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  1. #1
    Join Date
    Jun 2003
    Posts
    72

    web hosting services are so cheap now

    I am thinking about starting a new web hosting company, but I see that some companies selling web hosting service 50gb space for only $9 per month. How can a hosting company make a living now????

  2. #2
    Join Date
    Apr 2004
    Location
    Singapore
    Posts
    1,522
    There is still a market for this but those space are actually marketing purpose. If you ever get close to that amount, they will kick you out.
    tanfwc

  3. #3
    You can make enought o pay yourself but if you want to have a day off or a holiday you will need staff and at current street pricing there will not be enough profit to make this possible.

    Your only option is external funding (borrowing money) or having rich relatives or something similar.
    If I was starting now I would never be able to get to the stage I am currently at. You need lots of profit coming into fund the development of the business in the medium and long term.

    To get lots of customers you need to undercut everyone else and doing that makes no money, so whats the point?

    I have just downshifted from working 7 days a week up to 18 hours a day to 5 days a week 9-5pm and its totally changed my life.
    Was it worth working so hard to build up the business?
    Yes, but I can't see it getting any bigger as turnover is increasing and profits are staying the same so the percentage is falling all the time.
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  4. #4
    Quote Originally Posted by GordonH
    To get lots of customers you need to undercut everyone else and doing that makes no money, so whats the point?
    this is only true if you are targeting the low end-high churn part of the hosting market. there are a lot of other areas where the people you host are looking for stability, security, high end datacenters and connections and place big time emphasis on uptime and redundancy.

    NONE of these companies or individuals are going to use budget hosting simply because 9 out of 10 times its one or two people operating a reseller account that is likely overloaded and oversold.

    price is not as important as quality hardware, infrastructure, support and security in this area. you have to have the best of all four to capture clients in that market and most of these clients willingly pay a lot more than $9.

    my opinion anyway.

  5. #5
    yes, that's my strategy also. low profit but more sales. now i manage to cover my cost for my web hosting business.

  6. #6
    Quote Originally Posted by RobertPaulson
    this is only true if you are targeting the low end-high churn part of the hosting market. there are a lot of other areas where the people you host are looking for stability, security, high end datacenters and connections and place big time emphasis on uptime and redundancy.

    NONE of these companies or individuals are going to use budget hosting simply because 9 out of 10 times its one or two people operating a reseller account that is likely overloaded and oversold.

    price is not as important as quality hardware, infrastructure, support and security in this area. you have to have the best of all four to capture clients in that market and most of these clients willingly pay a lot more than $9.

    my opinion anyway.
    I think you will find that most of those clients will want to trust a known provider not a new one and once they have had a site for a year or two with no faults they will question the price and moves somewhere cheaper.
    Thats what tends to happen.
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  7. #7
    Join Date
    Jan 2005
    Location
    AZ
    Posts
    157
    If you really sat down with a calculator and worked out a business plan it would be easy to see that having a hosting business is a tough way to make a living for the sole proprietor.

    It is kinda like being a drug dealer ...or so I hear ;-) You can sell to your friends and make enough to pay for your own habit, but in the long run you end up mostly breaking even. It is very hard for one guy to have a dozen dedicated servers, and a couple thousand customers, and then keep up with billing, credit card processors, marketing, setting up new customers, technical support, etc...

    A better idea is to integrate web hosting as a product in your computer services business. Offer web sites, email, and other various services (depending on your skill sets) to LOCAL businesses and customers.

    My main business is networking, servers, high end engineering workstations, and onsite service... but i also register domain names with enom, and do occaisional websites and hosting. I do that so my regular customers don't have to talk to another computer guy when they need those services. That rat ba$tard may try and steal my cash cow customer! It helps me retain my services and computer customers by being able to offer a whole suite of IT services... one of which is hosting.

    PLUS... those small business customers don't mind paying ALOT more than what you typically see posted here for hosting prices. Would you rather have 10 customers paying $50/mo or 100 customers paying $5/mo?? The money to you is the same, but you have 90 extra mouths to feed with the $5 customers. That adds up to alot of support calls, hard drive space and bandwidth.

    The thing is this: The $50/month customer doesn't read the WHT forum. They don't buy hosting on eBay. They don't visit hosting reviews portal sites. To get this customer you have to go get them where they live...at their place of business. Knock on some doors, send some post cards, take a few ads out in small local newspapers. Host some free church websites, school websites, boosterclub sites. You may make alot of contacts that way. Visit them and ask what they hate the most about their computers/website/email... they all love to tell PC horror stories. Then offer them solutions so they can focus on running their business.

    My advice is to consider making hosting just ONE of the products in your catalog...if it is the ONLY one then you become a one trick pony in a crowded corral full of other ponies.

  8. #8
    Join Date
    Aug 2004
    Location
    Indiana
    Posts
    1,205
    You get what you pay for

    When you buy a product from a local shop, you're buying more than what they get it for at cost. You're paying for their storefront, the business costs, staff, customer support, etc.

    Even if computer hardware suddenly took a huge jump and allowed businesses to lower their costs by 90% with hardware that could handle 10 times the amount of all resources, most businesses in this for the long run wouldn't lower their prices.

    Why? Most of the costs are not dealing with just the cost of the servers, there are many other things involved, with one of the biggest being employees. You have to pay for skilled staff members and that's not something that will/can suddenly become 10 times cheaper.

    If you define the clients you are trying to target, know what kind of revenue it takes to run the business, etc. then it's very possible. I can name *many* companies off of the top of my head that have solid pricing that can be relied on as a hosting provider for a very long time. I wouldn't have any issue saying that I'd expect them to be around 10 or 20 years from now. Sure, things happen along the way, but that's the risk in running a business.

    Basically, while you don't need a business plan, thinking through the long term goals is something a business owner should do. Why work very hard at something only to see it not work out because you didn't plan better a few years ago?

    I know I touched on many different topics, probably mentioned some large categories that should be specified, etc. and so feel free PM me with any specific questions or just post back here. There is a reason why some of the larger hosting companies are still in the business and want to be for a very long time
    Ankit Gupta - Cernax Hosting
    "We're always second in the industry, the customer comes first."

  9. #9
    Still there those whom search for distinguished services so you must plan at first and look forward to a uniqe services then target you clients,low prices clients or ordinary and reasonable prices with high quality services clients and then let them choose but no one blame other than himself.
    HayPay.com withdrawal services.
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  10. #10
    Join Date
    Aug 2006
    Location
    Canada
    Posts
    292
    how about a dedicated servers company? is that falling too

  11. #11
    Join Date
    Jun 2003
    Posts
    72
    Maybe these companies can provide such low price becaues they've existed in the industry for a while already. But these low price plans have made me disappointed about starting selling hosting bussiness as a new. It is too hard for a new hosting company with low budget to survive in the hosting world, while compairing with those companies. why doesn't the hosting business have a standard, general price?

  12. #12
    Join Date
    Mar 2006
    Location
    Reston, VA
    Posts
    3,131
    for the most part its called overselling, others just do it more drastic than others.
    Yellow Fiber Networks
    http://www.yellowfiber.net : Managed Solutions - Colocation - Network Services IPv4/IPv6
    Ashburn/Denver/NYC/Dallas/Chicago Markets Served zak@yellowfiber.net

  13. #13
    Join Date
    Feb 2006
    Posts
    466
    Just to give a warning to you all. I got into the budget business. Soon had 4000 customers. Then couldn`t keep up with it anymore and stopped doing billing (i.e. if a Paypal subscription was cancelled I'd host for free for months) and lost many customers over that. Would I have charged more money I would have gotten less customers but I think in the end there would have been more money in my pocket. My advice: Do never sell for less than 5 bucks per month. Don't sell 50 GB of space. You do not need to do it. Many customers just see your ad and ask themselves "Can I afford it ?" The majority never compares you to other hosts. Sure, giving more space will result in more customers but it will also cause more work and in the end you have to try to work as efficiently as possible. Don't do the same mistake I did. I remember when I got into it I thought like you and I thought the people on WHT just say that because they don't want no budget competition and that's true to a degree but then I made my experience and now I can only tell you do never go under 5 Dollar per month and do never try to competete with hosts that sell insane packages...

    And the best advice I can EVER give you: NEVER NEVER NEVER stop doing the billing stuff. It is the most important part of this business. Never get behind on it. You will end up working for free.

  14. #14
    Join Date
    Aug 2004
    Location
    Indiana
    Posts
    1,205
    Quote Originally Posted by Mastdesi
    how about a dedicated servers company? is that falling too
    Again, the hardware may be getting better, but why would the price of a dedicated server fall substantially? You need to pay for the building's cooling, electrical infrastructure, on site technicians, the actual hardware, chance of hardware needing to be replaced, etc. Like I said, hardware can improve, but there are so many other costs involved that prices really shouldn't be dropping a lot. The hardware you're on is only a small portion of the costs!

    This might not be related directly, but one point people want to ignore is why corporations exist to begin with. They exist because they want to make a profit, simple as that. Yes, that means part of what you pay is going into the profit of a person.
    Ankit Gupta - Cernax Hosting
    "We're always second in the industry, the customer comes first."

  15. #15
    Quote Originally Posted by wfq2
    How can a hosting company make a living now????
    As with any new endeavor, starting is the hardest part. You cannot inspire people to try again if you don’t really believe that success is possible. You can’t comfort people during tough times if you don’t believe that tough times pass. You can’t lead if you don’t have faith in an uncertain future.

  16. #16
    Join Date
    Jun 2003
    Posts
    72
    I am not telling I want to selling webhosting service at a very cheap price as a new hoster, but I just to pointed out, some web hosting companies who have been selling cheap services have really dispointed me from thinking starting this business as a new.

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