I know this thread is a little old, but for people interested in how much you should pay consider this.
An engineers costs around £15/hour, tier 1 helpdesk staff cost around £10/hour.
If you are paying £1 for your hosting, and you have a questions which takes more than 6 minutes to answer your host is making a loss.
Now that's not strictly true, as not every customer has an issue every month.
If you are consistently using support, not because the systems are unavailable or having a problem, but to explain general internet principles that you don't understand, then you should definitely be looking at paying more for your hosting, otherwise you are actually contributing to the demise of the company you host with.
We have strange offerings which include CloudLinux, NGINX, Varnish & Apache, rapped in a CDN, so we expect to get asked alot of questions. For this reason we charge a little more money so we can afford to give the service quality and well as the uptime.
If you were to be paying us £1 a month and constantly asked us questions we would have to consider, as a business, whether we wanted you as a customer.
And there lies the rub. People who pay £1 a month, don't know whether they should pay more. They are the ones who will end up asking the questions, and the company will not, in all likelyhood, be able to sustain the amount of helpdesk requests it gets.
More experienced users realise they should be paying more (even though they do not always do so) and don't ask so many questions.
On that note you find more experienced hosting companies do not try to compete on price, but on service. So you rarely find a good hosting company charging cheap prices.