When you pay for web hosting, how is the money allocated?
I'm curious as to how the money I pay as a customer gets distributed. Does my money go more towards space or bandwidth? Some services seem to offer Frontpage, Perl, among other goodies for additional money... Is this more service charge, or is it towards the additional resources it eats up?
You pay for the server itself (not cheap), the physical location where the server is hosted, power, Internet connection (much more expensive than your home cable or DSL connection), staff (installation, tech support, etc)
I think with most hosting companies you pay for the same basic costs. Just different hosts market it differently and distribute their costs differently.
For instance, host A might say "$20 setup, 5 emails, and $20 a month"
However, host B might say "Free setup, 3 emails, and $25 a month"
In both cases, by the time the year is over, both hosts might make similar amounts of money from the customer.
However, host B might attract a certain crowd because of the free setup, and Host A might get other customers who aren't interested in the way Host B sells their product.
It appears to be about choice and appealing to different crowds.
It's the dangerous fly by night crowd you have to watch out for (Host C) who are selling things at a loss, and figure they'll make it up later by selling out to a bigger host company, being extra cheap with the quality of service, or simply surprising everyone a year later and raising the prices.
5% new development (software)
15% monthly bills (power, internet connection)
5% system upgrades/new equipment
4% extra unexpected things (e.g. taxes, unexpected annual renewals)
1% Business Savings/emergency fund
These are roughly ours; however, every hosting business will have their own breakdown according to their business model.
A lot of companies here on WHT and other forums completely drop the 50% for staff and just do not support their customers (those are the one that are going out of business all the time), others don't figure the 15% for monthly bills (those are the ones who also get instantly shut down and never heard from again). It is the 4% and the 1% that keep hosting companies online. If they don't have that then someday something might happen that could close their doors too.
In a nutshell your space and bandwidth are equally taken care of under the monthly bills (internet connection) and system upgrades (larger hard drives) categories above. Frontpage, Perl, among other goodies should fall under the new development and system upgrade categories above. Unless it is a major upgrade, or in addition to a current amount (e.g. more bandwidth, hard drive space) additional fees should not be charged to access them (in my opinion).