It can be tough to get out of a downward web hosting price spiral. Competitors offer more and more space at lower and lower prices. Customers urge you to do the same, with the unspoken threat of moving to other providers if you don’t comply.
A Vicious Downward Spiral
What is the answer? Suppose you go the cheap web host route. Then you’ll have to reduce your costs accordingly if you still want to make a profit. Technologies like virtualization to fit more websites into each physical server and automation to help bring down headcounts and employment costs can only go so far. At some point, you’ll run into the following challenges:
- Performance limitations. Cramming more websites into one hosting server increases the risk that one greedy site will hog resources and leave the other sites starved of processor power, main memory, and network link capacity. You’ll keep one customer happy (perhaps), but see others cancel their service subscriptions with you.
- Degraded finances. Making less money per customer and experiencing higher churn is not good for your bottom line. You could end up spending more to acquire new customers than the revenue you receive from serving them.
- Poor support. Good support can be cost-effective, but it still costs money. A “cheap and cheerful” pricing policy means you’ll have to offer less, sometimes zero, support for the websites you host for your customers. You’ll also receive little or no backup support if you are using the lowest provider to buy your hosting resources at rock-bottom prices. Customer loyalty suffers and churn goes up once again.
Value is What Counts
But is cheaper pricing the answer, either for your customers or for you as a web host? Many customers really want value for money and good service, rather than the lowest prices. They recognize that they get what they pay for and that their objectives will be better met by a suitable web hosting solution that offers good performance, reliability, support, and overall cost-effectiveness.
Some “plain vanilla hosting” players offer huge amounts of free hosting space. In return, they may oblige their customers to put online advertising on their websites or charge them premium prices for the additional services they need to make a real hosting solution. Neither of these solutions makes much sense to business customers looking for value and hosting solutions that let them reach their goals.
Differentiate with Business Benefit Instead
Factor in the other items that customers need to make websites run effectively, like easy-to-use administration, integration with databases and additional modules (e-commerce, customer relationship management services, contact database and automated emailing, for example), and three things happen.
- Basic hosting costs (disk space in particular) for websites become a smaller fraction of the overall end-customer budget and price pressure on hosting costs lessens.
- Business objectives become more of a priority, allowing you to emphasize value rather than cost.
- You get more opportunities to provide value in the form of a complete web host solution that meets customers’ needs, rather than trying to undercut competitors’ prices (and watching them undercut you in return.)
In summary, cheap solutions are not the answer, either for your customers or for you, the web host. Value for money web host solutions are a better way to go.
What are the best ways of adding value in web hosting?