Over Selling

[SharedGrid]

I started setting up some regular monthly plans to try to keep things simple. I think some people might be scared off with the prices of a yearly plan. I'll see how it goes.

You are 100% correct, people are usually reluctant to spend money on a yearly plan incase the operation doesn't last long especially for new web hosts. However, don't rule out offering 3/6/12 monthly payment options as well, some people are less risk adverse and would just like to pay yearly.

Rough estimations but I would say 90% of our customers are monthly, the rest are either 3/6/12 month customers and yearly customers are generally on the lower cost plans.

 

[OnTheCloud.co]

It's time to think outside of the box

Target Web Designers, for example.

When a web designer recommends someone, their reputation is on the line. You, the web host, must be held to a higher standard, as you've got more than your own reputation on the line. Reinforce this message regularly.

Everyone loves affiliate programs, right? Pretty much all the big box places offer a 10% affiliate or something similar when someone signs up.

Now, instead of going with ****, which gives affiliates 10% of $48 ($4/mo * 12 = $48), charge the users $10 or $15 - what it actually costs to run a budget account. Now it's 10% of $120 or $180. Your developers are now getting the following:
$48 = $4.80
$100 = $12
$150 = $18

So, instantly, they're getting more of a kickback. And if that user is on a higher plan, the payout is higher, too.

But wait, there's more!

Web designers generally work with clients for the long term, some for more than a decade. So, instead of 10% of the first year, make the commission recurring annually. And don't be stingy—after all, they've done all the marketing for you to get the client—pay them commission on upgrades, too!

So, the e-commerce account that started out at $10/month is doing better and now needs a larger account at $24 or $34/month. Reward that designer for sending you a high-quality client!

All of the above is how I operated Hands-on Web Hosting. But let's go a step further—don't lock users into one-year contracts, and don't pay commission only once per year.

Set a reasonable payout level at $50. Generate the 10% commission, and when the user reaches $50, they can cash out. Now, you're not losing any money on commissions! So many fear the commission, as you pay out after 60 or 90 days, then the client cancels, and you're left holding the bag. If the commission is paid monthly and kept on hold until they request a payout after $50, then the payout is strictly from income.

If you want, give a signup bonus of $20 when they join the program - that helps them meet their initial payout level faster, but it still encourages them to send at least 3 or 4 customers just to get the payout.

Don't be stingy - pay commission on reseller accounts too, on a VPS, and on dedicated servers. Pay them. They've been busting their ass marketing for you while you took care of support and awesome servers.

You just have to think differently than the mega-million dollar companies. Find the niche and go after it, be it web designers, podcasters, e-commerce platforms, local meetups, agencies, etc - there are plenty of places that have clients that need hosting. You need to market to them, and they'll do all the work for you!

Maybe this needs its own thread

Well said, Sir! Did you offer / are you referencing reseller accounts to the web developers? We have a lot of developers with reseller accounts instead of affiliate. That way they can manage the entire account. Pros and cons each method!

 

[bigredseo]

Well said, Sir! Did you offer / are you referencing reseller accounts to the web developers? We have a lot of developers with reseller accounts instead of affiliate. That way they can manage the entire account. Pros and cons each method!

In terms of affiliate payouts, we paid on reseller accounts too - but then we also paid on anyone who SELF REFERRED. I don't think it's fair that once I'm a client somewhere that I now can't have other accounts and receive a discount.

Our only policy was that in order to get a payout, you had to have an active account. Most people opted to just credit to their upcoming bill rather than actually getting a Paypal payment.

As a developer myself, I prefer reseller accounts, or accounts where I have have multiple domains/environments that are isolated from each other. A VPS can help with that, but having played in shell for 25+ years, I really don't want to be there unless I have to!

Often times what we saw was people would start with a regular account, upgrade to a reseller account, and then later upgrade to a VPS. We offered both proactive/reactive managed and unmanaged in both VPS and Dedicated. If they wanted proactive managed, there was an upcharge - we took care of everything and they never needed a ticket. Those that wanted to do things themselves and then just hit us up when they get stuck, those were no charge (usually). As a result, most people went for a VPS, then added on Management. Then they graduated to a dedicated server and management etc there too.

I'm a big fan of giving people the keys to the castle! If they want full access, here you go! When you need help, we're a ticket away.

 

[webling]

It's time to think outside of the box

Target Web Designers, for example.

When a web designer recommends someone, their reputation is on the line. You, the web host, must be held to a higher standard, as you've got more than your own reputation on the line. Reinforce this message regularly.

Everyone loves affiliate programs, right? Pretty much all the big box places offer a 10% affiliate or something similar when someone signs up.

Now, instead of going with ****, which gives affiliates 10% of $48 ($4/mo * 12 = $48), charge the users $10 or $15 - what it actually costs to run a budget account. Now it's 10% of $120 or $180. Your developers are now getting the following:
$48 = $4.80
$100 = $12
$150 = $18

So, instantly, they're getting more of a kickback. And if that user is on a higher plan, the payout is higher, too.

But wait, there's more!

Web designers generally work with clients for the long term, some for more than a decade. So, instead of 10% of the first year, make the commission recurring annually. And don't be stingy—after all, they've done all the marketing for you to get the client—pay them commission on upgrades, too!

So, the e-commerce account that started out at $10/month is doing better and now needs a larger account at $24 or $34/month. Reward that designer for sending you a high-quality client!

All of the above is how I operated Hands-on Web Hosting. But let's go a step further—don't lock users into one-year contracts, and don't pay commission only once per year.

Set a reasonable payout level at $50. Generate the 10% commission, and when the user reaches $50, they can cash out. Now, you're not losing any money on commissions! So many fear the commission, as you pay out after 60 or 90 days, then the client cancels, and you're left holding the bag. If the commission is paid monthly and kept on hold until they request a payout after $50, then the payout is strictly from income.

If you want, give a signup bonus of $20 when they join the program - that helps them meet their initial payout level faster, but it still encourages them to send at least 3 or 4 customers just to get the payout.

Don't be stingy - pay commission on reseller accounts too, on a VPS, and on dedicated servers. Pay them. They've been busting their ass marketing for you while you took care of support and awesome servers.

You just have to think differently than the mega-million dollar companies. Find the niche and go after it, be it web designers, podcasters, e-commerce platforms, local meetups, agencies, etc - there are plenty of places that have clients that need hosting. You need to market to them, and they'll do all the work for you!

Maybe this needs its own thread

I revisited this today after I added reseller accounts. I had them in the past when I did web hosting and even people with several websites like them because it saves them money. It's also how I started out. Reseller account plans are a bit tricky but I think I have an affordable price range for the platform I work on. I like your idea about attracting web designers and I plan on working on that as well. In the past I did web design but it's not my forte. There are a lot of people who are better at it than I am. I am more of a back end and network developer and have worked for corporations in that role.

 

[VeloxMedia]

I started setting up some regular monthly plans to try to keep things simple. I think some people might be scared off with the prices of a yearly plan. I'll see how it goes.

Yearly priced plans are good for sales like Black Friday, Xmas etc.

I only do those really good deals at Black Friday and Xmas mostly for VPS servers and they are limited, I still make profit because I don’t overpay for my IPs.

I also don't over sell any of my machines, never had and never will, but hosting space is hard to judge because not everyone uses a lot. If you oversell space, make sure you have a backup plan, I.e some NAS storage or able to add more drives to your servers.

I’ve noticed so many hosts offering a lot of SSD space and when someone uses a fair bit they get a message and have their services terminated, I’ve just had a client move to me for this exact reason on his VPS, I was asked a lot of questions before hand to make sure I won’t terminate for no reason, which I wouldn’t unless they abuse mailing or illegal activity.

Good luck with your venture.

 

[webling]

Yearly priced plans are good for sales like Black Friday, Xmas etc.

I only do those really good deals at Black Friday and Xmas mostly for VPS servers and they are limited, I still make profit because I don’t overpay for my IPs.

I also don't over sell any of my machines, never had and never will, but hosting space is hard to judge because not everyone uses a lot. If you oversell space, make sure you have a backup plan, I.e some NAS storage or able to add more drives to your servers.

I’ve noticed so many hosts offering a lot of SSD space and when someone uses a fair bit they get a message and have their services terminated, I’ve just had a client move to me for this exact reason on his VPS, I was asked a lot of questions before hand to make sure I won’t terminate for no reason, which I wouldn’t unless they abuse mailing or illegal activity.

Good luck with your venture.

Thanks for your reply, however I'm not going on luck, I'm working toward success.
Not many will take a yearly plan even at ridiculously low rates. I've been considering buying a new machine with a 100TB SSD or larger and colocating it. It would offer far more flexibility than running VPS. And for what I am paying for two VPS accounts I can almost do a colo.