to a permanent change of offering for the same price, all you are doing is essentially penalising them for their loyalty, when you should be rewarding them instead.

  26. #26
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    Quote Originally Posted by YetiHost-Wullie
    If it is a permanent change, we upgrade all clients free of charge. If it's a promotional change, it only applies to new signups.

    If you do not upgrade existing clients due to a permanent change of offering for the same price, all you are doing is essentially penalising them for their loyalty, when you should be rewarding them instead.
    You're not penalizing them if you give it to them if they request/need it. Its bad business to give away resources that you don't have to. Provide a rock solid service and customers will be loyal.

    Like someone else said, you don't see Verizon calling up millions of their customers each time they offer a new rate plan...unless its to upsell.

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  27. #27
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    Quote Originally Posted by AH-Tina
    You're not penalizing them if you give it to them if they request/need it. Its bad business to give away resources that you don't have to.
    You are not simply giving away the resources though, they are paying for them. Your usage does not suddenly jump up overnight because you offered the upgrade and if they do ever want to upgrade you need to give them it for free, so you need to reserve that allocation anyway.

    Dedicated servers are an exception because there is a lot more involved in an upgrade than there is with shared hosting.

    Think about it this way. You get your newspaper delivered every day and it costs you say 50p per day. After 6 months of getting the paper, you walk into the store and see a sign stating that for the last 4 months paying 50p gets you the paper and a free magazine. That magazine is something that would have been useful to you. Whether or not you can request for that magazine to be added free from that point forward, would it not piss you off that you have been paying the same amount for 4 months as others who were getting the magazine?

    I realise the above is slightly different, but it's the same principle.

    Quote Originally Posted by AH-Tina
    Like someone else said, you don't see Verizon calling up millions of their customers each time they offer a new rate plan...unless its to upsell.
    They might not do it but there are companies that do work this way and they will get respect from their customers for it. I personally deal with a company that does this very thing and I respect them for it, it's part of the reason I think twice before considering moving away from them. My ISP (Telewest/Blueyonder) have upgraded their bandwidth offerings about 4 times within the last few years and every time they have notified me that my account would be upgraded free. Within 2 years my account has gone from about 1MB to 10MBit with no change in pricing. (It's actually about £3 cheaper now for the 10MBit than it was for the 1MBit 2 years ago)

  28. #28
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    Quote Originally Posted by YetiHost-Wullie
    You are not simply giving away the resources though, they are paying for them. Your usage does not suddenly jump up overnight because you offered the upgrade and if they do ever want to upgrade you need to give them it for free, so you need to reserve that allocation anyway.
    Experience has shown that probably 99% of customers do not ask for the upgrade. They don't need it and probably don't care if they get it. We, like most hosts, base the number of customers per server on current packages + some extra. Giving blanket upgrades to everyone means that more servers are going to have to be put in and thus reduce profit margins.

    The 1% that asks are generally surprised and pleased when we say "Sure, we can upgrade you at no extra charge."

    The way we've handled it in the past is that when we roll out new packages (maybe 4 times in the last 9 years), we give them a completely different naming structure so that they truly are NEW packages. This means that new customers are given new packages and the old customers are welcome to move to the new packages of similar pricing. That seems to satisfy everyone and keeps our bottom line right on track.

    I've never once had any customer storm off angry because we didn't just upgrade them without them asking.

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