Cheap webhosting - worth saving money or not?

[gaogier]

Hello

What do you pay, what do you get?

Lets give an example,

Package 1.

£3/month
200MB space
10GB bandwidth
10, mysql, ftps, emails, sub domains.

Is that too cheap or too pricey, If so why? What do you pay and for what spec?

[edmondscommerce]

cheap hosting is rarely a good idea

[gaogier]

what about 3 months trial.

I am trying to do research, more info than that if you have the time. Thanks

Been hosting since 2005.

[fisicx]

Cheap is fine when it's all going well. As soon as you hit a problem or the site goes a bit wonky or your emails fail then you discover why they were cheap - it's becuase there is (usually) virtually no support.

OK so you take the three month trial and it all works fine and you sign up for 12 month. Two weeks later the site gets hacked or the server fails what happens then? You call but get no answer, emails are ignored and you are losing money. All becuause you wanted to save £50/year.

Ad Joseph says, it's rarely a good idea.

[gaogier]

my plan is to allow people to pay monthly. I want this to succeed we offer a full monthly backup. We offer full support via email normally replied within 2 hours, but can take as much as 6 hours - The longest reply time.

Where we get our money, will be from web design, development, installing software and addons.

We also offer packages which are more expensive. From £6-£35/month and again, full support via email and several hours of live support. Again the live support will be for everything.

[KM-Tiger]

The other way of looking at this is do you want the sort of client where the difference between £3/month and £10/month matters?

[gaogier]

No. But my prices are set so the client could save £360-£2760 per year, now that matters surely?

My packages are as follows

Hosting - cheap
Bronze £1
Silver £2
Gold £3
Platinum £4

Reseller - Cheap
Bronze £6
Silver £9
Gold £12
Platinum £15

VPS - Cheap/average
Bronze £20
Silver £25
Gold £30
Platinum £35

Dedicated servers from
Low end server £60 Average price £90
High end server £160 average price £390

[NuBlue]

No. But my prices are set so the client could save £360-£2760 per year, now that matters surely?

Depends on who your clients are. If I had a succesfull ecommerce store that took £1000 a day in orders then I would happily pay extra to ensure it was supported properly, backed up and reliable.

[Pandybearse]

I've had several sites at fasthostingdirect for 3 years with no problems
Cheap and lots of features, and emails within an hour or so.
No complaints at all
Paul

[independentSO]

i think cheap is fine for hobbie sites, small business e.t.c but not for big business - esp if your company is Global.

[cornish hosting]

We offer 4 packages for hosting and some for shopping carts they start from £3.99 a month and we offer 24 hour support via phone / ticket system or live chat. and all are packages come with R1Soft - Backup System
Continuous Data Protection: Now included FREE with all Basic, Shared, and Premium hosting accounts which take backups of all sites twice a day and stores them off site

[penguin-chrissie]

When looking at hosting for your business, cheap is not necessarily the way to go. Quite often 'cheap' hosting is oversold and the customers ultimately suffer. Its a classic case of 'you get what you pay for' in my opinion. Its always worth paying a little more for quality. Just an opinion of course.

[shazi]

depends on your requirements , if cheap hosting does not provide all services and server will get down then .....

[gaogier]

For small companies and personal sites, the hosting packages are fine.

For larger companies, there will be VPS's and dedicated servers.

[webhostuk]

Hello,

Before deciding on cheap or costly ...the Most important point is, are your requirements satisfied by the hosting company, what quality of support they offer, also google and check the company reviews ..what their customer talk about their service.

You need to study this factors as well.

[Dominic Taylor]

It depends really. Some people come to us for our low pricing on our Basic package because they just have a simple/small/new/non-profit site; others come to us based on our reputation, and others can't believe that for <£100/year they can have their site hosted on top-quality servers with a 99.9% uptime SLA!

Of course larger needs have pricier requirements, but our dedicated servers cost less than some like to charge per month.

Last week a client's former hosting/design/consultancy company wanted to charge in the region of £200 for a domain tag change so no wonder people are suspicious of prices lower than £xxx - because they've been ripped off by cowboys :(

[freeroam]

Hah you can get a good deal if you know where to look.

Here is a web host my clients are usually more than satisfied with should they require an external host:

hosting24.com ($4.84)

Yes. Unlimited Everything. And no, it's not a con. More than everything a novice would need... perhaps the more advanced user could find some fall backs but I've heard no complaints as of yet! Check them out.

[willbo]

I'm on Dreamhost.com (PM me for referral link if you're going to sign up). It's $9.95 per month and you get unlimited domains, disk space, bandwidth, databases etc etc. The company has a long and good history (10+ years) and their support is pretty good too. I've been with them for 4 years and hosted dozens of sites with no complaints.

[internetspaceships]

Personally, if I see the word "cheap" anywhere in the description of a product such as webhosting or anything essential for the smooth running of my company I don't even bother getting any more information.

It creates the wrong impression to me as I need 100% service and support and "cheap" doesn't imply that.

It implies "budget" or "basic" and does tend to attract a lot of people who want something for nothing.

There are better descriptions. As people have said, you tend to get what you pay for.

[cmjs3]

I've be caught out quite a few times by cheap or cheaper hosting and it really isn't worth it.

One company was unlimited everything for about $9 a month and after 3 days told me I was using too much of the servers resources and would have to upgrade to a dearer plan costing $35 a month. The site in question had less than 50 visitors per day.

I took out a buy one get one free offer on 2 highly specked dedicated servers and paid for a year upfront. It cost me about £2500.00 and included guaranteed 1 hour service. It took them 3 weeks to even get the servers up and running and after 6 months one of the servers would crash everyday at 8.00 am and unless I contacted them it would never go back online. Usually it took them about 2 hours to do but on one occassion it took them 36 hours.

At that point I gave up with them and went back to the more expensive reliable hosting with proper dedicated support with people who not only knew what they were doing but would monitor and preamp problems. Although it's twice the price, it is cheaper in the long run because I don't get the lost revenue from when they are constantly down.

[internetspaceships]

I've be caught out quite a few times by cheap or cheaper hosting and it really isn't worth it.

One company was unlimited everything for about $9 a month and after 3 days told me I was using too much of the servers resources and would have to upgrade to a dearer plan costing $35 a month. The site in question had less than 50 visitors per day.

I took out a buy one get one free offer on 2 highly specked dedicated servers and paid for a year upfront. It cost me about £2500.00 and included guaranteed 1 hour service. It took them 3 weeks to even get the servers up and running and after 6 months one of the servers would crash everyday at 8.00 am and unless I contacted them it would never go back online. Usually it took them about 2 hours to do but on one occassion it took them 36 hours.

At that point I gave up with them and went back to the more expensive reliable hosting with proper dedicated support with people who not only knew what they were doing but would monitor and preamp problems. Although it's twice the price, it is cheaper in the long run because I don't get the lost revenue from when they are constantly down.

I couldn't agree more "cheap" is rubbish. Frankly those people who market themselves as "cheap" need a kick up the jacksey as all they will ever attract is the bottom end of the market.

when will people ever learn.....

[NextPoint]

People who don't want to pay for what something is worth get what they pay for and I have no sympathy for them. Too many people expect to get too much for free or next to nothing. People want free websites and free hosting, but then complain when they don't get the quality they want - what they don't realise that the best value solution isn't usually the cheapest.

If everyone was willing to pay and charge the real value for what something is worth, then nobody would be unhappy - the customer gets the quality because the supplier has the financial resources to deliver. I blame this emerging culture on open source - although good concept for developers, the average person seems to think the value of software (and hosting as an extension) is nothing because you can get it for free - what they don't realise is that it takes time and skill to develop software, regardless of whether someone does it as a hobby or a profession. Grrrr!!!!

[internetspaceships]

People who don't want to pay for what something is worth get what they pay for and I have no sympathy for them. Too many people expect to get too much for free or next to nothing. People want free websites and free hosting, but then complain when they don't get the quality they want - what they don't realise that the best value solution isn't usually the cheapest.

If everyone was willing to pay and charge the real value for what something is worth, then nobody would be unhappy - the customer gets the quality because the supplier has the financial resources to deliver. I blame this emerging culture on open source - although good concept for developers, the average person seems to think the value of software (and hosting as an extension) is nothing because you can get it for free - what they don't realise is that it takes time and skill to develop software, regardless of whether someone does it as a hobby or a profession. Grrrr!!!!

The problem is, you always have your desperate people thinking that charging cheap rates and dropping their pants in order to win little orders makes them a businessperson.

[NextPoint]

The problem is, you always have your desperate people thinking that charging cheap rates and dropping their pants in order to win little orders makes them a businessperson.
I agree - the problem being that the average person can't tell the difference between someone who knows what they are doing and someone who thinks they know what they are doing. Unfortunately those who know what they are doing usually charge a lot more than those who think they know what they are doing.

[willbo]

Cheap is not always a bad thing.

Some larger hosting services are able to drop their prices because they have a lot of customers, and decent automated systems in place to provide 90% of the support that 90% of the customers require.

Being cheap doesn't automatically mean they're rubbish... just the same as being expensive doesn't automatically mean a better service:

In my last job we paid £80-300 per server and had no end of problems (crashes, hacks, lost backups, intermittent downtime, poor latency, the list goes on). However my personal $9.95 per month unlimited package has never let me down in almost 4 years.

I can't believe some people in this thread are paying £2,500+ for 1 or 2 servers a year and more than likely just getting the same basic service as most shared hosting customers! Think of all that money down the drain.. argh.

[internetspaceships]

You do have a good point!

To me it's not the price of something it's the marketing of it as "cheap" that sets the alarm bells ringing. It just creates the wrong impression.

[cmjs3]

I pay more than £3000 per year per server and do I think that is money down the drain? No I don't! It is money well spent.

Try running websites with more than 50,000 visitors a day or ones that consume more than 20GB of bandwidth a day on a 9.95 per month unlimited plan and see how long you will last before they kick you off.

I'm sure the majority of personal sites and small business sites would be fine but not all websites are like that.

[NextPoint]

Having been developing an online business platform that runs multiple websites, I had to upgrade my hosting and go for a more expensive dedicated server. The reason for this is that it just wouldn't be acceptable to have all of my clients websites go offline - if I have 100 clients and something happens to the server, I get 100 clients calling me to resolve the same issue and then risk losing 100 clients and gaining a bad reputation because I can't deal with all 100 clients at the same time. Paying more to have a guarantee of 100% uptime is certainly worth the few hundred pound extra over a cheaper hosting with no guarantee.

When making a decision based on hosting, it's always important to buy based on value and not price. After all, there's no point in buying hosting if the server is never online when you need it to be ;).

[internetspaceships]

Aye and sadly, you only find out how good a company is when the sh*t hits the fan.

[NextPoint]

True. That's why it's best to find somewhere that can offer 100% uptime - if the server goes down then you can get out of your contract and cancel your hosting with them.

[internetspaceships]

Yeah, and the "cheap" hosters don't offer 100%.............

[NextPoint]

Yeah, and the "cheap" hosters don't offer 100%.............
Exactly why I don't use them. Here's a hypothetical calculation as to what the cheapest hosting solution is:

Cheap Hosting

100 customers at £15 per month average subscription = £1,500 per month
Cheap hosting = £3 per month
Average subscription length with cheap hosting = 1 month
Main reason for people ending subscriptions = Websites always down

Year 1 Profitability:
Customer subscriptions: 100 x 15 = £1500
Hosting Costs: £3 x 12 = £36
Profit: 150 - 36 = £1,464

Year 2 Profitability:
If I'm lucky and none of my customers tell anyone else of their experience:

New customer subscriptions: 100 x 15 = £1500
Hosting Costs: £3 x 12 = £36
Profit: 150 - 36 = £1,464

Quality Hosting
On the other hand, I can pay for good quality hosting that has 100% uptime guarantee:

100 customers at £15 per month average subscription = £1,500 per month
Hosting = £120 per month
Average subscription length: More than 1 year
Main reason for people ending subscriptions = Business closure

Year 1 Profitability:
Customer subscriptions: (100 x 15) x 12 = £18,000
Hosting Costs: £120 x 12 = £1,440
Profit: 18,000 - 1,440 = £16,560

Year 2 Profitability:
If all of my customers are happy and introduce an average of 1 new customer who all subscribe for the whole year - let's not consider any other sales from my own marketing:

New customer subscriptions: (100 x 15) x 12 = £18,000
Existing customer subscriptions: (100 x 15) x 12 = £18,000
Hosting costs: £120 x 12 = £1,440
Profit: 18,000 + 18,000 - 1,440 = £34,560

Conclusion
Although the cheaper hosting provides me with less expenses, it limits my profitability on each customer. Not only does it reduce my ability to retain customers, it also limits the ability of additional sales based on word of mouth - any publicity generated via word of mouth will be negative and cost sales.

On the other hand, better hosting will allow me to benefit from better customer retention, lower customer support costs and added value of word of mouth and brand reputation.

The Real Cost of Cheap Hosting:
Although the above example shows that both options of hosting return a profit, there is a big difference of what the cheap hosting has cost me in terms of opportunities to increase profitability in a best case scenario over 2 years:

Cost of cheap hosting - year 1: 16,560 - 1,464 = £15,096

Cost of cheap hosting - year 2: 34,560 - 1,464 = £33,096

Total cost: 15,096 + 33,096 = £48,192

That's a lot of money to lose out on for the sake of going for the cheapest deal. The moral of the story - if you're serious about your business, you should be serious about what you pay.

In the Real World
In the real world the costs are likely to be higher and the above example cheap hosting would likely return a loss of profitability due to this example not taking into account:


Increased development costs
Increased support costs
Increased marketing costs - e.g. brand damage limitation

[internetspaceships]

Hehe I had to giggle looking at the calculations there because we supply server hardware to an ever increasing number of the mainstream hosting sites, and their business model is amazing.

Some are paying for very expensive new boxes in month 1 and certainly by month 3.

I keep getting asked if I want to set up a hosting company, since we pull a lot of the hardware out ex lease, and subsequently at a fraction of the retail value.

Maybe I need to listen harder to these people!

[Josh B]

Hi Guys,

Some interesting research and stats recently came from Google;

"Google research highlighted that just a half second delay in web page loading speed caused a 20% drop in traffic. These tests were also correlated with similar results from an Amazon test. Just half a second delay killed user satisfaction and turned many prospective purchasers away from the site. For a high volume online shop think what that could mean in terms of lost business. Conversely a faster loading web page will increase satisfaction and therefore increase business. Google found that a 30% increase in page load speed results in a 30% increase in business"


At Actinic we have packages to suit the different levels of usage for our users. One of our higher packages (Gold £175 per month) has a maximum of 6 companies on each server. Therefore less IP's, less domains and a biggest section of the server for each user. In upgrading from our lower packages (average cost about £40 per month) users have seen increases in traffic of up to 60%.

I've seen this happen enough to believe it is a false economy to have 'cheap' hosting (by cheap I mean poor quality). If your spending time and money on SEO and marketing it's worth making sure your site is fast and always available.

However the majority of start-ups use less bandwidth and are better off spending money else where than hosting, until they see traffic start to increase. You should always keep an eye on Google Analytics!

[Dominic Taylor]

I remember the widely-quoted study that a 4s delay will cause users to click elsewhere. I'd not thought about it until recently when I was on a website which was advertising how flashy and new it was.

It was great until I clicked on an AJAX menu and had to wait a good number of seconds for it to load!

[HostThree]

I think it can be very hard for a hosting company to strike a balance. I mean ideally I would like to be in the position that United-Hosting are in, fantastic customer base, good profits etc. but when a hosting company starts up offerign those sort of prices it would be very hard to attract new customers.

[NextPoint]

Competing on price is only good for commercial suicide. Even big companies who compete on price usually do this with 'loss leaders' in the hope that they make a profit from the customer buying other products and services that will cover their loss.

If you want to get a lot of customers using your hosting, you should identify a unique selling point that will add value to justify higher prices than those offering cheap hosting. I would assume that if you are aiming to provide quality hosting, this in itself is a unique selling point when compared to selling cheap hosting at £3 or so per month - you should emphasise on the quality of your hosting and the added value that you can provide for the small extra price; an extra £7 or so per month is certainly worth it for a small business to have 100% up-time guarantee for their small e-commerce shop as an example. You can also branch out into offer other complementary products and services that would increase the value of your hosting.

As for your profitability, although you may get more customers at £3 per month, you will most likely find that the type of customer you get:

* Doesn't value your time - after all, you set the presidence by offering your value at £3.

* Doesn't have as much understanding of IT and so requires extra support - anyone who knows about IT will know that £3 for hosting is too cheap.

* Will still want the quality of more expensive hosting - then will spread the bad news about you when you can't deliver because you don't have the financial resources.


We're all in business to make a profit and you can only make a profit if your customers pay you what covers your costs + profit margin. Don't forget, costs also include support time - regardless of whether you hire someone to do this for you or do it yourself. Some companies may offer hosting at a loss, but will make up their loss from other products and services they offer such as combined web design, SEO or software services. Every business has a different business model - identifying yours will be what makes you different and will allow you to identify how you can be profitable.

Also, it is better to have less customers that are more profitable and less problematic than to have more customers that are less profitable and more problematic. Less problematic customers are also more likely to recommend you if they are satisfied with your service.

[willbo]

Exactly why I don't use them. Here's a hypothetical calculation as to what the cheapest hosting solution is:

Cheap Hosting

...

Quality Hosting

...

You're assuming that cheap = poor quality, and that expensive = good quality. As I said in my last post, that's not always the case. What those headers *should* say is "Poor Quality Hosting" vs "Good Quality Hosting". Or, "Cheap Hosting" vs "Expensive Hosting".

I argue this point because to say that cheap hosting is always bad quality and therefore a bad business decision is incorrect, simple as that. Cheap, good quality hosting has it's place in the market. Poor quality hosting, whether cheap or expensive, does not. Let's not confuse the two.

Edit Oh yeah, and where do you get a 100% uptime SLA?

[internetspaceships]

You're assuming that cheap = poor quality, and that expensive = good quality. As I said in my last post, that's not always the case. What those headers *should* say is "Poor Quality Hosting" vs "Good Quality Hosting". Or, "Cheap Hosting" vs "Expensive Hosting".

I argue this point because to say that cheap hosting is always bad quality and therefore a bad business decision is incorrect, simple as that. Cheap, good quality hosting has it's place in the market. Poor quality hosting, whether cheap or expensive, does not. Let's not confuse the two.

Edit Oh yeah, and where do you get a 100% uptime SLA?

When I were a lad.... *giggles* "cheap" was considered a completely different thing to "low priced."

Cheap inferred bad build quality, mass marketed rubbish, often from China or the Far East. I think the perceived meaning of the word has changed over the last 25 years.

Having said that the levels of customer service provided by Businesses in the UK has declined dramatically in the last ten years, whilst the people offering that poor quality expect (high quality) themselves when they are buying.

[NextPoint]

You're assuming that cheap = poor quality, and that expensive = good quality. As I said in my last post, that's not always the case. What those headers *should* say is "Poor Quality Hosting" vs "Good Quality Hosting". Or, "Cheap Hosting" vs "Expensive Hosting".

I argue this point because to say that cheap hosting is always bad quality and therefore a bad business decision is incorrect, simple as that. Cheap, good quality hosting has it's place in the market. Poor quality hosting, whether cheap or expensive, does not. Let's not confuse the two.


Cheap usually does mean poorer quality simply because the provider has a less resources to provide quality and so normally has to cut corners somewhere. Corners cut could be in reducing customer service (e.g. no 24/7 telephone support or not hiring people with higher levels of technical knowledge) or reducing prices by selling in bulk (e.g. cramming lots of websites onto the same server) - regardless of intention of quality, both of these examples lead to poorer quality solutions that will affect the the hosting, which would be either websites loading slow and having interruptions due to the server being overloaded with websites or not having the capability to provide the correct level of support when something goes wrong.

It may very well be that someone offering hosting at £3 per month could deliver the quality of hosting and support required for business hosting, but if this were the case, they wont be profitable and I doubt they would be in business for long, hence causing me issues when I have to move my website elsewhere.

You also have to consider what you regard as cheap. I certainly wouldn't trust business hosting at less than £10 per month - £3 is laughable. From £10 upwards allows scope for the host to sell in some volume, whilst at the same time ensuring that adequate support per account can be provided. Take a look at the following calculation for to hire a person to provide server support per account:

Expected salary = £18,000 (for an entry level person we will assume)
Salary per month = £1,500 (not including NI or other expenses)
@£10 per month = 1,500/10 = 150 users required to pay this salary
@£3 per month = 1,500/3 = 500 users to pay this salary

Now it is clear that in order to break even to just provide the required support expertise that to offer cheaper hosting:

* We have to have more than 3 times the number of websites on the server.

* The support person has more than 3 times the responsibility.

* The support person will be 3 times less able to respond to support if large numbers of customers are requesting support.


This also doesn't include any costs for running the server and doesn't take into account holiday or sick cover. Again, you could say that you could do this yourself without hiring someone to do it for you, but then you are underselling yourself. You could afford to provide this at a lower price if you have other forms of employment, but that isn't good for a business when they need you during working hours when you are working at your day job.


Edit Oh yeah, and where do you get a 100% uptime SLA?
I can confirm that they do exist, but they don't come cheap. I pay a premium for them to manage my server and higher than average hosting prices, but they do offer very good quality hosting with 100% uptime SLA.

[openmind]

Golden rule of running a hosting business:

Never attempt to compete on price alone

On several occasions I have turned away business from a client because they expected me to price match joe blogs acme hosting for 1p a year and were surprised when I didn't.

To grow a successful hosting company takes a lot of time to build reputation, service levels and manageable income levels.

It's taken me close to five years to get to a point where I could in theory stop taking on new customers and still function but there is a load of hard graft in between.

[NextPoint]

Golden rule of running a hosting business:

Never attempt to compete on price alone

...

To grow a successful hosting company takes a lot of time to build reputation, service levels and manageable income levels.

Amen! Amen!