Go even further
Mrdredd,
I agree with your post, but I would go even further. Web hosting, like it or not, is a commodity business, and that is evidenced by the fact that lowest price is the basis on which people are competing. Unless you have the discipline and logistical power of Walmart you are going to live a very meagre existence trying to carve out any profits competing on price alone.
The way I would go further than what you say in your post is, as a web hosting business owner, find a way to charge the most amount possible for web hosting.
You are dead on when you say being the cheapest attracts the wrong kind of customers. YOu end up with customers that have no loyalty to you whatsoever who will drop you like a hot rock the second something cheaper comes along.
Which is why you want to charge as much as possible, without pricing yourself out of the market completely. Try double the current pricing of your low cost competitors to get started with, and then move to triple as quickly as you can.
As you do this though, think of everything you can include in your service that doesn't cost much but has a high perceived value. Things your customers want, might want, would definitely take if offered, things related to their using their web hosting that would help them 1) get things done more easily, 2) be more profitable (if they are using it to sell), 3) help them automate all the busy work associated with hosting , and so on.
Load up your service with "goodies"; things that take the frustration out of trying to get things working, things that make it easy to use, things that help them shorten their learning curve, step-by-step instructions for "everything", screen shots of control panels, pull down menus, "show them" exactly what to do. Give them audios to talk them through things that may me difficult for newbie. (I remember trying to figure out FTP with the first hosting package I ever bought, took me two days straight uninterupted going through each miniscule step, going back and forth to the help section trying to understand it. I finally figured it out but was a little resentful I had to go through all that in the first place.) Give them camtasia videos that show them "exactly" how to use all the parts of their service to get the results they wanted initially out of getting hosting in the first place.
All of the above has a low one time cost (for you) associated with it. But it has incredibly high percieved value for your customer. Because it is saving them TIME. By giving them these you are saying to them, "hey, you are important. Your time is valuable, I respect you and I want to get you to high operating proficiency so you can get the most value with this service as quickly as I can. So here is exactly what to do. No need to figure it out, I've already done it for you. Just follow these steps."
The more you can load up your service with these kinds of value added goodies, the more you:
1) differentiate yourself from every other web hosting co out there
2) create goodwill and customer loyalty
3) can legitimately charge more for your service.
The way to make it a no-brainer buying decision for your customer is to list out all of the extras that they get with your web hosting service, (the "goodies") and attach a dollar value to it (e.g. what it would cost if you got a $95/hr computer services consultant to come and do this for you), add up the dollar value of all the goodies and make the comparison with the dollar value of what they are receiving and the actual price in dollars they pay for your web hosting. And then guarantee the whole lot.
So lets say you put together 11 or 12 really high percieved value goodies that you can legitimately say would cost them $1,214 if they had a computer professional come out and spend time to do for them, but come included as part of the service when they enroll in your Silver package, a bargain at $14-95/mo. Of course there is even greater value with even more amazingly helpful and useful videos, audios, ebooks showing you every aspect of making your web hosting experience joyful when you upgrade to the Gold package, an amazing value at $19-95/mo.. And so on.
The more value you can add to your customers' experience of your web hosting, the more you take low price off the table as a factor in their buying decision. Plus it gives you a lot to talk about in your marketing, giving you the ability to differentiate yourself from the pack as no other of your competition is able to.
Oh, and yes, you will have a business that actually makes a lot of money because your customers will love you, feel great about paying you more than anyone else out there, and can't help trying to convince all their friends to use you as well.
This probably ruffles the feathers of people who think going the cheapest price route is your only choice. But if you want to make any money at all it's what you have to do. What you discover when all the cheapskates have been banished from your customer database is that, people are happy to pay extra if they feel they are getting good value.
Ben
Mrdredd,
I agree with your post, but I would go even further. Web hosting, like it or not, is a commodity business, and that is evidenced by the fact that lowest price is the basis on which people are competing. Unless you have the discipline and logistical power of Walmart you are going to live a very meagre existence trying to carve out any profits competing on price alone.
The way I would go further than what you say in your post is, as a web hosting business owner, find a way to charge the most amount possible for web hosting.
You are dead on when you say being the cheapest attracts the wrong kind of customers. YOu end up with customers that have no loyalty to you whatsoever who will drop you like a hot rock the second something cheaper comes along.
Which is why you want to charge as much as possible, without pricing yourself out of the market completely. Try double the current pricing of your low cost competitors to get started with, and then move to triple as quickly as you can.
As you do this though, think of everything you can include in your service that doesn't cost much but has a high perceived value. Things your customers want, might want, would definitely take if offered, things related to their using their web hosting that would help them 1) get things done more easily, 2) be more profitable (if they are using it to sell), 3) help them automate all the busy work associated with hosting , and so on.
Load up your service with "goodies"; things that take the frustration out of trying to get things working, things that make it easy to use, things that help them shorten their learning curve, step-by-step instructions for "everything", screen shots of control panels, pull down menus, "show them" exactly what to do. Give them audios to talk them through things that may me difficult for newbie. (I remember trying to figure out FTP with the first hosting package I ever bought, took me two days straight uninterupted going through each miniscule step, going back and forth to the help section trying to understand it. I finally figured it out but was a little resentful I had to go through all that in the first place.) Give them camtasia videos that show them "exactly" how to use all the parts of their service to get the results they wanted initially out of getting hosting in the first place.
All of the above has a low one time cost (for you) associated with it. But it has incredibly high percieved value for your customer. Because it is saving them TIME. By giving them these you are saying to them, "hey, you are important. Your time is valuable, I respect you and I want to get you to high operating proficiency so you can get the most value with this service as quickly as I can. So here is exactly what to do. No need to figure it out, I've already done it for you. Just follow these steps."
The more you can load up your service with these kinds of value added goodies, the more you:
1) differentiate yourself from every other web hosting co out there
2) create goodwill and customer loyalty
3) can legitimately charge more for your service.
The way to make it a no-brainer buying decision for your customer is to list out all of the extras that they get with your web hosting service, (the "goodies") and attach a dollar value to it (e.g. what it would cost if you got a $95/hr computer services consultant to come and do this for you), add up the dollar value of all the goodies and make the comparison with the dollar value of what they are receiving and the actual price in dollars they pay for your web hosting. And then guarantee the whole lot.
So lets say you put together 11 or 12 really high percieved value goodies that you can legitimately say would cost them $1,214 if they had a computer professional come out and spend time to do for them, but come included as part of the service when they enroll in your Silver package, a bargain at $14-95/mo. Of course there is even greater value with even more amazingly helpful and useful videos, audios, ebooks showing you every aspect of making your web hosting experience joyful when you upgrade to the Gold package, an amazing value at $19-95/mo.. And so on.
The more value you can add to your customers' experience of your web hosting, the more you take low price off the table as a factor in their buying decision. Plus it gives you a lot to talk about in your marketing, giving you the ability to differentiate yourself from the pack as no other of your competition is able to.
Oh, and yes, you will have a business that actually makes a lot of money because your customers will love you, feel great about paying you more than anyone else out there, and can't help trying to convince all their friends to use you as well.
This probably ruffles the feathers of people who think going the cheapest price route is your only choice. But if you want to make any money at all it's what you have to do. What you discover when all the cheapskates have been banished from your customer database is that, people are happy to pay extra if they feel they are getting good value.
Ben
:crazy2:
