Hosting is tough - but getting worse

W

WPHS-Matt

New member
Hello,
New to these forums but I wanted to start a topic for others to join in on and see how others felt.

I personally began in the hosting industry in 2003. Back then it was not as tough to be in the hosting market as it seems today. With companies like Digital Ocean, Vultr, Linode ect.. offering dirt cheap VM's ( unmanaged ) how does a company actually compete with that? My take is that you really can't. Tons of new companies popping up everyday and new technology introduced weekly ( seems like ) so how does a small hosting business stay afloat?

How do you feel the General hosting market will look in 5 years? In my own opinion, I don't see General Hosting being a dominate field as VM's are becoming more and more popular and being in demand.

It seems as though people are no longer looking for "Quality Hosting" but more so based on price ( cheap ) but expect the whole world from Support.
But if you sell to cheap, nobody will trust you, but if you sell to expensive, no body will look at you - so what's the happy medium? What's a small business to do in an industry that's rapidly changing everyday?

Just wondering how others felt about the hosting industry as a whole for shared, reseller, vps, dedicated and specialized markets.
 
Hosting industry is the same as all other markets. You fight for your place under the sun, you evolve and adapt, you find winning strategy - or you lose and start looking for another employment.

What about the prices? Count your expenses and add 50% to it - this would be your operating price. This would not be dirt-cheap nor would it be sky-high, just adequate pricing.

Define your USP. From your signature I see you already have some benefits to offer - just back it with real work and do what you promise - clients will respect this.

About 5 years in the future - hosting will still be there and will thrive. No matter what new offers emerge, people will still have to host their websites. New TLDs entered the market and their true time is yet to come. Hosting market will evolve and adapt, you just have to evolve with it.
 
It's not easy to develop and improve hosting services because there are many competitors in this market.
 
Hosting has changed in a number of areas. At one time only the geekish knew what hosting was. Now more and more businesses are aware of what is needed. What is also difficult is it used to be one company could offer development and referred people to a hosting provider and vice versa. Now with sitebuilder services, everyone is gettng a website designed (looks like crap) and hosted (with someone who hosts 1000s of websites on a limited amount of resources) and they get the customers.
My only recommendation is diversify or partner with someone who can offer what you cannot. Or sadly, sell out to someone who can do what you do butso you no longer handle the headaches.
 
Monitor market price, do not change your price frequently and medium price is good for your company (not high or not so cheap)

Don't try to attract "cheap" things but try to attract medium customer who does not care If your price is $6/m or $9/m per VM.

Mistakes: Many company focus on new customers and they don't care about their existing customers, they spend thousands of money on getting a new customers but they don't spend money for existing customers(better support, gift or loyalty program,etc)
 
WPHS-Matt said:
With companies like Digital Ocean, Vultr, Linode ect.. offering dirt cheap VM's ( unmanaged ) how does a company actually compete with that? My take is that you really can't.
Click to expand...

Yes true, you can't compete on their level unless you have their type of money, but you can compete in the hosting industry, you just need to find a niche and use that to be able top offer something others don't. I started in 1999 and today it is a total different playing field.
When i started getting a VPS was like getting a unmanaged dedicated server now.
But now you can get a VPS just a cheap as shared hosting
 
Hosting market is definitely tough market, I believe you have to fight hard for your existence. It is applicable every where. Remember Darwin theory " Survival for the fittest".
 
Now a days all the web hosting companies are offering similar type of features. It is important to be a little different and plan some smart marketing promotions. Even if you are adding a simple Facebook update, add customized images to it. Be different and people will start noticing you.
 
DigitalOcean and the other companies you mention target a totally different market than those opting for traditional hosting. You said it yourself, these are unmanaged.

Your average person is looking to get their restaurant online, as quickly and as cheaply as possible. They don't want to (and in most cases, don't have the knowledge) to login root, install a control panel, configure it all and start a website. This is where they won't look for a unmanaged VPS from DigitalOcean but a traditional hosting provider with all this set, from YOU.
 
In today's world you expect your hosting to be more robust. So you need to make sure there is no sort of delay in the services you are providing.
 
We are finding a reversal in customers who have VPSs, wanting to come back to the shared hosting offerings.

We've starting building huge shared servers, with ridculous specifications. Massive amounts of RAM and CPU and using CloudLinux to carve it up into VPS like chunks. (User data on SAS and databases on SSD)

Customers are liking the fact they they get the performance they want, but we look after the patching, security and backups.

I guess that not everyone wants to spend time doing system admin, but maybe running their business.

I believe this is our niche, so please don't do this also!
 
My worry is not the level of competition. What really freaks me is the the high risk of doing business online.

The rate of fraud is very alarming, especially to those offering VPS and dedicated servers. High lvel of chargebacks, intentional scams, where people place orders for vps with credit card and paypal, after provisioning, the use the IP to spam and once it is blacklisted, they cancel the order and move to the next provider.
 
1. Put a stake in the dirt and stand for something. 2. The mass market is dead. Don't try and appeal to the biggest audience out there, appeal to the most passionate. 3. Be transparent. It's fresh, and interesting and people will love it.
 
How do we deal with it?

1) We offer high-quality service and enterprise grade Supermicro hardware; we field promos and provide starting discounts so people can afford the first month and understand they don't want to leave us, ever.
2) We politely ask our clients to recommend us to their colleagues/customers/ friends/ through their communities + we pay them referral bonuses
3) Word of mouth from trusted friend is much better than million-worth advertisement that you are not interested in.

It works, quantity of our clients grows steadily - not drastically, but at accceptable rate (we would like it to grow faster, of course, yet IM/AM proved to be of little use)

This way, you either use dirt-cheap service and deal with issues yourself or you pay money and get safety of mind
 
ughosting said:
We've starting building huge shared servers, with ridculous specifications. Massive amounts of RAM and CPU and using CloudLinux to carve it up into VPS like chunks. (User data on SAS and databases on SSD)

Customers are liking the fact they they get the performance they want, but we look after the patching, security and backups.

I guess that not everyone wants to spend time doing system admin, but maybe running their business.

I believe this is our niche, so please don't do this also!
Click to expand...

What is your niche? I'm not seeing any niche described here. Pretty much every web host out there actually.

HostNesta said:
My worry is not the level of competition. What really freaks me is the the high risk of doing business online.

The rate of fraud is very alarming, especially to those offering VPS and dedicated servers. High lvel of chargebacks, intentional scams, where people place orders for vps with credit card and paypal, after provisioning, the use the IP to spam and once it is blacklisted, they cancel the order and move to the next provider.
Click to expand...

Yeah it really sucks. There are tools out there that help prevent this though, for one, maxmind. It doesn't really combat every type of fraud but it really does help against most. You can also look into FraudRecord which is basically a database of known abusers, if any details match you'll be notified of it.
 
ughosting said:
We are finding a reversal in customers who have VPSs, wanting to come back to the shared hosting offerings.

We've starting building huge shared servers, with ridculous specifications. Massive amounts of RAM and CPU and using CloudLinux to carve it up into VPS like chunks. (User data on SAS and databases on SSD)

Customers are liking the fact they they get the performance they want, but we look after the patching, security and backups.

I guess that not everyone wants to spend time doing system admin, but maybe running their business.

I believe this is our niche, so please don't do this also!
Click to expand...

well so offering shared hosting and VPS is your niche and no one else should copy this.
I think you need to look at the hosting industry and you will find out this is what every host offers

HostNesta said:
My worry is not the level of competition. What really freaks me is the the high risk of doing business online.

The rate of fraud is very alarming, especially to those offering VPS and dedicated servers. High lvel of chargebacks, intentional scams, where people place orders for vps with credit card and paypal, after provisioning, the use the IP to spam and once it is blacklisted, they cancel the order and move to the next provider.
Click to expand...

Simple Do not auto provision VPS or dedicated servers, then when an order comes in check the details with Fraudrecord, if the buyer has been upto no good with other providers than they will be listed in fraudrecord, so you can reject the order before they get a chance to blacklist IPs etc.
 
HostNesta said:
My worry is not the level of competition. What really freaks me is the the high risk of doing business online.

The rate of fraud is very alarming, especially to those offering VPS and dedicated servers. High lvel of chargebacks, intentional scams, where people place orders for vps with credit card and paypal, after provisioning, the use the IP to spam and once it is blacklisted, they cancel the order and move to the next provider.
Click to expand...

That is why having solid fraud control systems is essential. MaxMind and FraudRecord WHMCS modules help a lot.
 
It is a wrong perception, however, that cheap web hosts entail poor quality of services because there are really, indeed, reputable web host providers that are offering affordable or cheap web hosting packages.
 
Well, we do not argue with that. Huge hosting companies can go for quantity of customers, thus keeping the price low. Small hosting companies are mostly resellers, whos low price is because they ask you only to pay for the resources, keeping own income low to gain customer base and be able to increase operations in the future.

However, cheap service from resellers almost always involves dealing with their lack of knowledge or waiting till their upstream provider solves the issue. There are some decent exceptions, yet the majority of freshly started hosting providers act very much alike, because they simply cannot act in any other way.

Thus said, cheap service almost always means bad support quality. Exceptions do happen , but they mostly confirm the rule.
 
Cheap service does not mean bad service or support. I know some cheap hosts that are great at support/service.

I know some mid range and expensive hosts that i would not touch with a bardge pole as they provide shocking support
 
You must log in or register to reply here.

Latest posts

Forum supporters

Members recently online

Total: 16

Forum statistics

Threads
81,051
Messages
248,679
Members
20,690
Latest member
JohnMuller
Top