Are coupon codes a sign of desperation?

[LampNetworks]

Promos in the traditional sense used to be offers that happened 2 or 3 times a year. In the hosting world, promos appear to be a permanence with the coupon code.

There are coupon codes of 70% and 80% off for life! Does this mean that the client is otherwise overcharged by this amount?

I understand the concept of sales but in the hosting world, I see an air of desperation. Some hosts advertise the same ad in scores of forums offering say 50% discount, week after week, month after month. I can't imagine savvy clients falling for it, so why do so many hosts do it?

 

[visiba]

I think clients are getting used to the fact they can ask for a promo code before signing up with a host (most online services in fact). So that would mean that the prices are overcharged as you say, they already take into account a discount.

However, I think hosts offering coupon codes of 70/80% off for life don't have a clear business plan and are not here for the long run. IMO, some clients will fall for very high discounts, without thinking about the possible consequences.

There are some special periods in a year where you can offer a higher than normal discount, like Christmas / New Year period, Halloween, Black Friday, Cyber Monday etc.

 

[HostLeet]

Promos in the traditional sense used to be offers that happened 2 or 3 times a year. In the hosting world, promos appear to be a permanence with the coupon code.

There are coupon codes of 70% and 80% off for life! Does this mean that the client is otherwise overcharged by this amount?

I understand the concept of sales but in the hosting world, I see an air of desperation. Some hosts advertise the same ad in scores of forums offering say 50% discount, week after week, month after month. I can't imagine savvy clients falling for it, so why do so many hosts do it?

A sign of desperation or genius marketing?:idea:

Well, it all depends...

Have you ever seen a store with a sign that reads "Going out of Business!" or "Liquidation Sale!"? And yet, the store remains open and with the sign up for years, and selling more than ever... I sure have. Any savvy sales person knows that we humans simply can not pass up a good deal. We love the idea of knowing (or thinking) that we are getting something for cheaper than what it's really worth.

With that logic in mind it is only prudent to run your business with the use of promotions, discounts and special offers to gain a marketing edge over the competition. So long as you do it smart, of course, just as visiba has mentioned above. :thumbup: If your discounts are taking away from your profits, you're doing it wrong!

 

[Stream101]

A sign of desperation or genius marketing?:idea:

Well, it all depends...

Have you ever seen a store with a sign that reads "Going out of Business!" or "Liquidation Sale!"? And yet, the store remains open and with the sign up for years, and selling more than ever... I sure have. Any savvy sales person knows that we humans simply can not pass up a good deal. We love the idea of knowing (or thinking) that we are getting something for cheaper than what it's really worth.

With that logic in mind it is only prudent to run your business with the use of promotions, discounts and special offers to gain a marketing edge over the competition. So long as you do it smart, of course, just as visiba has mentioned above. :thumbup: If your discounts are taking away from your profits, you're doing it wrong!

Very well said! While I don't agree with this tactic (going out of business sale), it does get people in the door!

 

[NW-Dan]

The market today has so many sellers that it is somewhat required to have some sort of special to get clients. While you are correct, that it doesn't have to be all the time..there isn't much to do to "stand out" of the crowd at face value beyond price.

I can go to this site or others like it and promote my brand, but what am I promoting to? The people of the industry that use VPS accounts or know what to look for in a host.

I always run specials. My company runs shared hosting only. We put a lot of time and focus into maintaining quality of our service. We don't have VPS or Dedicated for sale because we want to keep focus on the shared corner of the market.

It is HUGE for us to have specials running at all times to be able to get a few clients over the big names that have 'unlimited'. The users who don't know what they are looking for will always run to most bang for their buck and just deal with the performance sufferage.

It is up to us as providers to bring the client back to reality and show them what quality hosting without the performance issues is about. Entice them with a coupon or a special and throw in good customer service and they'll be a friend/customer for life.

 

[BradatA2Hosting]

It's definitely a way to stick out, especially within a forum. If you're competing against 100 other hosts for 10 readers suggestions, you need to make your post stand out. What sounds better, $6/mo hosting or 50% off $12/mo hosting. Consumers are extremely smart and savvy, but even from a personal standpoint I feel like I'm getting more value with the $12/mo hosting.

 

[Alex - A2 Hosting]

I was sort of taken back by the thread title as desperate is such a strong word.

Honestly, I don't know of a single company that does not offer coupon codes as they are quite simply, wanted by clients (Yes even the biggest players in the industry offer coupon codes!).

 

[SkyNetHosting]

Hello.

Also most coupons are created by affiliates, when an affiliate is giving out a coupon offer both the client and affiliate benefit from the sale. Hostgator is a good example for offering such coupons.

 

[LampNetworks]

I was sort of taken back by the thread title as desperate is such a strong word.

:thumbup:
Desperate probably is too strong a term as a generalisation but not in the context I meant to question. I agree that the 'BIG boys' of course are not desperate.

I should have been clearer in that I meant the small and medium enterprises seem to be trying to 'out promo' each other that looks like an act of desperation IMO. Really, look at some of the ASCII art used, the massive life time discounts offered (a one-off half price used to be big), It's analogous to jumping up and down with a hand in the air shouting me, me, me. The coupon code will have no value as a real discount to savvy clients IMO.

A traditional shop / store in the UK has to sell a product at the full price for a specific length of time (I do not know how long) before legally being allowed to offer a genuine sale price. The hosting world may be a better place to shop if similar rules were enforceable. Again, IMO

 

[SenseiSteve]

A traditional shop / store in the UK has to sell a product at the full price for a specific length of time (I do not know how long) before legally being allowed to offer a genuine sale price.

Who determines the full price in the first place? If I'm a vendor and determine my original full price is not selling, can I then lower my pricing or do split testing to determine what does sell? What if I'm buying dedicated servers and they're moving well and decide to then lease some of the same at a volume discount, can I not then lower my price on that server to make it more attractive?

 

[LampNetworks]

Who determines the full price in the first place?

The vendor would I'd assume.

If I'm a vendor and determine my original full price is not selling, can I then lower my pricing or do split testing to determine what does sell? What if I'm buying dedicated servers and they're moving well and decide to then lease some of the same at a volume discount, can I not then lower my price on that server to make it more attractive?

I do not know the exact UK law but to be a genuine sale a product has to have been historically priced higher. If the higher price has never been paid and/or artificially inflated as to claim a sale price, then there is no *genuine* sale. Permanently lowering prices because a product was not selling at the higher price is also not a sale or should be claimed as such.

We offer coupon codes, I'm not against them. I just wandered if others thought like me that they have become ubiquitous and many smack of desperation in an effort to 'out promo' the competition.

 

[Alex - A2 Hosting]

The vendor would I'd assume.


I do not know the exact UK law but to be a genuine sale a product has to have been historically priced higher. If the higher price has never been paid and/or artificially inflated as to claim a sale price, then there is no *genuine* sale. Permanently lowering prices because a product was not selling at the higher price is also not a sale or should be claimed as such.

We offer coupon codes, I'm not against them. I just wandered if others thought like me that they have become ubiquitous and many smack of desperation in an effort to 'out promo' the competition.

I think as a company grows (and becomes more reputable) they become less dependent on offering promotions and discounts and can trust more on their reputation and reviews to have a large affect on the sign ups.

Whilst starting up I think promotions have a huge play on the first few clients (unless going locally ).

 

[IkY0294]

I think it's just because the industry is just too over populated and it's even more easier to start a web hosting business with a reseller than finding a host. Lots of providers do for sure over price their services and then offer a crazy discount off their services. It's just how they run their business.

 

[visiba]

The craziest coupon codes I've seen are mostly only a HUGE discount for the 1st year of hosting. Their plans renew at their regular rates, which are rather expensive.

 

[shango]

No. Coupons and promotions are a way to attract customers. It is from the ABCs of marketing.

 

[visiba]

No. Coupons and promotions are a way to attract customers. It is from the ABCs of marketing.

Hmm, I don't think you get the point of the OP. We all understand that coupons / promotions are a way to attract customers. This topic is about the insane coupon codes of 70/80% off and the question if such discounts are rather a sign of desperation instead of normal operations.

 

[Jump systems]

Even the most established webhosting companies offer coupons regularly. Its a customer base expansion strategy due to cut-throat competition

 

[shango]

Hmm, I don't think you get the point of the OP. We all understand that coupons / promotions are a way to attract customers. This topic is about the insane coupon codes of 70/80% off and the question if such discounts are rather a sign of desperation instead of normal operations.

I got the point, but i still say the same - coupon code for $1 or $0.01 "the first month" or something like that is a nice "hook" to catch customers.
I don't mean this in a bad way.
You attract a customer for $1 or $0.01. If you are a decent provider with a good cancellation policy and money back guarantee you give the customer a chance to test your service for little or no cost. Riske free - mers want that so they can feel confident about their provider being serious. If the customer is happy - he will stay and pay full price.
If he is not happy he should be able to leave / cancel with no issues.
That is also what we try to achieve at iclickandhost.
We are very proud we haven't had a customer asking for a refund yet.

 

[nigelb]

You need to think what are the motives for the coupon, could be;
1. They over charge to offer a discount
2. Have spare capacity they want to fill quickly
3. they want to do a land grab, part of exit plan.

Its all down to each business, if they over use it customers become immune, the bottom line is what it costs and is it value.

 

[Jump systems]

Coupons

Promos in the traditional sense used to be offers that happened 2 or 3 times a year. In the hosting world, promos appear to be a permanence with the coupon code.

There are coupon codes of 70% and 80% off for life! Does this mean that the client is otherwise overcharged by this amount?

I understand the concept of sales but in the hosting world, I see an air of desperation. Some hosts advertise the same ad in scores of forums offering say 50% discount, week after week, month after month. I can't imagine savvy clients falling for it, so why do so many hosts do it?

This is correct. But some hosts inflate their selling price then offer permanent discounts. This could be unethical but its all about getting customers to your door