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Originally Posted by bandboy
Once basic costs are covered, a small profit is welcome but pricing is what stumps me. Because if i work out module or package with that intention, pricing is very low since i am getting services directly without having middle men thereby saving on hosting costs. With low pricing, comes abusers and kids who'd continue to drain server. But if i raise prices, competition will kill me. Thats my main worry.
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That's pretty much
everybody's worry, though, isn't it? How to price low enough to be more attractive than the competition, but not so low that you get every resource leech to sign up?
You could start out pricing your packages on the higher side of things, and gradually lower prices to where you're getting signups. That means anyone who signs up with you will end up paying less on future bills, and script kiddies and ultra-budget folks (those who want the world for a dime, so to speak) will steer clear.
You'll also want to plan enough profit to build up a savings: for software upgrades, hardware upgrades, regular maintenance of existing materials, all that kind of thing.
Just remember: your prices are never set in stone. You control them. You change them. You may have to experiment around with package makeup, pricing, and bundling; but as far as I know, there's no "magic formula" for figuring that out. Hosting platforms, support options, back-end costs, management requirements, employee costs...everything's different for each web services business.