Set Up Fees...

[Robert]

Why do hosts make it like "special" of the day when they don't include setup fees? We only charge setup fees on reseller accounts because we have to manually give them permissions, setup nameservers, etc.

[JeremyV]

It is just a marketing technique. Anything to make a customer think they are getting a better deal. We all know it only takes a matter of minutes to setup an account, or even have them setup instantly... yet many companies, even large successful ones still have setup fees.

I have done it both ways... have a setup fee, and no setup fee, and the number of sales did not change :confused:

[Dapon]

I charge a $25 setup fee on my plans. I don't even remember the last time someone questioned it. In my experience it usually becomes an issue when the salesperson makes it an issue.

If you hesitate when you mention it then they may question it, but if you say the cost is $X plus a $25 setup fee like it's no big deal then they don't think twice about paying it.

[beley]

Setup fees are pretty 1999 anyway. Hardly any hosts now (virtual not dedicated) have setup fees. I know of a few that are still charging $25 or $50 and they setup the account automatically!! What are they charging for? Makes no sense to me. :rolleyes:

[Dapon]

Originally posted by CDHost:

Setup fees are pretty 1999 anyway. Hardly any hosts now (virtual not dedicated) have setup fees. I know of a few that are still charging $25 or $50 and they setup the account automatically!! What are they charging for? Makes no sense to me. :rolleyes:

I've told people what we do with them before but I will share the info one more time.

We use most of the seup fees to pay for my ex-wifes Mercedes and house. Some of the money goes to the huge, lavish parties we throw for our employees here at ZanaWeb. Then there is my weekend chalet in Lake Tahoe, the gardners, maids and other domestic help I have at my house. My children all go to exclusive private schools and expensive summer camps. The stable where we keep our horses just raised their fees for board. And do you have any idea what it costs to keep a helicopter standing by?

Actually the fees are used to offset the cost of doing business. Kind of like paying points on a home loan I guess.

[beley]

Originally posted by Dapon: We use most of the seup fees to pay for my ex-wifes Mercedes and house. Some of the money goes to the huge, lavish parties we throw for our employees here at ZanaWeb. Then there is my weekend chalet in Lake Tahoe, the gardners, maids and other domestic help I have at my house. My children all go to exclusive private schools and expensive summer camps. The stable where we keep our horses just raised their fees for board. And do you have any idea what it costs to keep a helicopter standing by? LOL Good one :rofl:

[tranz]

We only do setup fees on dedicated servers or special client requests.

[Living Media]

Setup fees pay for the time spent to research the domain to be hosted, the name of the person asking for the hosting, and other such things...to see if any of them come up connected with proven spamming or hacking activities. If any red flags are raised, we investigate further.

It isn't cheap. It can't really be automated - or at least, I don't have the resources to automate the process (no programmer-fu, no money to pay someone to create such a script.) But it keeps the shared servers and our IP range clean and out of any SPEWS or SpamHaus listing.

Sure, it's possible to just set up an account when the order comes in, automate that thing, and let people access their accounts and start uploading files...and sending out email...within 5-15 minutes. It's even arguable that the total number of hosting clients to spammers is low enough that cautious server monitoring can catch the spammers before they do much damage. It's all in how you look at things, I suppose. (This also gives us a much better idea of the types of domains we host, where our clients are from, et cetera.)

Hey Dale, can I use that chalet some weekend during ski season? I promise to restock all the food and not leave scuff marks on the parquet :D

[Chicken]

I'm not sure what the question is (or rather, what the question really is)???
Originally posted by Robert:

Why do hosts make it like "special" of the day when they don't include setup fees?
If a host does have set-up fees on their plans, then a special without set-up fees seems to make sense to me. I don't think that's your question/comment though.
We only charge setup fees on reseller accounts because we have to manually give them permissions, setup nameservers, etc.
From this, I gather your comment is why you charge set-up fees, and that you don't charge set-up fees for normal shared accounts. I won't put words into your mouth to extend that to say that you don't feel hosts should charge set-up fees for shared accounts, though I do feel that's what you may have been implying.

[Robert]

Chicken, what I am saying is, in today's world, setting up an account requires the click of a button or 2 or it's instantly created. Setup fees are exactly what they mean Setup. But why would I charge someone $5-10 dollars for a setup fee when all I am doing is pushing a button?

If it's a reseller account, that's a different story. It requires a little more manual programming.

To what I said early


Why do hosts make it like "special" of the day when they don't include setup fees?

Hosts advertise as if it's a special not to have a setup fee, more then half of the hosts don't charge setup fees. It's like saying "We're special, we place ALL our users on MULTIPLE connections, rather then 1 T1".

Ahh i'm just rambling

[JeremyV]

IMO, if people are still willing to pay setup fees, then why not use them? The whole reason we can setup accounts with a click of a button is because of software that we have to pay to use (ie. control panels or automated and integrated billing scripts)

So... while it may only take a few minutes to set up the account, the cost to have this ease should be offset somehow, and more often than not, a setup fee can help cover the costs to pay for things like cpanel, modernbill, etc...

[Chicken]

Originally posted by Robert:

Hosts advertise as if it's a special not to have a setup fee, more then half of the hosts don't charge setup fees. It's like saying "We're special, we place ALL our users on MULTIPLE connections, rather then 1 T1".
Well to me, what you're saying is the same as commenting on HostXYZ who charges $14.99 for a plan that HostABC sells for $9.99, then wondering why HostXYZ would have a special for $9.99 on the plan. What one host charges really has little to do with any other host.

I've also posted about a comparison of two hosts, over a year's time. One host sells a pakage with a small set-up fee for a dollar less than another host without a set-up fee. It averages out to be the same (cost to consumer).

IMHO, a host is more than justified to charge a set-up fee for many reasons. Rather than answer this though, perhaps it would be better to start a new thread asking hosts that do charge a set-up fee why they do. Keep in mind that other hosts wouldn't be able to disagree with any of the points (as it is their choice).

You might decide to charge a set-up fee after reading the reasons others have.

[Robert]

Originally posted by Chicken:

Well to me, what you're saying is the same as commenting on HostXYZ who charges $14.99 for a plan that HostABC sells for $9.99, then wondering why HostXYZ would have a special for $9.99 on the plan. What one host charges really has little to do with any other host.

I've also posted about a comparison of two hosts, over a year's time. One host sells a pakage with a small set-up fee for a dollar less than another host without a set-up fee. It averages out to be the same (cost to consumer).

IMHO, a host is more than justified to charge a set-up fee for many reasons. Rather than answer this though, perhaps it would be better to start a new thread asking hosts that do charge a set-up fee why they do. Keep in mind that other hosts wouldn't be able to disagree with any of the points (as it is their choice).

You might decide to charge a set-up fee after reading the reasons others have.

Na.. no need. But for those hosts who do charge a setup fee, I understand that people don't complain... I just think that a setup fee isn't really needed as there isn't anything that needs to be setup except clicking a button or 2.

[Rob-Bocacom]

You could make an argument that there are carrying costs associated with having everything setup so that service is available at the push of a button. Although you don’t have to do anything at the moment they sign up, you did have to do things to be sure you were ready and able when they signed up.

And a benefit of charging a setup fee is that it reduces churn. If someone has paid a month’s worth of charges up front, they are less likely to jump ship quickly. Not that you want to trap your customers into staying with you, more that you want to discourage flakey ones. If someone’s planning to stay for awhile, assuming there aren’t any problems, then the setup cost over time is negligible to them.

But back to the original point… Proclaiming “no setup fees” is advertising a benefit that may as well be pointed out since others you compete against do have setup fees.

[JeremyV]

Instant or easy account creation comes at a cost, like hsa already been mentioned. If you use a control panel or other commercial script that makes your life easier by doing all of the work for you.. then the costs need to be offset somewhere. Maybe you choose to charge 1.00 more per account and do not have a setup fee, maybe you charge a fee instead, and keep the price a little lower.

But one way or another, you have to figure out how to best cover the cost of having automation. So while the actual act of creating an account may not cost you any time.. having the technology to do so ultimately is costing you. What do you pay for a control panel? 30 bucks a month? 50?

Just things to consider, at the surface things seem free or inexpensive, but when you boil down the numbers and take into account why setup is easy, you really are paying for account setup out of your pocket, and to maximize profit you need to determine what the best method is to recover those costs. :)

Also, not sure if this applies or not, but do you keep hard copies and invoices for you or your customers? If so, that is another cost to offset. We enter every customer into an offline financial program and print hard copies of every invoice for records. Paper costs money, toner costs money, and it takes a few minutes to enter their information into the system. Again, just one of the little things that can add up.

We're still trying the no-setup fee for another month or two... but like I said, have seen absolutely no change in the rate of signups, so will most likely go back to a setup fee :)


So just some food for thought, not saying one way or another is right or wrong, as each business model is different. But to maximize profits, having a setup fee may make a lot of sense.

[Dapon]

I second what Jeremy says. Thanks Jeremy, you saved me from having to type all of that out.:p:

[Robert]

Jeremy. I coulda sworn you've said that before.

But yes, I agree.

[markblair]

You know, I used to be against setup fees but after reading posts by Living Media, JeremyV and others, I now completely understand their meaning. Great explanation everyone! :)

[Living Media]

Eveyrone has a different way of doing business. Some people prefer to check domains and accounts individually before activating the account. Others prefer to go with the "why investigate until there's probable cause" school of thought. And there's some who don't think of doing any checking until they get burned somehow.

I figure it's not much different than applying for an apartment and needing to pay $10 or so for the complex owner / manager to run a credit check. Not all rental companies charge this fee upfront - they amortise it into the monthly costs. Not all rental companies will do a full-on credit check. But the complexes that do this check and charge this fee may have a better chance of keeping out renters with a history of financial trouble, so the managers have to spend less time going through eviction procedures, late-payment collections, what have you.

By separating out the setup fee, we can decrease it when people purchase subsequent hosting accounts. The check on them personally has already been done; we just do a quick check on the domain that they propose to host, make the few tweaks to the account setup once it's done, and they're off to the races.

[dynamicnet]

Greetings:

We do not compete on price; yet, we removed most set up fees due to automation of account provisioning.

Why charge a set up fee if you cannot justify the labor involved?

Thank you.

[Chicken]

I think that question was already answered :o: