Page 1 of 3 123 LastLast
Results 1 to 40 of 89
  1. #1

    How they make profit with such low price?

    understand that the VPS hosting is very competitive now a day. How's the provider can make profit with such low price such as

    chhost.net (free cpanel + low price ?!!)
    delimiter.us (large resources?!!)
    ......

  2. #2
    Join Date
    Nov 2003
    Location
    Marylebone, London, UK
    Posts
    526
    Some companies are just 14-year old kids who rent
    one server. All their bills are paid my mom and pop.
    Next step is to oversell until the server falls over.

  3. #3
    Join Date
    Nov 2005
    Location
    Michigan, USA
    Posts
    3,872
    Delimiter always made me wonder, due to the fact they include DirectAdmin ($5 license) on a $10 server, plus they were offering it for $6 a month ago. So therefore they were only bringing in $1 - transaction fees for the VPS.

    I mean, think about it, there are two options here if the price is ridiculously low:

    1. They are not a real company
    or
    2. They are overselling their servers

    RAM is cheaper these days so I can understand lower pricing, but some of it is just insane.


  4. #4
    Join Date
    Apr 2009
    Location
    OnTheWeb
    Posts
    2,024
    Some companies (especially new ones) simply under charge to gain clients then raise their prices later on. Its a known fact in the business industry. You call it hook and bait advertisement. Lure them in with nice prices then raise the price or offer ridiculously high add ons to cover your losses.
    If you're the smartest person in the room then you're in the wrong room

  5. #5
    Join Date
    Jul 2005
    Posts
    445
    Caveat emptor - buyer beware. The odds against you enjoying success with that type of deal are thousands:1. It's a no-brainer that you should ignore such enticements completely. They will bite you in the backside faster than a Jack Russell terrier and twice as hard.

  6. #6
    Join Date
    Apr 2007
    Posts
    3,513
    For new companies and even old ones making a loss for a short period is a valid business theory, call it an investment.

    I have worked with data centres that do 1 first month deals on services that at cost price will be over 40... the whole point in them is to get a client that will hopefully stay with your company.

    Just the same as paying 200 on a advertisement but instead you could give 20 people a free VPS for a month and hopefully the clients will stay with you for the long term.

    Other companies will make money by selling a large volume of services for a small profit, its better to sell 100 vps's and make 1 per vps than it is to sell one that makes 40?

    Also yes some companies out there do oversell, guess I am just trying to point out there are some other valid reasons.
    - Buying up websites, side-projects and companies - PM Me! -

  7. #7
    Join Date
    Apr 2009
    Location
    OnTheWeb
    Posts
    2,024
    Quote Originally Posted by RedRat-Chris View Post
    Caveat emptor - buyer beware. The odds against you enjoying success with that type of deal are thousands:1. It's a no-brainer that you should ignore such enticements completely. They will bite you in the backside faster than a Jack Russell terrier and twice as hard.
    Do you have experience with this host or are you just making an assumption?
    If you're the smartest person in the room then you're in the wrong room

  8. #8
    Join Date
    Jul 2005
    Posts
    445
    Quote Originally Posted by cpoalmighty View Post
    Do you have experience with this host or are you just making an assumption?
    It's just a general rule of thumb, as such, and not specifically aimed at either of the companies mentioned in the first post. You are right to pull me up as I did not make that clear.

    However, "assumptions" are a perfectly valid tool in risk assessment. "Gut feelings", "intuitional perceptions" and such like are often absolutely spot on and, in any case, mostly supported by experience. It was not for nothing that the saying, "Beware of Greeks bearing gifts.", came about although, I have to say that the poor Greeks get the short end of the stick re this saying since the same could be applied to members of any country.

    @ZanyHost: That is a good point and, I agree, it is quite true that these marketing devices are used extensively and legitimately, often by perfectly reasonable providers. However, they tend to be used with restraint and in a time-limited manner that "makes sense" to both the buyer and seller in that one can understand the logic and believe in the possibility that they are credible, when they so often are not. Hence, Caveat emptor! A tried and tested convention of wisdom since time immemorial and far more reliable than any amount of BS from those whom may deceive us.

    But these massively bloated, throw away deals, generally, are the sweeties of babes and have a high rate of going completely pear-shaped.

    Interestingly, threads like this one are often made by "forum posters" to promote certain companies. I am not saying this one is though.

    There is little replacement for basic common sense.
    Last edited by Mach4-Chris; 11-12-2009 at 02:13 PM.

  9. #9
    Join Date
    Apr 2009
    Location
    OnTheWeb
    Posts
    2,024
    Quote Originally Posted by RedRat-Chris View Post
    It's just a general rule of thumb, as such, and not specifically aimed at either of the companies mentioned in the first post. You are right to pull me up as I did not make that clear.

    However, "assumptions" are a perfectly valid tool in risk assessment. "Gut feelings", "intuitional perceptions" and such like are often absolutely spot on and, in any case, mostly supported by experience. It was not for nothing that the saying, "Beware of Greeks bearing gifts.", came about although, I have to say that the poor Greeks get the short end of the stick re this saying since the same could be applied to members of any country.

    @ZanyHost: That is a good point and, I agree, it is quite true that these marketing devices are used extensively and legitimately, often by perfectly reasonable providers. However, they tend to be used with restraint and in a time-limited manner that "makes sense" to both the buyer and seller in that one can understand the logic and believe in the possibility that they are credible, when they so often are not. Hence, Caveat emptor! A tried and tested convention of wisdom since time immemorial and far more reliable than any amount of BS from those whom may deceive us.

    But these massively bloated, throw away deals, generally, are the sweeties of babes and have a high rate of going completely pear-shaped.

    Interestingly, threads like this one are often made by "forum posters" to promote certain companies. I am not saying this one is though.

    There is little replacement for basic common sense.
    I got pulled up by admin for using assumptions the yesterday. 2 more infractions my way
    If you're the smartest person in the room then you're in the wrong room

  10. #10
    Join Date
    Mar 2009
    Location
    Austin, TX
    Posts
    934
    New companies would probably start off lowballing the price, taking loss initially. Eventually as they grow, raise the prices. If the host want, can offer existing good standing clients to stay on grandfather price plan. This is also not uncommon.
    SysAdmin.xyz
    Having severs with customer data on it without proper monitoring is like having one night stand without using protections - eventually, there will be an 'oh s**t!' moment.

  11. #11
    Join Date
    Jul 2005
    Posts
    445
    Quote Originally Posted by cpoalmighty View Post
    I got pulled up by admin for using assumptions the yesterday. 2 more infractions my way
    Ironic that! The first thing any bank or investor will demand is the "assumptions" behind your decisions. Entrepreneurial "gut feelings" are as valued as so called "facts". Appearances are often deceptive and this can only be perceived by closing one's eyes.

    If, when out walking towards the minefield surrounding Osama's base camp, you come across a sign that reads, "No mines here!", your "gut feeling" might just save your life.

    I notice that you have no recorded infractions. That "fact" prompts further "assumptions" that might be useful.
    Last edited by Mach4-Chris; 11-12-2009 at 02:46 PM.

  12. #12
    Join Date
    Feb 2004
    Location
    Sacramento CA
    Posts
    3,342
    It's one thing to use low prices to gain customers. Customer acquisition is very expensive and if done correctly a loss leader can be cost effective. The only worrying aspect is that too many hosts start out using this method and either manage it poorly and go out of business or its a scam from the get go.

  13. #13
    Join Date
    Jan 2004
    Location
    Pennsylvania
    Posts
    939
    There was a thread recently about profit-per-node... some people out there are only hoping to make $100-200/mo "profit" (revenue minus server/colo costs)... that is just not enough to sustain once you factor in taxes, employees, etc.
    Matt Ayres - togglebox.com
    Linux and Windows Cloud Virtual Datacenters powered by Onapp / Xen
    Instant Setup, Instant Scalability, Full Lifecycle Hosting Solutions

    www.togglebox.com

  14. #14
    Join Date
    Jul 2005
    Posts
    445
    Yes WiseOne. That's a very good point and much akin to what I was alluding to. Unless someone is charging a realistic fee it is proportionately less likely that they know what they are doing. Signs like these point towards higher risks.

  15. #15
    Join Date
    Feb 2005
    Location
    Australia
    Posts
    5,842
    Quote Originally Posted by RedRat-Chris View Post
    It was not for nothing that the saying, "Beware of Greeks bearing gifts.", came about although, I have to say that the poor Greeks get the short end of the stick re this saying since the same could be applied to members of any country.
    I think you'll find there's some historical precedent for that expression.

    But on topic, "making assumptions" doesn't seem like the right wording to me - you can estimate for yourself what your host's costs should be if they're buying the kind of hardware you'd like to be hosted on, employing the kind of technicians you'd like to be supported by, etc. Your estimates may not be perfect but if the prices are dramatically out of line you have good reason to assume that you won't be getting what you wanted.
    Chris

    "Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them." - Laurence J. Peter

  16. #16
    Join Date
    Jul 2005
    Posts
    445
    That's a pretty reasonable assumption. And thanks for reminding me about the Trojan Horse bit. It was in there somewhere, just lost in the dust of my ancient archives.

  17. #17
    Join Date
    Aug 2004
    Location
    Shanghai
    Posts
    1,449
    Quote Originally Posted by TheWiseOne View Post
    There was a thread recently about profit-per-node... some people out there are only hoping to make $100-200/mo "profit" (revenue minus server/colo costs)... that is just not enough to sustain once you factor in taxes, employees, etc.
    I agree 100% with this. The fact is that history proved us right in this mater. So many small and big company just went down without warning because not charging enough. There are 100s of examples in this forum only, with customer winning about not being able to recover their data.

    Consider also this: there is also hosting for FREE on the market. Does it means that hosting has no value at all? Certainly not...

    Thomas
    GPLHost:>_ open source hosting worldwide (I'm founder, CEO & official Debian Developer)
    Servers & our leading control panel and our Xen VPS hosting, which are already included in Debian and Ubuntu
    Available in: Kuala Lumpur, Singapore, Sydney, Seattle, Atlanta, Paris, London, Barcelona, Zurich, Israel

  18. #18
    Join Date
    Jun 2006
    Location
    Cluj Napoca
    Posts
    468
    This is a very interesting topic, however when making assumptions you should have at least a little experience with one of this cheap companies (and not kids).

    My questions are, is burst.net a kids company ? (assuming you all have see their prices for VPS servers)
    Is burst.net will die in a while or it will raise prices ?

    (these are rhetorical questions and the answers are of course "no" to both of these questions)

    Assuming a company will die because of too low prices is a poor practice that some use it to calm them selfs up or just to throw a few words that everyone will like here.
    IntoDNS - Check your DNS health and configuration
    FLEIO - OpenStack billing and control panel for service providers

  19. #19
    Join Date
    Aug 2004
    Location
    Shanghai
    Posts
    1,449
    Quote Originally Posted by Cristi4n View Post
    Assuming a company will die because of too low prices is a poor practice that some use it to calm them selfs up or just to throw a few words that everyone will like here.
    We do not make any assumption here, look in this forum and see what other users have experienced, and check for yourself that this is the reality, unless the company is really big and can make money with numbers. And when I say big, I'm thinking about something like number one in its country, not just few servers. When you have that critical size, then you can afford to lower margins.

    Thomas
    GPLHost:>_ open source hosting worldwide (I'm founder, CEO & official Debian Developer)
    Servers & our leading control panel and our Xen VPS hosting, which are already included in Debian and Ubuntu
    Available in: Kuala Lumpur, Singapore, Sydney, Seattle, Atlanta, Paris, London, Barcelona, Zurich, Israel

  20. #20
    Join Date
    Jun 2006
    Location
    Cluj Napoca
    Posts
    468
    Sure, I have seen a lot of companies going down because of too small prices, or was it because of too small prices ?

    Assuming I will go on with this, is burst.net going to go down ? According to you they won't since they are a big company and will sustain that VPS part with money because the openvz part will not make a profit, right ?
    But a big company usually has complex management and things are analyzed in advanced so burst.net analyzed this and got to the conclusion that they must offer very cheap VPS servers even if those servers will not bring any money to then and instead they will actually loose money ?
    I don't think so.

    Regardless if it's a big or small company, the biggest problem the way I see it is the management and not the 10$ 512MB VPS that can be considered too cheap. That is why, a person that has worked with a company that offers cheap services will know how things really are and probably will tell you the same.
    IntoDNS - Check your DNS health and configuration
    FLEIO - OpenStack billing and control panel for service providers

  21. #21
    Join Date
    Jun 2003
    Location
    London, UK
    Posts
    1,733
    The companies offering these kinds of prices invariably disappear 6 months down the road - it's seen all to often on WHT.
    Darren Lingham - UK Webhosting Ltd. - (0800) 024 2931
    Tsohost.co.uk - Quality UK Windows and Linux hosting since 2003
    UK WordPress Hosting - Fast, easy, cloud based WordPress Hosting

  22. #22
    Join Date
    Jun 2006
    Location
    Cluj Napoca
    Posts
    468
    my question again. Burst.net will disappear in 6 months ?
    Do not confuse a kids company with a real company.
    IntoDNS - Check your DNS health and configuration
    FLEIO - OpenStack billing and control panel for service providers

  23. #23
    Join Date
    Nov 2009
    Location
    Cheltenham, UK
    Posts
    1,323
    Quote Originally Posted by hostgrazy View Post
    understand that the VPS hosting is very competitive now a day. How's the provider can make profit with such low price such as

    chhost.net (free cpanel + low price ?!!)
    delimiter.us (large resources?!!)
    ......
    Haven't used chhost.net, so can't comment on them.

    However bear in mind delimiter's Core i7, 8 GB DDR3 RAM, Hard discs 2 x 750 GB SATA-II HDD servers cost them just 49 EUR/month (plus an initial one off setup fee of 149 EUR)
    Plus, I have no idea if they oversell or not, but if they did they could easily make profit at those prices.

  24. #24
    Join Date
    Jun 2007
    Location
    Taylorsville, Utah
    Posts
    46
    Hey wait a minute while examining chhost.net charges for cPanel and it's not free.

    But anyhow yes alot of companies go down not because of low pricing but because the person or people running them don't know how to operate correct and once a few things hit the fan they duck.

    Practical hosting companies provide the services they offer and grow steadily after some promotion because they provide what they say.

    Like with us were launching a new hosting company but we actually provide what we preach and know how to do what needs to be done as we have been in the business 8+ years.

    As well watch out for oversellers that is always bad news, whenever I see something unlimited I run like you know what
    TurboHosted Web Hosting
    █ Fast, Quality Web Hosting
    Call Us: (801) 876-0680
    Visit Us Today | myTurboHosted

  25. #25
    Join Date
    Mar 2008
    Posts
    372
    Quote Originally Posted by Cristi4n View Post
    my question again. Burst.net will disappear in 6 months ?
    Do not confuse a kids company with a real company.
    mate y r we discussing about burst.net over here companies have various ways to make profits and burst might increases prices in future who knows ?? They use veportal which means lesser budget compared to virtuzzo or any other platform,

  26. #26
    Join Date
    Jun 2007
    Location
    Taylorsville, Utah
    Posts
    46
    Burst.net is a larger company which has been around for quite some time and offers good services. I promise you won't see them go away anytime soon.

    When you have the $$ and the know how to do stuff you can either cluster servers or build huge servers and offer great pricing like that and if you think they arent making any money you are kidding yourself.

    Look at vePortal.... I know they are reliable VPS containers because I have personally tested them 14.99 for an unlimited VPS provisioning license on a server. SO they pay 14.99 / month or less if they partner and the customer pays for cpanel. If you fit 20 VPS servers or more on a box at 5.95 / month = 119.00 for that box plus im sure they have enough cPanel licenses bought in bulk to where a cPanel VPS license costs around $6-$7 per month so they make money there as well.

    Think about it they are making money because first and foremost they own a ton of servers that have paid for themselves over and over again so in essence they are using servers that are already paid off meaning 100% profit margins after vePortal.
    TurboHosted Web Hosting
    █ Fast, Quality Web Hosting
    Call Us: (801) 876-0680
    Visit Us Today | myTurboHosted

  27. #27
    Join Date
    Jan 2001
    Location
    Miami, FL
    Posts
    1,072
    Quote Originally Posted by squirrelhost View Post
    Some companies are just 14-year old kids who rent
    one server. All their bills are paid my mom and pop.
    Next step is to oversell until the server falls over.
    second this one
    Biznesshosting, Inc. DBA VOLICO - Intelligent Hosting Solutions
    East Coast Enterprise Dedicated Servers and Miami Colocation.
    managed and unmanaged dedicated servers. High bandwidth colocation. Managed clusters.

  28. #28
    Join Date
    Jun 2006
    Location
    Cluj Napoca
    Posts
    468
    yes talking about a kids company you can say that it will go down, but it will do that regardless of the prices they will charge.
    Also, regarding unlimited, depends too on the management.
    Have you seen Hostgator going down ?

    Regardless of this discussion, everyone sooner or later will offer unlimited bandwidth and disk space, there is no point in giving reasons why no to do that except when you plan to calm yourself down and hope that this unlimited thing will go away so you won't have to offer it.
    The same is for cheap OS virtualization. Today is cheap, tomorrow a 10$ VPS will be expensive.
    IntoDNS - Check your DNS health and configuration
    FLEIO - OpenStack billing and control panel for service providers

  29. #29
    Join Date
    Jan 2006
    Posts
    1,915
    There will always be the hosts who try to sell to the masses with marketing lingo and of course it will work for some but not all. There will also always be a place for quality hosts who offer a service none of the oversellers/cheap hosts can even dream of. I don't foresee Rackspace or Liquidweb for example all of a sudden dropping their pants/prices. They know they are quality and believe it or not people do pay for quality and will continue to do so as their business relies on it. At the end of the day you will still get what you pay for. Unlimited everything doesn't mean you get quality bundled with it. In most cases with such low prices the hardware is probably old and collecting dust on it so reusing that hardware and selling at such low prices and making $100/mo profit is better then it laying in the datacenter taking up room...
    KnownHost Managed VPS Specialists
    Toll Free: (866)-332-9894
    Fully Managed VPS, Hybrid, and Dedicated Servers

    RocketVPS.com - Premium Unmanaged VPS Hosting

  30. #30
    Join Date
    Aug 2004
    Location
    Shanghai
    Posts
    1,449
    When you are a VERY big hosting company, you own:
    - the data center and all its equipment
    - the network (often), so connectivity doesn't cost you much
    - lots of hardware

    You are also in a good position to discuss hardware, or even to design your own to match your needs.

    The bigger you are, the better you can also optimize your support. Just consider this: in a place like France, to have somebody on duty 24/7/365, you need at least 6 employees. And I'm talking about ONE person, not even 2...

    Now, if you are a very small company, you will pay a lot for only few U and a poor network connectivity. Setting prices very low will only make things harder, because you wont be able to do the return on the hardware investment fast enough. If you reduce your margins so much, then the risk is that you are going to work for nothing. We even saw people in this forum setting prices so low, that they can't even EARN (not even considering the return on the hardware investment), and that is, for sure, going right into a wall.

    By the way, I never said that smaller hosting company are bad in the customer's perspective. In bigger companies, most of the time, support is not as good and personalized as with small ones, and often the higher price is justified.

    Last, there's one thing that we don't see often that can make the difference to: technical innovation. But it's pretty rare. Mostly everyone is selling the same cPanel/OpenVZ thing.

    Now, about burst.net, I don't know them, that is the first time I hear about them, so I cannot tell.

    Thomas

    P.S: Maybe all this discussion should go in the "running a hosting business" forum...
    GPLHost:>_ open source hosting worldwide (I'm founder, CEO & official Debian Developer)
    Servers & our leading control panel and our Xen VPS hosting, which are already included in Debian and Ubuntu
    Available in: Kuala Lumpur, Singapore, Sydney, Seattle, Atlanta, Paris, London, Barcelona, Zurich, Israel

  31. #31
    I can tell you that for Delimiter (which I'm associated with), we are able to offer the ridiculously cheap VPS plans with DA free because many people don't choose the monthly payment option--and there are setup fees for choosing monthly payment.

    What happens is that, say, 5 people purchase the $6 plan on quarterly payment, meaning they each pay $18 up front for a total of $54. We buy three DA licenses (total $15) and setup the accounts. Technically the profit month-to-month on those accounts is $1 each, but until the renewal on the DA licenses comes up, we have the extra capital from their initial quarterly payment to work with.

    Multiply that by a lot more customers and more expensive plans, and you end up with (indeed we did end up with) lots of "extra" capital from multi-month payments. As long as the company coffers are never in danger of being unable to come up with monthly renewal for servers and software licenses, expansion keeps going until it gets to the point where we can remove the cheaper plans.

    Also, another side-effect of the cheap plans seems to be that it attracts quite a lot of word-of-mouth referrals, and not more than half of those referrals actually buy the same low-end plan. I've been seeing tons of people referred by $6-plan customers end up buying $20 ones, which is where the healthy profit margins begin.

    Like btcentral said, our hardware is also cheap enough (and 12gb DDR3 per server, mind you) that it's no challenge at all to get each server to a break-even point.
    Last edited by wziard; 11-14-2009 at 10:55 PM.

  32. #32
    Join Date
    Jan 2004
    Location
    Pennsylvania
    Posts
    939
    Are you seriously trying to try to say $1/mo profit per VPS is enough to sustain a company? To put that in perspective, just for 1 person to survive they're gonna need at least $30,000/year, that's 2500 VPS's needed to provide for 1 person let alone an entire staff -- not factoring taxes (roughly 20%). Does that $1/mo profit include just datacenter/server costs or does it account for marketing, advertising, business services, etc? Seems like a business plan that will put you our of business soon (assuming you have real bills / this isn't a 2nd job for you).

  33. #33
    Join Date
    Aug 2004
    Location
    Shanghai
    Posts
    1,449
    When seeing his signature, you can tell that they have only one kind of very recent hardware type (at least, this is what is advertised). This is the kind of signature showing a very young company that isn't old enough to have heterogeneous hardware (maybe even only a single server???). If I'm not mistaking, the whois is also showing that delimiter.us was registered first last July (I'm not used to read .us whois). This kind of thinking is typical from people just starting, and never last long...

    In marketing class, they tell you that there can be ONLY ONE company with the lowest rates. This company will of course go very well, and trying to compete on the same level can be though. In the web hosting industry, it's even worth: there's 100s of tiny company setting themselves to LOOSE money and soon die.

    Oh, and one last thing: what wziard is talking about for his smaller plans is called "dumping" and is not legal in many countries...

    Thomas
    GPLHost:>_ open source hosting worldwide (I'm founder, CEO & official Debian Developer)
    Servers & our leading control panel and our Xen VPS hosting, which are already included in Debian and Ubuntu
    Available in: Kuala Lumpur, Singapore, Sydney, Seattle, Atlanta, Paris, London, Barcelona, Zurich, Israel

  34. #34

    *

    Almost overlook to this thread.
    What a interesting discussion...


    Quote Originally Posted by devonblzx
    They are overselling their servers
    Please have a look on the attached server status. this is one of the server.

    Quote Originally Posted by ZanyHost
    ...you could give 20 people a free VPS for a month and hopefully the clients will stay with you for the long term.
    I agreed with you comment..
    If you can provide good service, i don't think your customer will leave you alone..

    Quote Originally Posted by Cristi4n
    Sure, I have seen a lot of companies going down because of too small prices, or was it because of too small prices ?

    Regardless if it's a big or small company, the biggest problem the way I see it is the management and not the 10$ 512MB VPS that can be considered too cheap.
    Strongly agreed with your point!

    Quote Originally Posted by ProDesigning
    Hey wait a minute while examining chhost.net charges for cPanel and it's not free.

    Like with us were launching a new hosting company but we actually provide what we preach and know how to do what needs to be done as we have been in the business 8+ years.

    As well watch out for oversellers that is always bad news, whenever I see something unlimited I run like you know what
    First I look at it you are promoting yourself here in stead of discuss according to the topic.
    I don't want to comment on the cPanel is free or not as it will be evaluate by the user who decide worth it or not.

    Quote Originally Posted by quad3datwork
    New companies would probably start off lowballing the price, taking loss initially. Eventually as they grow, raise the prices. If the host want, can offer existing good standing clients to stay on grandfather price plan. This is also not uncommon.
    Our plan is solid price and permanent. Even though we increase price later, existing client wouldn't be affected unless there upgrade/downgrade or change plan....including the plan with free cPanel! We are not promoting here, but talking about the fact that people will evaluate later.

    Anyhow, this is a great discussion!
    I love it!
    Attached Thumbnails Attached Thumbnails server.jpg   server1.jpg  
    ControlVM.com :: Cloud Hosting Reliable Xen VPS :: Serving Customer From More Than 40 Countries.
    Hosting Services Available in the USA ● Germany ● Malaysia ● Singapore and Hong Kong

  35. #35
    Join Date
    Aug 2001
    Location
    Richmond, Va
    Posts
    386
    Quote Originally Posted by squirrelhost View Post
    Some companies are just 14-year old kids who rent
    one server. All their bills are paid my mom and pop.
    Next step is to oversell until the server falls over.
    I'm guessing, they are closing in on the "Next step"...

    http://www.webhostingtalk.com/showthread.php?t=904848

    Quote Originally Posted by wziard View Post
    I have for sale a small VPS hosting company. Currently it has about 50 customers on 4 dedicated servers, plus another server for the main site. I'm interested in selling the entire setup, i.e. servers, clients, software licenses (WHMCS, FluidVM, DirectAdmin and cPanel for the clients), and website (which is very nice). Currently the business is profiting, and could be very, very successful with more expansion.

    This would be a great way for someone to start up a VPS host. If you're interested in either the whole thing, or just the clients, PM me and I'll provide more details.
    Or should I say, cashing in before the "server falls over"...

    Last edited by bdsnyder; 11-15-2009 at 11:36 AM.

  36. #36
    Join Date
    Jan 2006
    Posts
    1,915
    The bottomline is average revenue per customer (ARPU) is very important for any business and in many cases I bet some companies here don't even know what that term means. I mean it's obvious they don't or they wouldn't be offering such low priced plans. It could work if you have the powers of 1&1 and have millions of customers but it's time to come back to reality. Making a $100 or so of profit per server in the long run is a terrible idea. As companies grow so do the needs for employees and with such little revenue this means one thing, you are cutting corners in places you shouldn't be. Also, with small ARPU your not going to get sold for a good number compared to those hosts who actually have a real business plan so you can count that out as well. Someone may come by and save you by purchasing you but that's about it.

    In Burst's case, that is a little different but it's pretty easy to figure out in my opinion. They have lots of older servers and server components laying around just like any Dedicated Provider. So what other better way to actually make some money on these servers collecting dust then to sell cheap VPS's on them? If I had to guess the servers these VPS's are on don't compare to other VPS's offered at a higher price (old CPU's or something). So it's all relative to what your buying essentially. There is no way they are dropping $5000+ on a custom built server to in turn sell VPS's under $10. Just my 2 cents.. I wish everyone good luck of course and maybe even a business 101 class. It could do wonders for your businesses believe it or not.
    Last edited by KnownHost; 11-15-2009 at 12:01 PM.
    KnownHost Managed VPS Specialists
    Toll Free: (866)-332-9894
    Fully Managed VPS, Hybrid, and Dedicated Servers

    RocketVPS.com - Premium Unmanaged VPS Hosting

  37. #37
    Join Date
    May 2004
    Location
    /bin/sh
    Posts
    814
    Quote Originally Posted by devonblzx View Post
    Delimiter always made me wonder, due to the fact they include DirectAdmin ($5 license) on a $10 server, plus they were offering it for $6 a month ago. So therefore they were only bringing in $1 - transaction fees for the VPS.

    I mean, think about it, there are two options here if the price is ridiculously low:

    1. They are not a real company
    or
    2. They are overselling their servers

    RAM is cheaper these days so I can understand lower pricing, but some of it is just insane.
    http://www.webhostingtalk.com/showthread.php?t=904848

    Seems like it's up for sale now.. I might be wrong, but I think they might be letting it go..

  38. #38
    Join Date
    Apr 2009
    Location
    OnTheWeb
    Posts
    2,024
    this is soo true Known Host, You have to be able to determine your ROI-return on investment. It does not make sense buying expensive servers etc simply to sell it way under the amount simply to gain clients who are barely covering the costs of the server they are on. That sort of ideology leaves room for mad ppl who oversell simply to get the amount of money they want out of one server. Being an Financial Adviser, I always recommend doing business plans or at least juttin down on a piece of paper "How much you expect to spend", "How much money you are going to charge", "How much clients would you need on one server to AT LEAST cover the costs of the server based on the allocation resources judging by the type of plans each client is expected to take, when, how often", "How much extra costs you MAY incurr ie licenses, staff fees, general up keep of server", "How much money you would like to make"

    All of these questions you need to ask yourself before you setup a business. This is just a rough sketch by the way. I do not plan on giving financial advice to individuals who should know better on a Sunday
    If you're the smartest person in the room then you're in the wrong room

  39. #39
    Join Date
    Aug 2004
    Location
    Shanghai
    Posts
    1,449
    If I may add, any plan to do the return on investment in more than a year is just foolish, and this is not a secret for anyone that has been running a hosting business over few years (I'm not disclosing any secret here...). All together, this "ROI in less than a year" thing is quite the industry standard anyway. Hardware gets outdated fast, price of power can go up (it already did over the last few years, and I expect it to go up again), etc...

    Thomas
    GPLHost:>_ open source hosting worldwide (I'm founder, CEO & official Debian Developer)
    Servers & our leading control panel and our Xen VPS hosting, which are already included in Debian and Ubuntu
    Available in: Kuala Lumpur, Singapore, Sydney, Seattle, Atlanta, Paris, London, Barcelona, Zurich, Israel

  40. #40
    Join Date
    Dec 2005
    Posts
    3,077
    I think there are a number of reasons:

    1) Some companies are ran by kids/inexperienced people who don't think about setting any margins before they start. They end up going bust/dissapearing

    2) Some companies oversell their VPS nodes, e.g. sell twice the amount of RAM the machine has. Therefore they can offer higher resources/lower prices.

    3) Some companies use low end hardware. e.g. Dualcore, Low end Quadcore with a single Disk or 2x disks in RAID-1, vs a company who might be using enterprise-grade hardware with Hardware RAID6/10

    4) Some companies will own all of their hardware rather than leasing. This means their monthly outgoing costs are much lower than a company who leases servers elsewhere. Therefore they can provide more resources at a lower price.

Page 1 of 3 123 LastLast

Similar Threads

  1. Replies: 18
    Last Post: 11-23-2005, 04:27 AM
  2. Replies: 2
    Last Post: 08-04-2005, 01:54 PM
  3. How much profit do they make???
    By techworld in forum Running a Web Hosting Business
    Replies: 16
    Last Post: 08-24-2004, 06:37 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •