Offering hosting for 1 cent for the first month

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hostmything

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Do you think this is a good idea? I just began offering this as a promotion, and already have a few foreign clients (not from Europe/America). Spam is my biggest concern, as well as host jumpers. Has anybody else offered any similar promotions? And if so, what was the turnout?
 
hostmything said:
Do you think this is a good idea? I just began offering this as a promotion, and already have a few foreign clients (not from Europe/America). Spam is my biggest concern, as well as host jumpers. Has anybody else offered any similar promotions? And if so, what was the turnout?
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I would personally recommend against doing this, it will only attract abuse and the wrong type of clients (IMHO). Sure, some big hosts like EIG brands can offer such deals and market them successfully, but the volume of orders they receive alone is one of the main reasons they can offer such deals and "get away with it".. They have huge marketing budgets, lots of staff, and many, many servers. A smaller host or new startup is just asking for trouble running super low promos. Specially if you only have a few servers. You could be jeopardizing your good clients by filling your servers with bad apples. :(

My advice is not to try and compete based on price alone, you can not, and will not win.. Instead, ask yourself 'what makes my service better than others, and why would someone pay more money for it?'.. :agree:
 
Possibly but then you would have to review all the orders more in depth, you will get spammers and all sorts of customers you do not want.

It can work but a money back guarantee would be more safer.
 
We offered such a deal a few years ago, but we utilised a server just for this promo, so it would not effect our good customers. Spammers were not our main problem on this server, it was that it seemed to get full of people have never had websites before to a point our ticket system and live chats almost crashed with the amount of requests every second of the day
 
Another issue to look out for is your affiliate program. We ran a $1 first month VPS promo in February of last year and it got picked up by fraudulent affiliates. They were even signing up for 2nd tier affiliate accounts on top of that. Be careful!
 
I recommend against doing this as it would just loose you money.

You sell the first month at $0.01 at lets say 2CheckOut (or any other gateway), as part of the 5.5% fee that $0.01 is gone and they will still charge you a further $0.45 transaction fee so that puts you out 45 cents per new customer.

Whilst this is small it slowly adds up with no guarantee they will carry on renewing their services.
 
This is one reason we stopped our £1 a month promotions through ebay.
By the time we paid the listing fees and then the Paypal fees, it left us with approx. £0.25p to cover our other costs/profit and 9/10 it is in the initial first days a client would need most support and no guarantee they would stay after the first month
 
Better you should have a penny plan with little resources that customer will eventually upgrade to regular plan
 
In my previous hosting business when we offered standard shared web hosting I avoided these type of promotions (completely opinion based). I just feel there are a few areas of concern:

1. Actual clients - You may get signups but what's keeping them from signing back up after their 1 cent month? They may just come by, use your service for 1 cent for a month, and move on. Or they may sign up again (attempt) under different information to get it for a penny again.

2. Spammers - That kind of promotion is very compelling for spammers. They pay a penny to get shared hosting to spam, host their phisher, whatever. They get canned, well there's a penny down the drain and they move on.

It's a great promotion in terms of grabbing your customers attention, but the crowd you'll bring in may not be worth it.
 
we did run a promotion last year where we offered 'A free month' take note how i stated 'A' and not the 1st month free.

It worked like this

A client signs up and pays for the first month as normal, once the funds have cleared we adjusted the next due date on the system so they got the 2nd month free, this way also cuts down the spammers who look for 1st free month plans so they can use the free month to send out spam and then do a runner.
 
We offer $1.00 for the first month then after that it goes to regular price. We highly monitor all servers on a hourly basis and haven't had to deal with any spam issues.

Yes, the $1.00 doesnt make up for operating cost but when we have 50 people sign up for $1.00 and 30 of them stay the next month we feel it was worth it.
 
We actually started doing this very thing (1-cent for first month), and we've had pretty good results, although it does take a hit up front and risks a lot of dropoff after that first month. We have only had a couple instances of abusers, luckily (people running proxy scripts that ate up all of our RAM). So I can't say for sure whether it's been worth it yet. We have had a LOT of customers sign up with it, but we haven't waited long enough to see whether a good percentage of those customers stuck with us after a month or two.

I'd say it's maybe worth a try, if you don't mind the risk and can monitor the server for abuse pretty well.
 
Personally, I have run these offers with a higher payment term.
Example: A customer gets first two months free when he signs up for a day minimum quarterly plan. Meaning he has to pay for a quarter in full and we manually adjust his payment to decide after 5 months. While it may seem again tip 40% off, the benefit is it's a higher lumps coming in upfront.
 
Thanks for all the input! We have seized to run these types of promotions, as we were indeed attracting the wrong crowd. Instead, we are now offering 75% off the first invoice when a client signs up. This way, we are covering the CC processor fees and putting a dent in our overhead. We have not had any "host hoppers" yet. Time will tell!
 
hostmything said:
Thanks for all the input! We have seized to run these types of promotions, as we were indeed attracting the wrong crowd. Instead, we are now offering 75% off the first invoice when a client signs up. This way, we are covering the CC processor fees and putting a dent in our overhead. We have not had any "host hoppers" yet. Time will tell!
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Good luck with this new method, let us know how this one plays out. Sorry to hear the 1 cent promotion didn't ;).
 
HostLeet said:
Specially if you only have a few servers. You could be jeopardizing your good clients by filling your servers with bad apples. :(
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That's a good point, but a quick workaround would be to put all the $0.01 bad apple customers together on one server

Although, that's not to say anyone who uses the coupon is bad, but if they have a suspicious domain (warez, pharmaceuticals, torrent tracker, etc), you can put these guys together ;)
 
RH-Jordie said:
if they have a suspicious domain (warez, pharmaceuticals, torrent tracker, etc), you can put these guys together ;)
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If they has a suspicious domain then they would not get past our fraud/security checks, so they would not even get placed on a server.

but what you say would just damage your companies reputation anyway.

Place all bad apples on 1 server, they start spamming etc. from their accounts, so your server provider/DC says

Oh thats good he has done the right thing and placed all the bad apples on the one server.

WRONG

It would be more like

Your server **** has been suspended due to the amount of spam reports received. We will give you 24 hours to correct this issue or you face having your account terminated.

so you have other servers with that provider/DC with genuine users on then, and because you thought you were being clever and placing bad apples on 1 server you now face having all your servers taken down.
 
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