Everything that is wrong with the hosting industry summed up into one sentence

[allan]

I saw this quote on one of those sites that help you move your website from one server to another:


"If you are paying more than $20 a month for hosting, you are wasting your money!"


Says who? Is my new $76 VPS too expensive, should I tell Fluid to lower their pricing because this guy says it is too much money? People who spread this type of FUD are helping to contribute to the free-for-all price drop in the hosting industry.

[dynamicnet]

Greetings Allan:

I agree though actually we see from time to time complaints that we are over $1 per month, and must be ripping people off big time.

Most of the time to the end user, the Internet is so intangible they (the consumer) don’t know what it takes to do the job right for them.

They see hosts advertise from $0.50 per month on up, and don’t have the knowledge, wisdom, or means to invalidate those hosts.

Instead they see them around for a few months, maybe a year, and go with them thinking they have nothing to lose.

They don’t think about reputation, lost search engine rankings, lost revenue.

They consider they are making $2,000 or more a month in on-line revenues and such a move could kill it.

And even sadder, when that cheap hosting provider fails, they (the consumer) do not attribute the failure to the pricing. They feel that some one has to be able to provide service at that price.

They don’t even take the time to think that they probably spend how much per week on lunch? Or going to a movie? Or taking their clothes to the dry cleaner.

Sigh, and rant with you.

[vivehosting.com]

I was expecting something useful and in-depth... I guess I was wrong :p

[allan]

Originally posted by vivehosting.com:

I was expecting something useful and in-depth... I guess I was wrong :p

Never discount brevity -- anyone can spout long tomes, it takes a clever mind to find the answer in only a few words ;).

[soapsud]

brevity is the soul of wit...

or something like that :)

[jbiz718]

I think the comment they mentioned was in regards to a shared hosting account. Which I would agree with now a days.

In regards to the $76 for a VPS, technically you are paying on the high side.

[net-trend]

Originally posted by jbiz718:
In regards to the $76 for a VPS, technically you are paying on the high side.

Technically, you cannot be sure of that.

Allan might have a VPS account with 60gb disk space and 800gb data transfer. Would that still be on the high side?

[emstro]

Price wars are useless... In many cases, low prices have the inverse effect and actually turn away customers. Low prices position the company as a cheap company. Buyers think "what corners are they cutting to make their price so cheap."

Timberland (have you heard of them?) used to make cheapo budget shoes. That is, until they discovered that when they raised their price, making no changes to the actual shoe, their sales went up.

[allan]

Originally posted by jbiz718:

I think the comment they mentioned was in regards to a shared hosting account. Which I would agree with now a days.

In regards to the $76 for a VPS, technically you are paying on the high side.

http://www.pair.com/pair/shared/
http://hosting.verio.com/index.php/web.html
http://www.hostway.com/webhosting/index.htm
http://www.hostrocket.com/products/shared.htm
http://www.earthlink.net/biz/hosting/packages/
http://www.he.net/hosting.html
http://www.futurequest.net/Services/Packages/
http://www.interland.com/shared/?path=homewebhosttab

All of these companies are, as far as I know, considered successful in the shared hosting market. All of them offer plans that are more than $20 a month. I am sure his comment was geared toward shared hosting accounts, but I still think he is wrong. I also think the type of mentality that shared hosting should not cost more than $20 is dangerous to the industry, and should not be propagated by those in the industry.

As far as my VPS:

http://www.fluidhosting.com/vps/pricing.php

The one that lists for $84.95. It might be a little on the high end (I honestly don't know) but it is worth paying the money knowing I have a solid network and solid support to back me up.

[jbiz718]

Well allan,

I do agree that most of those companies you listed are somewhat sucessful. Hostway for example has a plan starting at $8.95. For most consumers that has all the features needed for a good hosting account.

Even more so I think both hardware and bandwidth prices have come down alot, so I do think paying anymore then 14.95 for a basic hosting account is overpaying.

Obviously if you demand more then some of the higher priced plans are needed. Thats why people still buy managed services over 1000 a month.

In the shared world for a basic account with a few email addys and what not, 14.95 at most is what I feel is the most you should pay.

Joe

[allan]

Originally posted by jbiz718:

Even more so I think both hardware and bandwidth prices have come down alot, so I do think paying anymore then 14.95 for a basic hosting account is overpaying.


But, the original quote in my post didn't make any distinction between basic shared hosting and complex shared hosting. The quote said "if you are paying more than $20 a month for hosting, you are wasting your money!". And I believe that statement, even restricting the conversation to a shared hosting environment, is not only wrong, but dangerous to the industry.

[beley]

I don't understand how you can even just simplify it into "Shared Hosting" or "VPS" - there are so many features and benefits that one host might offer to increase the value of his services. What if I moved your site from your old server? What if the site came with an advanced website creation software? Or what if it was bundled with some free online business applications such as financial software (similar to quickbooks)?

You can't just say "$20 is too expensive." Without specifics, that's just like saying $50,000 for a car is too expensive? Would $50,000 be too expensive for a brand new Hummer? Or how about a Rolls? But $50,000 would be too expensive for a Pinto for sure.

It all just depends... this industry, like all others, is not black and white.

[Dapon]

Originally posted by beley:

I don't understand how you can even just simplify it into "Shared Hosting" or "VPS" - there are so many features and benefits that one host might offer to increase the value of his services. What if I moved your site from your old server? What if the site came with an advanced website creation software? Or what if it was bundled with some free online business applications such as financial software (similar to quickbooks)?

You can't just say "$20 is too expensive." Without specifics, that's just like saying $50,000 for a car is too expensive? Would $50,000 be too expensive for a brand new Hummer? Or how about a Rolls? But $50,000 would be too expensive for a Pinto for sure.

It all just depends... this industry, like all others, is not black and white.
Unfortunatly a lot of poeple don't understand this concept beeley. There is a mind set that it has to be cheap to sell. Verio and some of the other large companies are proof that this isn't so, but people will still argue with you.

[jbiz718]

Well I think just as you state your point on a 20 plus plan, it is very arguable to have a sub 20 plan. I currently use a sub 20 plan that is on cpanel and has a ton of features.

It costs 13.95 and has been relativly great. It is also not with the company I work for. So too me why pay any more then 13.95 if I get everything if not more from my plan.

[Dapon]

Originally posted by jbiz718:

Well I think just as you state your point on a 20 plus plan, it is very arguable to have a sub 20 plan. I currently use a sub 20 plan that is on cpanel and has a ton of features.

It costs 13.95 and has been relativly great. It is also not with the company I work for. So too me why pay any more then 13.95 if I get everything if not more from my plan.
If it does everything you need then you shouldn't pay more. But you have to understand that some customers need more and don't care how much they pay.

As beley stated earlier, "You can't just say "$20 is too expensive." Without specifics, that's just like saying $50,000 for a car is too expensive? Would $50,000 be too expensive for a brand new Hummer? Or how about a Rolls? But $50,000 would be too expensive for a Pinto for sure." If you are just looking for something to get you from point A to point B and you don't want to take the bus you can but a Geo Metro for almost nothing. But if you need to get their in style and with all of the comforts then you need to spend more and get the Mercedes.

You can't just say that it works for you so therefore it's good for everyone. I wish you could sit on th esales floor of Verio for one day. You would be amazed at the number of $50 to $125 hosting plans they sell. There are plenty of customers out there willing to pay that price.

[jbiz718]

I am not sure if you know but I work for a managed hosting company. So I am constantly putting proposals together for alot more then the prices you mentioned.

My point is that if you look at the hosting industry 90% of most consumers just need the basics. I get my #'s from the hosting company I use to own, plus the other two i worked for. Then looking at the feature set of my present host (insiderhosting, i do not work for this company) I can safely say that most consumers would not use the majority of the features of my account.

So the comment of 20$ is too expensive would technically apply to that 90%. The other 10% or so is your higher demand sites, which then 20$ is relatively cheap.

The issue of what a customer is willing to pay is a lot different then what they really need.

This is just from my expierence

Here is a good example:
My friend she does arts and crafts stuff and I recommended taking it to the net. So i setup her account for free and gave her all the info. I even took the time to customize her email and what not so it would be easy for her.

Then i walked her through the cpanel control panel and explained to her all the stuff. Her question after that was simple, "How can i upload my site and just check my email. I dont really have a need for the rest."

I would say from all the people I talk too, most of them are similiar. If my friend paid $20 a month I would advise her she was paying too much and she just needs the basics.

Its a good topic so thoughts.

Joe

[dynamicnet]

Greetings jbiz718:

“Even more so I think both hardware and bandwidth prices have come down a lot”

Over the past 18 months if you priced out a dual processor Compaq DL360G2 with SCSI 73 GB HD and 1 GB RAM you would actually see a price increase.

Have you done a stuffy on the rack-mounted server market to know hardware prices have come down a lot? If so, please post the executive study of your summary stating brand names, configuration, price 12 to 18 months ago, and the price now.

On the bandwidth side, please do the same sticking with the major carriers dealing with 1 MB per second or higher including all charges.

Also, do you think the salary and benefits for good system administrators has fallen under $50,000 per year US? If so, please state your sources.

Thank you.

P.S. Most people in business management I’ve met in the past 20 years spend more on lunch than $20, and if not lunch certainly dinner. So what is $20 to $100 per month or more for hosting compared to the value received?

[Living Media]

There are several different types of people who will purchase hosting services: individuals, hobbyists, and businesspeople are three groups that immediately come to mind. Businesspeople need a much more tailored solution, and often need services and support that the individual and hobbyist don't necessarily require.

$20 a month for business hosting, depending on total package features, is reasonable.

I'm not so sure that the same could be said for individual / hobbyist hosting.

The needs are different. The perceived values are different. And thus, accordingly, pricing and features will be different.

[carrierhotels]

Hi Allan,

It amazes me how many customers set these "I won't pay more than $X a month" parameters on their hosting. I'm tracking the weblog hosting market a lot these days, where people pay $5 a month and then complain when they have problems with their uptime or domain. If you've selected a $5 web host, you've made a conscious decision that price is all that matters and overrides all other concerns.

Value is not not determined by a monthly number. Folks pay more for things that matter to them. If you need high reliability and support, you pay for it and do so gladly, as an affirmation that your web site is important to you and your customers/readers.

Rich

[allan]

Originally posted by carrierhotels:
Value is not not determined by a monthly number. Folks pay more for things that matter to them. If you need high reliability and support, you pay for it and do so gladly, as an affirmation that your web site is important to you and your customers/readers.


Absolutely! I think the problem is, as you point out a disconnect between the importance of hosting/mail and the value people place on that service. For many people, their weblog/mail is terribly important, but they are not willing to spend the money normally equated with that importance.

Speaking of weblogs, since he is here, I have to say that Rich's weblog: http://www.carrierhotels.net/wiredspace/ should be required reading for everyone in the hosting industry. He has some great insight into the industry and some excellent commentary - he just needs to update more often ;).

[carrierhotels]

Originally posted by allan:

Speaking of weblogs, since he is here, I have to say that Rich's weblog: http://www.carrierhotels.net/wiredspace/ should be required reading for everyone in the hosting industry. He has some great insight into the industry and some excellent commentary - he just needs to update more often ;).

Allan,

Many thanks for the kind words. You've shamed me into an update. ;)

Rich