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  1. #1

    Does three year billing term actually sell?


    Can someone throw some light on the percentage of customers who signs up for a three or five year billing cycle ?

    Which billing cycle is the most popular among you hosts ?

    For us, the yearly cycle in the highest sold so far..

  2. #2
    Join Date
    Aug 2009
    I would say a three ear billing cycle does not work. We had a 24 month cycle to start with but no one used it so we removed it.

    It is a big risk for the client to pay for services that far in advance. Especially in a recession where companies of all size and nature are going bust.
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  3. #3
    Join Date
    Jul 2009
    London, UK
    All of my clients use a monthly cycle. If I was looking for hosting I would do monthly aswell. I couldnt trust a small hosting company to stay around for 3 years
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  4. #4
    It depends.

    If it is a new customer, then they are highly unlikely to select a 3 year billing cycle. Most new customers will choose monthly, and then switch to yearly (if you offer it) after they begin to trust you actually provide good services...

    We have offered a 2 and 3 year option to existing customers, when we wanted to raise some immediate capital. It's a good way to raise cash quickly, and many of our long-term customers who have been with us for many years are the ones who switch.

    (We typically sweeten the deal by offering a 25% discount.)
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  5. #5
    Join Date
    Jul 2008
    Eta Carinae
    if you can market it right you can sell for 10 years to the right people. But personally i wouldn't pay for 3 years in advance with any host, even if the host is 30 years old with great reputation. Three years is a long time, things change such as pricing, hardware, and your own ability and knowledge.

  6. #6
    It depends.

  7. #7
    Join Date
    Sep 2002
    Three years is too long for me. The quality of the host could fall, the relationship could go sour, the host could go out of business. Also, your requirements could very easily change and your host may not be able to accommodate them.

  8. #8
    Join Date
    Apr 2007
    you may as well put it on... even if it only gets one more client its worth it!
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  9. #9
    Join Date
    Apr 2003
    Quote Originally Posted by coolwebhosting View Post
    It depends.
    Well put.

    Three years with a big discount would have worked better as recently as last year, when folks had big limits on their credit cards.

  10. #10
    Join Date
    Nov 2006
    I have had clients ask for 3 year renewals, but it is not worth it due to changing prices, etc - without even a discount. It might work to existing, long - term clients but I don't think to new ones.
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  11. #11
    Join Date
    Feb 2002
    New York, NY
    Larger businesses are often willing to sign 3 year contracts, because they're expecting that whatever project they are doing will have a lifespan of many years. If you're targeting small businesses and individuals, you probably won't see much more than 1 year terms.

    If you ever intend to sell your hosting business, keep in mind that long-term prepayments are actually a liability. If a customer has already paid, then the buyer has to support them for free until their their renewal date, and then there is still no guarantee that they will renew. Monthly payments are much safer.
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  12. #12
    We made the decision to only offer monthly, quarterly, and semi-annually to our customers.

    I agree that some people might purchase a 3 year hosting term but in reality, I wouldn't expect much beyond 1 year.

    Even if all things remain good, a customer might lose their interest with their site along the way.

    I'd say that the average customer is unlikely to order more than 6 months in advance (hence our decision).

  13. #13
    Join Date
    Sep 2007
    You will hardly find any customers opting to pay for three years in advanced for web hosting. If there are huge savings on offer, some may go ahead with it however chances of that happening are very remote. As far as longer billing term is concerned, annual billing works well with good savings on offer.
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  14. #14
    Join Date
    Oct 2002
    EU - east side
    If you ever intend to sell your hosting business, keep in mind that long-term prepayments are actually a liability.
    It's not like the prepaid money disappear though. If they're not wasted or spent for personal pleasure, then they're in some form or another still in the business, potentially adding even more value, if they were used smartly.

  15. #15
    Join Date
    Apr 2001
    It does works a lot if you are a reputable company that people can trust in you and your name. We disabled it only because we migrated from MB to WHMCS and the last do not allow 3 years of billing cycle.
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  16. #16
    Join Date
    Oct 2009
    United Kingdom
    Monthly billing is the only option I offer to my customers. Three reasons really, One: it's cheaper and more affordable to customers, Two: Unfortunately a lot of websites (and offline businesses for that matter) don't make it to a year let alone 3 years. Three: It's easier to keep track of your active customers and provides a more solid monthly income.

  17. #17
    3 Year is a tough sell. Even with a well established brand it is more likely to get annual sales or quarterly we find.

  18. #18
    Join Date
    Feb 2008
    South Florida
    I think 3 years is too long too. It can create a sense that you are hurting for revenue which I think might scare off some potential new clients. It can also create problems with upgrades and refunds because the prepayment term is so long. What will you do is someone starts on an entry level plan and then needs to move up a few levels. Now you have the complication of how to properly charge the client for the new service plan.

  19. #19
    Yearly is one thing, but I don't think 2-3 years would really work for most. I personally would be scared to act on paying that long of a term. With the way the economy is, or if you end up changing plans which requires a different type of hosting etc. You never know what you'll run into.

  20. #20
    Join Date
    Nov 2009
    Atlanta, GA
    Quote Originally Posted by bqinternet View Post
    If you ever intend to sell your hosting business, keep in mind that long-term prepayments are actually a liability. If a customer has already paid, then the buyer has to support them for free until their their renewal date, and then there is still no guarantee that they will renew.
    That's definitely a good thing to keep in mind if you ever plan on selling.
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  21. #21
    Join Date
    Apr 2006
    Yorkshire UK
    I have only sold one once and that was when the client asked for it, after the 3 years were up the client renewed for another 3 years.
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  22. #22
    It can have a massive effect if your looking to sell within 1 - 2 years.

    Companies like HostGator offer these type of terms and it can raise cash to fund expansion/improved services so isn't always a bad thing.

    However I'd always be wary of paying anything more than monthly for shared hosting.

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