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  1. #1
    Join Date
    Nov 2006
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    168

    Setting up pricing questions

    Hi, I was wondering if anyone has any guidelines they can share for setting up hosting pricing. I have been comparing the prices & offerings of other hosting companies, and am a little puzzled of how they are able to offer what they do, at amazingly low prices. Some companies are offering like 1000GB Disk Space with 1000GB Bandwidth for like $6 per month, I am clueless of how they can offer this kind of a deal, concidering a dedicated server costs around $150 per month, and does not include near what they are offering for six bucks.

    Can anyone explain to me how companies are able to offer these types of deals. I am thinking they offer these huge packages realizing that the majority of clients would never come close to reaching these huge disk space & bandwidth quota's.

    Just wondering how others go about setting pricing for there hosting packages. Any suggestions would be greatly appreciated.

    Best Regards

  2. #2
    Join Date
    May 2002
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    Internet / Colorado
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    Quote Originally Posted by XT22
    Hi, I was wondering if anyone has any guidelines they can share for setting up hosting pricing. I have been comparing the prices & offerings of other hosting companies, and am a little puzzled of how they are able to offer what they do, at amazingly low prices. Some companies are offering like 1000GB Disk Space with 1000GB Bandwidth for like $6 per month, I am clueless of how they can offer this kind of a deal, concidering a dedicated server costs around $150 per month, and does not include near what they are offering for six bucks.

    Can anyone explain to me how companies are able to offer these types of deals. I am thinking they offer these huge packages realizing that the majority of clients would never come close to reaching these huge disk space & bandwidth quota's.

    Just wondering how others go about setting pricing for there hosting packages. Any suggestions would be greatly appreciated.

    Best Regards
    They are huge and have the resources to oversell, my advice would be to focus on a niche market with your company and offer on your plans a good amount of bandwidth/diskspace, the amount is pretty unimportant as most people don't use that much. What has become more important is who you are marketing too and fitting their needs and perhaps on your page make it clear how much bandwidth/space you are offering, explain it in lay terms, maybe show how many CDs your packages hold etc, to show how silly some companies are..... would make a great ad campaign if you said maybe xxx host is compensating for something with their huge bandwidth / diskspace, aka lack of support/service, etc
    Like passive recurring revenue you can retire on?
    You focus on building your brand, we handle all support, billing, and more.
    Pressed.net - Start your own Managed WordPress Hosting Company

  3. #3
    Join Date
    Nov 2005
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    USA
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    First you have to think of what clients you expect to host for? Then see what you are capable of offering? Web hosting service also requires support and dedication to address client questions and concerns. Lastly, see how much your servers can handle and divide it base on the rate plans (calculate your profit) remember, you calculate your bandwidth and dis space.... you can do a little room for overselling (I do it on 10% oversell the server) as soon as a server reaches the oversell threshold, I add another server....
    I hope this helps.
    GS RichCopy 360 Enterprise - Voted #1 for data migration and replication in terms of performance and features. Replicate data across between servers in the same network, WAS, or even across the internet

  4. #4
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    Aug 2003
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    Twin Cities Area
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    what you do is make your prices REALLY high and then people think you have something of extraordinary value.

    never target deadbeat cheapie hosting clients. they will always want something for nothing.

    getting one GOOD hosting client paying 99.99 a month is better than having the drama of 10 different $9.99 clients a month.
    if you haven't considered chapter 7 bankruptcy, maybe you should.
    eliminate your debt, keep the property you want, most people qualify.
    contrary to popular belief - no attorney is necessary!

  5. #5
    I think you really have to understand the statistics involved, not every user is going to use 100% of the resources given to them. A good rule of thumb is that most clients use about 20% of the resources given to them, it really depends on the clientele you attract.
    Jay Kramer - Operations Manager
    Affordable Colocation and Dedicated Servers
    www.colostore.com 1-877-719-3698

  6. #6
    Join Date
    Nov 2006
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    168
    Thank you everyone for your excellent well thought out answers. They have been very helpful! I really appreciate all of your help.
    By: bwb
    They are huge and have the resources to oversell, my advice would be to focus on a niche market with your company and offer on your plans a good amount of bandwidth/diskspace
    - Thanks very much for your suggestion.
    [quote]
    By: bwb
    if you said maybe xxx host is compensating for something with their huge bandwidth / diskspace, aka lack of support/service, etc
    - I like this marketing idea.
    By: ITAhmed
    First you have to think of what clients you expect to host for? Then see what you are capable of offering? Web hosting service also requires support and dedication to address client questions and concerns. Lastly, see how much your servers can handle and divide it base on the rate plans (calculate your profit) remember, you calculate your bandwidth and dis space.... you can do a little room for overselling (I do it on 10% oversell the server) as soon as a server reaches the oversell threshold, I add another server....
    I hope this helps.
    -Thank you very much for your suggestions & formula ITAhmed, very helpful. much appreciated.
    By: Lauren Stephens
    what you do is make your prices REALLY high and then people think you have something of extraordinary value.
    never target deadbeat cheapie hosting clients. they will always want something for nothing.
    getting one GOOD hosting client paying 99.99 a month is better than having the drama of 10 different $9.99 clients a month.
    I really like this idea, but I am wondering how easy it is to get the high end customers when you are just starting out? I am thinking it is likely easier to get 10 dead beat nuisance customers than to get 1 high end client. Am I wrong?
    By: jkca
    I think you really have to understand the statistics involved, not every user is going to use 100% of the resources given to them. A good rule of thumb is that most clients use about 20% of the resources given to them, it really depends on the clientele you attract.
    Thank you for your suggestions jkca. This is what I figured, and would like to make my packages look better by adding lots of disk space & bandwidth to the packages. The trouble is with what I am offering, I have tons of disk space that I can offer but am some what limited in bandwidth. With our package we get 400 GB of bandwidth, and like 1500GB of disk space.
    To purchase additional space is very cheap, but the company we are dealing with charges a lot for bandwidth - basically $1 per additional GB. We could easily get burned if we offer say 80GB or more of bandwidth, and find that our customers are actually using that much. Basically a package we sell for $10 per month could cost us $80 in bandwidth fees, so kind of scary. I just think it may be hard to compete without offering a decent amount of bandwidth with our packages. Sort of a catch 22.

  7. #7
    Join Date
    May 2004
    Location
    Montgomery, AL
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    176
    Here is a topic discussed back in the spring of this year that relates to your question. You may find good answers in this topic.

    http://www.webhostingtalk.com/showthread.php?t=506728

    Additionally the following link goes to another pricing topic that includes a spreadsheet that another user wrote and you can modify to fit your needs. I have been using it since I first found it. Credit goes to InnovaDev for his development of the spreadsheet.

    http://www.webhostingtalk.com/showthread.php?t=287200


    Hope this helps you in setting your prices.

    William

  8. #8
    Join Date
    May 2002
    Location
    Internet / Colorado
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    I really like this idea, but I am wondering how easy it is to get the high end customers when you are just starting out? I am thinking it is likely easier to get 10 dead beat nuisance customers than to get 1 high end client. Am I wrong?
    That is probably true, maybe start with some local customers, they are liable to pay more though too. Just aim your marketing message accordingly, what is probably best is to go after small business sites that were already burned once by a bad host. Maybe advertise on google keywords for things like "host down" "dependable hosting" and have a landing page that says "Last host down? Time to pay a little more and see the difference" etc etc..

    The key here is you have to provide great service and uptime of course... once you have a few and if its good WOM will help a lot as small businesses customers are more likely to spread your name if you are good.
    Like passive recurring revenue you can retire on?
    You focus on building your brand, we handle all support, billing, and more.
    Pressed.net - Start your own Managed WordPress Hosting Company

  9. #9
    Join Date
    Nov 2005
    Location
    USA
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    874
    Quote Originally Posted by Lauren Stephens
    what you do is make your prices REALLY high and then people think you have something of extraordinary value.

    never target deadbeat cheapie hosting clients. they will always want something for nothing.

    getting one GOOD hosting client paying 99.99 a month is better than having the drama of 10 different $9.99 clients a month.
    Good idea, hard to implement, as high paying clients are more likely going to go with reputable companies, if you are new you would have issues with that.
    However, if you get clients thrugh current business, then you can do that as they know you and trust your service... else is you can wait until you grow and then start a new high class tier and offer it to successful clients on a new server. This is something I started recently and it works well.
    GS RichCopy 360 Enterprise - Voted #1 for data migration and replication in terms of performance and features. Replicate data across between servers in the same network, WAS, or even across the internet

  10. #10
    Join Date
    Aug 2003
    Location
    Twin Cities Area
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    who is to say you arent reputable?

    is someone saying you are not?

    people only know what you want them to believe, but for the money, you had better be ready to deliver!

    value proposition....

    http://marketing.about.com/od/market.../valueprop.htm

    i have spent MORE time trying to convince a tightwad of why they want to part with their $10 a month, then the support nitemares begin. everyone wants something for nothing. who needs that drama! if someone isnt going to pay me AT LEAST what they pay for their cable modem or cell phone every month, let site5 have them!

    the people paying the most will question you the least!
    Last edited by Project X; 11-14-2006 at 01:09 AM.
    if you haven't considered chapter 7 bankruptcy, maybe you should.
    eliminate your debt, keep the property you want, most people qualify.
    contrary to popular belief - no attorney is necessary!

  11. #11
    Join Date
    Nov 2006
    Posts
    168
    Hi frogbert2002, thank you for digging up those threads for me. I also really appreciate you posting the link to the spreadsheet, I think it will help alot. It looks well done.

    Hey bwb, I am going to seriously concider adding some of the marketing ideas you mention. I now think that offering a reliable hosting company with excellent support out weighs price in many ways. Very helpful, thanks again!

    Hi ITAhmed, thank you again for your suggestions, definatly something to think about. Much appreciated.

    Hey Lauren, your points are very good. I am going to discuss this with my partner. I recently reviewed a hosting company that offers paid & free hosting, and I couldn't believe all of the bad feedback from people who signed up for a free account, and complained that the customer support wasn't prompt enough for them! It certainly seems that the less that people pay, the more they expect, I guess its definatly a matter of quality, there are those who only shop at dollar stores, and those who will always shop for quality. All of your suggestions are much appreciated.

    I am going to go over these threads with my partner, and hopefully we can come up with a good game plan. All the posts in this thread have been extremely helpful. Thank you all once again!

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