View Poll Results: What is the acceptable Gross profit margin for webhosting biz.

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  • 60+%

    22 42.31%
  • 50%-40%

    17 32.69%
  • 30%-20%

    4 7.69%
  • <20%

    9 17.31%
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  1. #1

    Gross Profit Margin

    In your opinion, what is the acceptable Gross profit margin for a web hosting biz.

  2. #2
    Join Date
    Nov 2000
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    San Diego
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    3,407

    Re: Gross Profit Margin

    Originally posted by matrosov
    In your opinion, what is the acceptable Gross profit margin for a web hosting biz.
    I think you should explain what Gross profit margin is. I think a lot of host have no clue.

  3. #3
    Join Date
    Jul 2002
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    UK
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    524
    It's a basic business term, that anybody who runs a business should surely know...

  4. #4
    Oops accounting talk sorry. Gross profit margin is your revenues less expenses directly related to your hosting business like server rentals, backups, cp licences merchant account fees. (Does not include your salaries, publications, or travel and entertainment.), divided by your revenues and expressed as percentage so basically it is this formula

    (Revenues-Direct expenses)/Revenues*100%

    So as an example if your Revenues are $3200 and your Direct expenses are $1600 your Gross profit Margin is

    (3200-1600)/3200*100%=50%

  5. #5
    Join Date
    Nov 2000
    Location
    San Diego
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    Originally posted by ubergeek22
    It's a basic business term, that anybody who runs a business should surely know...
    I know. Thanks. I was joking. If you hang around here long enough I think you will see my point.

  6. #6
    Well good businessman is not the one who knows what that term means but the one who can hire a good accountant to keep that businessman honest .
    Neureal Inc.
    The leader in multi-domain webpresence solutions
    www.neureal.com

  7. #7
    Join Date
    May 2001
    Location
    United States of Walmart
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    687
    I would have to say 30 to 50% would be ideal, as once all the other expenses are factored in, it will keep cutting in.

    umbilly, I was following ya!

  8. #8
    Join Date
    Apr 2002
    Posts
    12
    Originally posted by matrosov
    Well good businessman is not the one who knows what that term means but the one who can hire a good accountant to keep that businessman honest .
    I hired Andersen

    Seriously though, hosting has been infamous for its razor-thin margins. If there's a host out there with a GPM of >=20%, they are doing damn well.

  9. #9
    Join Date
    Jul 2001
    Posts
    145
    matrosov you'd really have to define your question about the GPM%. There are many types of webhosting services...those who provide only dedicated servers, those who provide ded servers and shared hosting and those who only provide shared hosting (did i miss anything?). the margins for these different types of services would vary differently. for example shared web hosting companies would have a higher GPM margin since they would not have higher costs involved compared to dedicated server providers like maintaining data centers and such...you get the point.

    one thing i do know is that pure service based companies have a much higher margin, typically 40% or more based on what my accountant told me.
    spam --> /dev/null

  10. #10
    Join Date
    Dec 2001
    Location
    Franklin, TN, USA
    Posts
    1,320
    UmBillyCord
    Loves Square Dancing

    Registered: Nov 2000
    Posts: 1337

    UmBillyCord is l337
    Congrats
    ServerSync. Perfect Uptime. Clockly. | Built for the Hosting Industry
    Server Management. Helpdesk Management. Business Management.
    ( AcuNett, Est. 14 Years, BBB A+, RateLobby 5 Stars)

  11. #11
    Join Date
    Sep 2001
    Location
    Clifton Park, NY
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    925
    just for some contrast walmart's profit margin is about 3%

    -Brendan

  12. #12

    *

    Given sales of $226.7B , 3.1% are enormous.

  13. #13
    Join Date
    Dec 2000
    Posts
    610
    Originally posted by matrosov
    Oops accounting talk sorry. Gross profit margin is your revenues less expenses directly related to your hosting business like server rentals, backups, cp licences merchant account fees. (Does not include your salaries, publications, or travel and entertainment.), divided by your revenues and expressed as percentage so basically it is this formula
    Shouldn't sales commisions and wages for support employees be included in the above equation. They are variable expenses and directly related to sales volume.

    Mike

  14. #14
    Join Date
    Sep 2001
    Location
    Clifton Park, NY
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    925
    Originally posted by Duchz
    Given sales of $226.7B , 3.1% are enormous.
    About 1 out of ever 200 people in the US works for Walmart.

    -Brendan

  15. #15
    Join Date
    May 2001
    Posts
    1,349
    Originally posted by HRBrendan


    About 1 out of ever 200 people in the US works for Walmart.

    -Brendan
    You're kidding right? Wow! Can you show me a link or some report about this?

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