One thing I would not do is give away free hosting in the hope of converting your customers to paid customers.
1. Free hosting attracts the worst people
2. You'll be tempted to keep the costs down as to not make a loss.
3, You will end up with miscreants on poor hardware.
4. You end up with complaints posted about the above.
5. Even people who want to pay, get put off by the bad publicity of free hosting.
I think many of us realised long ago, it's easy to attract people to free hosting. Much harder to convert. I
n fact we've spent a long time ensuring we keep profitable customers and shed the freeloaders (or people who create more problem than money).
This I believe has resulted in better services for the remaining customers.
95% of your problems will come from 5% of your customers.
95% of those problems tend to be people who want everything for £2/month
(Ok those stats are what it feels like and not based in fact, but you get the point).
If you lose the people who consistently raise tickets for things they could google easily, that will be better than attracting freeloaders that will damage your bottom line.
Just ask yourself, would you want to share a server with non paying customers?
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