There was a long discussion about this a while back...
generally with Shared hosting, i dont think a setup fee is necessary, especially since you already have a pretty decent margin of profit. but as argued in the other thread, it makes a good selling point for a potential client when you wave it (they will tell all their friends, "they waived the setup fee especially for me!")
As I stated in the other discussion, I think setup fees can be of benefit if used properly. Such as waiving the fee if they sign up yearly vs. monthly, or offer different specials occasionally saying you not charing the fee this month, etc.
Depending on your market, you may also use this to help discourage "host hoppers" or other somewhat troublesome clients you may not want.
Technically no, the effort involved in setting up a shared account doesn't require that extra fee, but many large and very successful companies still charge setup fees, so it obviously works. Also, I think it can help promote a more serious image about your host, as everywhere you look people are giving all these freebies. I know a lot of people who tend to shy away from anyone that is giving something for free. A lot of people have that "you get what you pay for" mentallity
I think with how easy it is to setup a shared hosting account these days it is really not needed and is basically just another way to make a couple bucks.. I personally would be put off if I was looking for hosting and they wanted a setup fee.. As far as reseller plans and/or dedicated servers there is more to the process and the setup time usually jumps from a normal shared account which takes <3 mins to setup while reseller/decicated accounts can take up to 1/2 hour or more to add/assign IP's and get everything else done which is usually not just a point and click setup.
* compensate me for the (admittedly small amount of) time I spend checking the incoming orders to verify that they aren't fraudulent
* weed out some of the host-hoppers
* get amortised over time with the attention I pay to my clients
* allow me to run periodic "no setup fee" specials, which can attract more clients
The setup fee I charge is small, and I actually have to do something for any account that's set up - it's not an automated operation. I don't see setup fees as a major moneymaker, but since I don't completely automate signups and actually do something for each account created, I feel that neither my clients nor my business are being gouged.
We charge Setup fees for Resseler Accounts only . That is to prevent Host Hoppers... creating and configuring a reseller account is tedious job . And that shouldn't not be free ... what's more , as some one rightly said .. it keeps of bad, troublesome customers .