Is this a good business model?

[bjg]

Would it be a good business model to only offer one plan? Say something like 100MB + 3GB/month at a low price, and then allow people to buy as much as they like and merge it? Would this work, or do customers want choice? I thought simplicity would be a good approach.

Thanks

[exasko]

I'd say choices... because emerging them sounds like a pain in the but... so I would go with having a couple plans... or even better a place where you can decide how mucb BW and Space you want...

[Spencer]

What's the objection to offering choices?

[Andrew]

Originally posted by exasko:

or even better a place where you can decide how mucb BW and Space you want...

I kind of like this idea - a sliding scale of sorts - x$ per MB of space + x$ per GB of transfer

or

An "on-demand" format where customers get billed at the end of the month for what they actually used

[bjg]

Originally posted by Olternit:

What's the objection to offering choices?

No objection. But from what an outsider looking in, every host seems the same, no originality or uniqueness. I'm just curious if a different approach would set one apart. Or is jumping on the bandwagon and hoping all goes well the best approach to webhosting? What sets the most successful webhosts apart?

[Spencer]

There are definitely ways to be original and unique, but offering just one plan wouldn't be the best idea. :)

[_Dana_]

Originally posted by bjg:

No objection. But from what an outsider looking in, every host seems the same, no originality or uniqueness. I'm just curious if a different approach would set one apart. Or is jumping on the bandwagon and hoping all goes well the best approach to webhosting? What sets the most successful webhosts apart?

I beg to differ , there are hosts that make their own trail , Id like to think we are one of them we focus on real ppl not the super tech .

you will find your own area where you can make your own way , limiting packages isnt the way , ppl like choices

Good Luck to you , you will find lots of help here :D

[bjg]

Originally posted by Olternit:

There are definitely ways to be original and unique, but offering just one plan wouldn't be the best idea. :)

Ah but how do you know this? You have tried and failed with this model?

I know it's entirely different, but Google became the market leader through simplicity. While Yahoo and Altavista were trying to do too much, Google focused on one thing, one way, and now they are a household name.

And Aldi. The German-owned supermarket chain that just puts all their stock out on pallets and wheels it out into the store while offering good prices - yet all these other supermarkets struggle against one another because they're trying to do too much. Aldi is the biggest retailer in Europe i know that, and are already closing in on the market in Australia and US.

So as history would have it, efficiency and value seem to be the key in those markets. Who knows with webhosting.

There's no harm in trying.. and it shouldn't be deemed a failure until it actually has been tried and failed.

[Chet]

One of the easiest ways to make money as a host is to offer plans larger than what most people will use. Some pick the plans to grow their sites, some just want the biggest, sometimes because a host will offer only certain functions on the largest plans. This is money you make, without those resources being used.

If you just sold one plan - the lowest denominator, you would be taking money out of your pocket for no appreciable gain by only gaining additional income when additional resources were used.

I have seen hosts who just have one plan, I always just thought they couldn't figure out how to integrate a shopping cart.

Chet

[bjg]

Originally posted by _Dana_:

I beg to differ , there are hosts that make their own trail , Id like to think we are one of them we focus on real ppl not the super tech .

you will find your own area where you can make your own way , limiting packages isnt the way , ppl like choices

Good Luck to you , you will find lots of help here :D

Every host probably sees themself as unique. It's the customer who doesn't and their point of view you should be worrying about.

[Chicken]

Originally posted by bjg:

Would it be a good business model to only offer one plan? Say something like 100MB + 3GB/month at a low price, and then allow people to buy as much as they like and merge it? Would this work, or do customers want choice? I thought simplicity would be a good approach.

Thanks
It's been done before, though I couldn't give you any figures on the success of it compared to offering more than one plan. The only thing I'll say is that quite a few times people privately presented me with 'build your own plan' sites and we worked out a couple of sample packages and compared them to existing plans, and the price was always higher than what I felt people would pay. That's not a bad thing, only an observation.

With adding onto an existing plan, you need to be mindful of two aspects: One, that the cost of the additional space, transfer, etc., is so low that you're not making any money and (for the most part), selling the service at cost. Two, that the cost of the additional space, transfer, etc., is too high, and someone will question paying $45.99/mo for 500MB + 10GB/month with 10 email accounts.

In theory it works, but in practice it's more common to skip breaking everything down to the smallest parts (makes customers question if they can get an additional email address for less than a quarter somewhere else), and instead offer levels that people can step up to which will include more for less than they paid for the initial plan. For example...

$15 for 100MB of space and 3GB transfer
$25 for 200MB of space and 6GB transfer
$32 for 400MB of space and 12GB transfer

Something along those lines. You can play with the prices and the levels (amount of services you want to offer at those pricing levels), or just offer one plan for $19.95 :D

[bjg]

Originally posted by Chet:

One of the easiest ways to make money as a host is to offer plans larger than what most people will use. Some pick the plans to grow their sites, some just want the biggest, sometimes because a host will offer only certain functions on the largest plans. This is money you make, without those resources being used.

Interesting.

I'm not saying my way's the right way, i am just wondering if it would work. I'm yet to see a host that offers one plan. Or a host that just offers one way of ordering which is customising everything.

[Andrew]

Originally posted by bjg:

There's no harm in trying.. and it shouldn't be deemed a failure until it actually has been tried and failed.

I agree. You may be able to find your niche market and attract large amounts of referals.

We have always struggled with how many plans to offer. Our site shows 3, but realistically, we have about 8 different plans.

If you were to try going to market with 1 plan (as you seem determined to do), I would suggest you identify your target audience and focus on them alone. You may also want to consider having T&C's around growth and expansion costs.

Best of luck, and please let me know how it goes.

[Karen]

I can think of two hosts that only offer one plan, and both are very successful hosts.

I also think that it would make you stand out and be unique. What would it hurt... go ahead give it a shot.

Karen

[alex042]

I have seen hosts who just have one plan, I always just thought they couldn't figure out how to integrate a shopping cart.
Speaking of shopping carts, are there shopping cart systems that allow for subscription based services? From what I've seen they allow single purchases and not recurring billing, but maybe I missed something.

[bjg]

Originally posted by Karen:

I can think of two hosts that only offer one plan, and both are very successful hosts.

Hmm, are you just saying this? :) Do you remember their names?

[Adam]

Well i certainly aagree your approach is somewhat different however if you was to offer one plan, you'd haev to make sure the price and specification of that package was to have a wide target audience.

[Karen]

Originally posted by bjg:

Hmm, are you just saying this? :) Do you remember their names?

Yes I do know their names. But I will not offer personal opinions about either company since I do not have any first hand knowledge of either one.


With that said, I am only trying to tell the thread starter to go with something he believes in, and I wish him luck.

Karen

[bjg]

Originally posted by Karen:

Yes I do know their names. But I will not offer personal opinions about either company since I do not have any first hand knowledge of either one.


With that said, I am only trying to tell the thread starter to go with something he believes in, and I wish him luck.

I am the thread starter.

I was just curious of any hosting businesses that offer one plan - successful or not. If you know any, it wouldn't hurt to let me know.

[Karen]

Originally posted by bjg:

I am the thread starter.



Oops, and so you are. Duh


Sent you a PM.

Karen

[Chet]

http://www.hosthideout.com/showthread.php?s=&threadid=3948

is one that just recently posted here.

[bjg]

Thanks :)

[bradley]

Originally posted by bjg:


I know it's entirely different, but Google became the market leader through simplicity. While Yahoo and Altavista were trying to do too much, Google focused on one thing, one way, and now they are a household name.


To add to the list... I was just reading in Fortune Small Business about the founder of Domino's Pizza. I was incredibly busy but wasn't making money. (Forgive me if my numbers are off, but you get the point!)... He had 7 different pizza sizes. On his business night, he was short of staff and didn't know what to do. Somebody recommended narrowing the options. This worked. He started making a profit. He kept narrowing the options until he only had 2 or 3 sizes left. He found that he was making a huge profit with a simpler selection.

....that's some how relevant to hosting...I'm just not sure how... :D

[Deb]

He found that he was making a huge profit with a simpler selection. Never forget the Colonel... (?the first?) to drop his restaurant menu down to one primary dish with a choice of sides. The idea was insane .... but it worked out rather well for him ;)

True in hosting ? It depends on how you do it, promote it, bill it, etc.... Clients seem to beg for the "pay only for what they use" concept but in shared hosting it's the fact that they "don't use" that allows the costs to be as low as they are. Just be careful not to shoot them or yourself in the foot when you work out the plan and be prepared to shell out the extra time/money it'll take to get a billing system to work with it.

[NovaW]

Having one plan in the traditional sense will limit your market. People who understand the web don't want to go thru a cafeteria style selection to build a plan when the competitors plan that matches is 1 click away.

But at the end of the day most people buy 1 plan! and not everybody knows what that plan is when they start looking - so a cafeteria style selection can be great if it is focused on the customer instead of the product.

You'd limit your market - but the opportunity exists to be more successful in that segment if you can take away the prospects pain and make it easier for them.

[alex042]

Hmm, are you just saying this? Do you remember their names?
The 1st host that pops up in my head is readyhosting.com who only offers 1 plan for $99/yr and the must be doing something right because when I was with them, I was on somewhere around server 40 and they didn't even have a control panel. I had a few issues with them, but I was also going through a reseller so it took a while to resolve some of my issues.

[bradley]

http://www.nomonthlyfees.com has been VERY successful w/ their one plan, one price philosophy.

[GChurch]

It sounds like a good idea. Perhaps it is the future of hosting as it becomes more of a commodity like other utilities.

[noncompare]

Here's an example. Powweb offers one $7.77 plan, and it seems to work for them (never mind what many say about service levels, etc.).. point is, they've done it, and it works.

About simplicity, look at it this way. Many people want choices. But a lot of people would also appreciate not having to make any. Yes, it doesn't take a lot to choose between three or even eight different account/plans, but having one plan can sometimes take away the subconscious "clutter" and let people have an easier time getting an account.

In fact a simple single-plan might even help prospective customers from having to "examine" different account plans, and even help you get the sale faster since you've actually removed the factors and variables that might cause them to put off the decision to buy from you to a later date. Direct marketers know how important it is to get the sale now and remove all possible obstacles, especially since that prospect is already in your website (strike while the iron's hot), and just might forget your site if he/she puts off the purchase at a later date (and get another offer), etc.

It worked for Henry Ford before (ModelT: "You can have it in any color, as long as it's black"), and can still work today. You can give many choices, or you can simplify. There's a market for each one.

[spewn]

*I have seen hosts who just have one plan, I always just thought they couldn't figure out how to integrate a shopping cart.*

tfs
(thats funny shi*)

- g