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Thread: prices too low?

  1. #1

    Question prices too low?

    Ive been told that our prices are too low, and many people think that the quality of our services is suspect due to the low prices,
    however, server uptime is currently at 99.97%, we're not overselling, and we're still making profit on every sale,
    should we increase prices to give more confidence to buyers?
    http://www.allabouthosting.co.uk/hosting.html for the prices
    Thanks for your opinions

  2. #2
    Join Date
    Sep 2002
    Location
    Phoenix area
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    1,121
    I'm sure everyone is curious as to the kind of business model that would support gross income per client such as that. In our experience, clients at that price level are more *cough* difficult *cough* to deal with than higher tier clients.

    2checkout has costs involved that instantly bring down your gross, as do taxes (I would assume you have value-added tax, but I am US so I'm not familiar with it).

    That leaves only a few dollars per year left per client. If you had 500 clients, you could easily have 5-10 support calls/day and would only have an income per year of a few grand. More clients would require more support. You also have to spend some of that income on your hosting, unless it's free.

    If your tech will work for a few grand/year, and if they will also do the marketing, setting up accounts, dealing with server issues, etc, then you could break even. (I wish my techs would work that cheap ).

    The problem is that the only people who would do this are people who don't need a job, like kids or hobbiests. They don't have a tendency to stay around very long, and they dont' tend to be well-rounded in their business sense (not to say this applies to you).

    If they are suspecting you, it's because they have these thoughts, or similar thoughts in the back of their head that they are not communicating with you. If this scenario is not true, you need to make that well-known on your site and your marketing so they will feel more comfortable with it. You will have to somehow explain your pricing so they will believe it.

    If someone were to come out with a new car that only costs a few grand, what would everyone's first thoughts be (can you say Yugo?)? Price in and of itself can imply value or the lack thereof sometimes.

    I'd love to see a business model that would support paying for my house, my Harley, my ex, etc. If you mean profit by more income than outgo, but you don't make enough to live on, then it's not really a business, it's a hobby.
    Learn survival/prepper information from a combat veteran at Graywolf Survival

  3. #3
    Join Date
    Apr 2002
    Location
    Seattle, WA
    Posts
    955

    Re: prices too low?

    Originally posted by jimcarter
    Ive been told that our prices are too low, and many people think that the quality of our services is suspect due to the low prices,
    however, server uptime is currently at 99.97%, we're not overselling, and we're still making profit on every sale,
    should we increase prices to give more confidence to buyers?
    http://www.allabouthosting.co.uk/hosting.html for the prices
    Thanks for your opinions
    I would raise em

  4. #4
    As for taxes I dont need to register for VAT as gross income is much lower than the required amount,
    maybe I should raise the prices though to increase confidence,
    thanks for your opinions
    web:http://www.allabouthosting.co.uk
    email: [email protected]

  5. #5
    Join Date
    Jun 2002
    Posts
    196
    Yes, everyone must realize the cheapest prices will get you the cheapest clientel. You can bet no huge company that needs hosting is paying 6.95 for an unlimited paln.

  6. #6
    Join Date
    Jul 2002
    Location
    UK
    Posts
    169
    Our prices are slightly cheaper than that, and we don't have many really difficult customers, and our sales rate is acceptable

  7. #7
    Yes, ninji was using just that as an example,
    our average price is $3 per month for 500MB space / 5GB bandwith,
    I havent seen many hosts offering much near these prices which is partly why we decided to price so low,
    but after some comments I think that we are going to increase prices in 10 days
    web:http://www.allabouthosting.co.uk
    email: [email protected]

  8. #8
    Join Date
    Sep 2002
    Posts
    78
    I agree with raising your prices but two things;

    1- Keep your existing clients with the same price they first signed up as long as they are with you. So they will not get upset and feel special.

    2- You say that you'll increase prices in 10 days. So why not start a campaign saying that "this is the last 10 days with this prices!!!"? Time-limited offer is a great way of marketing. You can even put a countdown on your web site showing how may days/hours left to sign-up with this prices...
    Just fooling around...

  9. #9
    thanks for the reply
    ive decided to do both of these and ive posted on the offers forum saying that the prices will only stay this low for 10 more days
    web:http://www.allabouthosting.co.uk
    email: [email protected]

  10. #10
    Join Date
    Aug 2002
    Location
    Seaford, DE
    Posts
    2
    .
    Last edited by jamescover; 10-19-2002 at 10:38 PM.

  11. #11
    Join Date
    Aug 2002
    Location
    Illinois
    Posts
    847

    they are low, but check mine

    Well, they are low, but mine are very low also.. :-) Your selling this for pennies a day, i can't see how your in it on making a profit. (I can because i pay like 10 bucks for my reseller) I suggest raising your prices maybe a dollar for profit sakes.. ;-)
    Max
    Web Hosting Talk Community Guide

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