I've been lurking around these forums for the last few days, fascinated by the volume of postings, the help people provide, and the amount of expert help that is available.
Like a lot of users, I've also been amazed (and a little depressed - cos we couldn't do it) at the prices and features some companies provide their services for. I've seen a few postings along the theme of "how do they do it?". I know companies oversell, but even then I couldn't see where the profits were coming from. I decided to put together a quick spreadsheet to see if I could figure it out.
Unfortunately, I'm none the wiser. I created the spreadsheet so that it could take account of overselling (and add a contingency percentage - just in case!), decide how many users you wanted to recover the costs over, allow for different features to be added and costed, play around with various plans/configurations, and even allow for hardware replacements and maintenance charges/support time.
I can't help feeling that some of the calculations I've made MUST be wrong, or the pricing models must have some fundamental mistake in them. I appreciate any feedback that anyone could give. You can download the spreadsheet at http://www.indigo-moon.co.uk/hostcostcalc.zip.
It's a zipped XLS file. No macros but the sheet is protected (password 123456) just so you don't adjust any of the calculations.
It was put together to account for Win2K and SQL Server licensing, and the bandwidth charges (at the top) are based on the "lumps" we can purchase it in but I'm sure you can just substitute what you would pay for these amount.
I can't argue when it comes to Free O/S's but I can't even buy 10 Win2K server licences for $5000 - they alone would cost me £7500 or $11250. Add in a Dual Proc DB Server for MS SQL and your talking almost $9,000 for the licences just for that. However, even with these sort of prices its obvious that hardware costs are only a fraction of the total cost and to a large extent are irrelevant to the equation.
Bandwidth is expensive here and the cheapest 10Mbps we can get is £1000 (or $1500) per month, but even at $500 for a 10mbps line I can't figure it out.
The £20 per GB doesn't really figure into the equation (althought it IS what we pay for over-using bandwidth) since the majority of the bandwidth cost was priced at £1 per GB. Even if I change the costing to 0.25 per GB (based on 2000Gb at $500) it still defies the pricing that I'm seeing here.
If you base it on only 10% of actual bandwidth being used (i.e. 10 plans required to meet bandwidth traffic allowances), then some companies must be working on a knife-edge to make it work, are in for a nasty shock one day, or have little idea how much it actually costs.
The results suggest that the only way to actually make it work is to purchase a reseller account. Then you don't have to worry about the server and costs, you just pay your monthly charge and let the poor so-and-so who is providing the server make it work for them.
We do carry out hosting so this isn't a shot-in-the-dark. We only have about 1200 sites hosted on 9 servers and we've been around for over 3 years now, but our prices are WAY above what I'm seeing here. I was just trying to figure out how they make it work cos I'd love to offer these prices.
I was looking to see if I was missing something in the calculations. You also have to remember that the calculation only covers the most obvious costs - and doesn't include making any actual profit.
Lol, yes, I think you'll find that at least 90% of the web servers out there are Linux or BSD based... not only because of the license fees, but also because of remote management. I shudder at the thought of administering a Windows server without console access. Nothing's better than working from home.
Thanks for your help. I've gone from stumpted and confused to completely dissatisfied in a matter of hours. Now I'm starting to get angry at the amount we are paying. If it wasn't for the bandwidth costs we'd be RICH (or cheaper).