Cheap hosters...
- Thread starter Homer
- Start date
HostingDirect
New member
I think they will be fine for the personal web sites that do not need great uptime or any support. I refuse to compete with the cheap hosts, it is like comparing apples and oranges. I often have people ask me why our prices are more the "x's" prices. Some understand it more clearly after I explain but many just do not want to hear it, they just want cheap and in the end they will get exactly what they pay for.
One thing is for sure they will never get rich with $3.00 hosting and the odds are very high that they will not be in business for the long haul. It is just not a sustainable business model, there is not enough margin in those cheap plans to grow a good support staff at those rates.
I think we will find as the availability and support goes down hill with some of the very cheap hosts those of us who provide proven long term stable service and support will end up with many of the unsatisfied customers who jump ship. It is just a matter of time, we have seen a lot of the cheap host come and many of them go.
There is my 2 cents!
One thing is for sure they will never get rich with $3.00 hosting and the odds are very high that they will not be in business for the long haul. It is just not a sustainable business model, there is not enough margin in those cheap plans to grow a good support staff at those rates.
I think we will find as the availability and support goes down hill with some of the very cheap hosts those of us who provide proven long term stable service and support will end up with many of the unsatisfied customers who jump ship. It is just a matter of time, we have seen a lot of the cheap host come and many of them go.
There is my 2 cents!
I do think the longterm equation is not actually realised since this cheap merry-go-round that the online hosting world is on, has not gone the distance yet. Right now, the income is not that bad but sustainability is the common denominator in whether the equation is acually viable when you consider ROI levels, growth, risk-value analysis, and so on.
Sure, there is a market there for low end but reality will step in sooner or later when its realised that you cannot maintain profitability and reliability of a business model based on low overheads through DIY, and offering same levels of support that is seen in standardised hosting services.
Sure, there is a market there for low end but reality will step in sooner or later when its realised that you cannot maintain profitability and reliability of a business model based on low overheads through DIY, and offering same levels of support that is seen in standardised hosting services.
Cheap Hosters are a scam. Even if the service is any good, the support is terrible. I've been a reseller of cheap hosting companies in the past and it ended up costing me some of my clients. http://hostspring.com is who I'm with now. Their support is great
$3/month is just that little bit too low. If they are going to provide support, most people would expect to pay at least $5 even for a low requirements personal site, and if the host is relying on just cheap hosting, they may struggle.
This does not mean to say that all cheap hosts are bad. If they have a couple of cheaper plans, but do not rely on these, they may well be financially stable, and able to support clients.
I would be wary of a host that only has under $3 hosting, or a host that offers unlimited bandwidth/space at any price.
The fact is that deciding on a host given price alone is not a good strategy. Look at the whole package.
This does not mean to say that all cheap hosts are bad. If they have a couple of cheaper plans, but do not rely on these, they may well be financially stable, and able to support clients.
I would be wary of a host that only has under $3 hosting, or a host that offers unlimited bandwidth/space at any price.
The fact is that deciding on a host given price alone is not a good strategy. Look at the whole package.
$3 hosting is hard to do really and make any money at it.
If you have a toll free number, and you spend 10 minutes on the phone with a customer in a month, here is a general breakdown - phone call at 10 cents per minute is $1.00, person talking on the phone if you are paying $9.00 per hour is going to cost another $1.50. That already is $2.50 that is gone of that money that one client paid in, not to mention the cost for maintaining the equipment, bandwidth, etc. each month. This is IF the problem was only a 10 minute problem.
This is just a example in my mind. Now resellers of a datacenter server can get away with this because they are generally a fixed amout for that server each month and it is the DC's responsibility to maintain the hardware and work the support for the reseller. The reseller just calls them and pawns it off.
But if you have your own DC as we do, it is VERY hard to do $3.00 hosting. It is great to get people in the door, but you have to bank on about a 60% upgrade rate within the first 3 months that someone is using your services just to make it worthwhile.
If you have a toll free number, and you spend 10 minutes on the phone with a customer in a month, here is a general breakdown - phone call at 10 cents per minute is $1.00, person talking on the phone if you are paying $9.00 per hour is going to cost another $1.50. That already is $2.50 that is gone of that money that one client paid in, not to mention the cost for maintaining the equipment, bandwidth, etc. each month. This is IF the problem was only a 10 minute problem.
This is just a example in my mind. Now resellers of a datacenter server can get away with this because they are generally a fixed amout for that server each month and it is the DC's responsibility to maintain the hardware and work the support for the reseller. The reseller just calls them and pawns it off.
But if you have your own DC as we do, it is VERY hard to do $3.00 hosting. It is great to get people in the door, but you have to bank on about a 60% upgrade rate within the first 3 months that someone is using your services just to make it worthwhile.
The telecoms went bust with their price wars and so will the hosting industry. Consolidation in the hosting industry is on its way. There is no way the low cost provider will survive. They certainly won't get bought out. Not much value in a customer base of $3 hosting clients.
Back in 1995, one of the 1st and most sucessful hosting companies (Adgrafix) started business in the garage of the founders home in MA. In 2000, they sold the company to Allegiance Telecom for Millions and it wasn't because they had a lot of $3 clients. ALGX also bought out HarvardNet which was run by a group of Harvard IT Grads. What was real funny was that Adgafix had a 1/2 Mil monthly positive cash flow and the Harvard Grads were not even turning a profit.
If you in the hosting business, you have to think long term. Not how soon you can gather enough customers to pay the cost of your monthlyu outlays.
Phil Stanley
http://www.hosting-america.net
Back in 1995, one of the 1st and most sucessful hosting companies (Adgrafix) started business in the garage of the founders home in MA. In 2000, they sold the company to Allegiance Telecom for Millions and it wasn't because they had a lot of $3 clients. ALGX also bought out HarvardNet which was run by a group of Harvard IT Grads. What was real funny was that Adgafix had a 1/2 Mil monthly positive cash flow and the Harvard Grads were not even turning a profit.
If you in the hosting business, you have to think long term. Not how soon you can gather enough customers to pay the cost of your monthlyu outlays.
Phil Stanley
http://www.hosting-america.net
It's all in the business model.
If you bulk stable is $3.00/USD then no you might now survive, but being a $3.00 host. (Plus much larger plans.) I can say if you have a reliable business model you will be fine.
Saying that price wars will ruin the industry is not correct in my opinion. It's changing and growing. More compatition makes for more interesting times.
Also if this was 2-3 years ago, then the lower plans might bankrupt a hosting company, but now in the days of the $99.00/USD per month and lower, it's not that hard to find a few business models that will make this function.
If you bulk stable is $3.00/USD then no you might now survive, but being a $3.00 host. (Plus much larger plans.) I can say if you have a reliable business model you will be fine.
Saying that price wars will ruin the industry is not correct in my opinion. It's changing and growing. More compatition makes for more interesting times.
Also if this was 2-3 years ago, then the lower plans might bankrupt a hosting company, but now in the days of the $99.00/USD per month and lower, it's not that hard to find a few business models that will make this function.
It all depends on the needs of the client.
There is definitely a market for the low cost small site hosting.
If a person just wants a few pages to show off to their friends, or a small business wants an on line business card or what ever.
This type of site will rarely use much bandwidth or server resources so you can host a lot of them on a single server.
I don't view them as destroyers of the hosting bizz but as filling a need.
There is definitely a market for the low cost small site hosting.
If a person just wants a few pages to show off to their friends, or a small business wants an on line business card or what ever.
This type of site will rarely use much bandwidth or server resources so you can host a lot of them on a single server.
I don't view them as destroyers of the hosting bizz but as filling a need.
Nickelhosting
New member
If you can make a profit and provide backup service then I don't think cheap hosting plans should cause any unnecessary problems within the industry. I tend to find that the cheap hosting plan customers are easiest to deal with in that they have less resources and therefore are less likely to run into problems.
Hey all,
The fact is that according to FBI, internet-service related fraud complaints from customers trippled in 2002 alone. I think it is a clear indication that many cheapest companies are subject to fraud activities since making refunds costs money, too.
Btw, here is something fresh and interesting that explains the mystery of cheap web hosts:
http://www.cnet.com/internet/0-3799-8-21008572-1.html?tag=boxhl
Best,
The fact is that according to FBI, internet-service related fraud complaints from customers trippled in 2002 alone. I think it is a clear indication that many cheapest companies are subject to fraud activities since making refunds costs money, too.
Btw, here is something fresh and interesting that explains the mystery of cheap web hosts:
http://www.cnet.com/internet/0-3799-8-21008572-1.html?tag=boxhl
Best,
bright-byte
New member
Hi people,I would have to agree with others here that say it's a good thing, however let me elaborate.
I believe that these so called cheap hosts are in fact a good thing for the honest, professional, reliable and affordable hosts out there. My rational for this is that sooner or later the general public (who are now very well educated in these matters) will come to the conclusion that these cheap hosts simply can't offer either the quality or quantity of services they claim in a professional and timely manner for such low prices.
With the above clearly an eventual outcome, this will benefit both customer and professional hosts alike. Customers will benefit by receiving a professional and quality service with exceptional support at an affordable price, whilst the professional hosts will receive the credit they are due, along with a larger customer base.
I guess there is a niche out there for $4.00/month hosting. I just can't afford to offer it to my customers. We have 24/7 phone support, toll free number, a staff to pay, and all the other essentials of a business. There is no way I can compete with $4.00 hosting so I don't even try. I have sold $25/month hosting for so long without any trouble that I don't see a need to compete with the low budget company.
I'm not knocking them, I know they have a markewt to sell to, I'm just saying that it isn't the market I target. I host business for the most part. They care more about quality than low price. People don't mind spending $5/pack on cigarettes but they don't want to spend $20/month on there business.
I wouldn't tell anybody how to run their business or what to charge. If it works for you, conratulations. It just doesn't work for me.
I'm not knocking them, I know they have a markewt to sell to, I'm just saying that it isn't the market I target. I host business for the most part. They care more about quality than low price. People don't mind spending $5/pack on cigarettes but they don't want to spend $20/month on there business.
I wouldn't tell anybody how to run their business or what to charge. If it works for you, conratulations. It just doesn't work for me.
Hello Everyone,
My opinion of $3 a month hosting is that it's a pointless due to billing. I believe that if the host wants to offer cheap low cost hosting then make it a low yearly fee. By the time you've processed the payment it's just not worth the investment of putting them on the server and providing support for them.
Should you provide budget accounts i think it's only fair that you label clearly that it would come with limited support. I've seen companies offer $1 a month hosting and say they provide 24/7 realtime support but it takes 2 weeks to get an answer. These customers then run to the nearest hosting discussion group and bash this host and then get ridiculded by people. These people are well within there rights to be peeved because when they signed up they were promised an unbeatable service.
I know when we launch our budget plan we will state clearly that the customer will only get limited support and will be overlooked by premium accounts but we promise a reply to all emails within 24 hours.
Also, a lot of these budget hosts out there overload the server with hundreds if not thousands of accounts. This is the only way they can make money. Never put an important website that generates you money on a $1 a month host. Think about how much you would be affected if your email stopped working and it took 2 weeks to fix!
My opinion of $3 a month hosting is that it's a pointless due to billing. I believe that if the host wants to offer cheap low cost hosting then make it a low yearly fee. By the time you've processed the payment it's just not worth the investment of putting them on the server and providing support for them.
Should you provide budget accounts i think it's only fair that you label clearly that it would come with limited support. I've seen companies offer $1 a month hosting and say they provide 24/7 realtime support but it takes 2 weeks to get an answer. These customers then run to the nearest hosting discussion group and bash this host and then get ridiculded by people. These people are well within there rights to be peeved because when they signed up they were promised an unbeatable service.
I know when we launch our budget plan we will state clearly that the customer will only get limited support and will be overlooked by premium accounts but we promise a reply to all emails within 24 hours.
Also, a lot of these budget hosts out there overload the server with hundreds if not thousands of accounts. This is the only way they can make money. Never put an important website that generates you money on a $1 a month host. Think about how much you would be affected if your email stopped working and it took 2 weeks to fix!
Good points Eddie. One other thing that should be mentioned is that a lot of these cheap hosts go out of business. Let's ay you sign up for an annual plan at $3/month or $36/year. You pre-pay for the year and after 1 month they go out of business. (This happens all of the time). So in essence you have paid $36/month for hosting, not such a great deal for the trouble you just went through.
But it doesn't really matter, people are still goint to go for the cheapest they can find. They don't want to hear the negatives about doing so. For the price of a soft drink a day they could go with a company that will be around to give them support and great service. Actually a soft drink every other day .
But it doesn't really matter, people are still goint to go for the cheapest they can find. They don't want to hear the negatives about doing so. For the price of a soft drink a day they could go with a company that will be around to give them support and great service. Actually a soft drink every other day .
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