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  1. #1
    Join Date
    Oct 2003
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    9,264

    Reality Check: If you're a webhosting client.. read this ;)

    Today I'm going to make you feel silly, hypocritical and borderline retarded!
    Let's get started.

    While I hope you're not too offended by this post... I do hope you'll change your ways.

    Before we dig too deep let's get down and do some arithmetic. I'm sure you did this back in Elementary school -- that is if you got past pre-school.

    Before starting on your homework -- get out a pen, a piece of paper and jot down the following:

    Pay per hour:
    Pay per day:
    Pay per month:
    Amount hourly:
    Job:

    Ready? Not yet? Come on Jonny don't hold up the rest of the class!
    All right.. now let's really get started.

    Today we're going to teach you a few lesssons.
    The first lesson we're going to teach you is:

    How much you pay your host (before expenses)

    Ask yourself the following questions:

    1. How much do you pay per month (if you pay monthly) Let's let this number = X
    Now let's do some simple division.

    Monthly payment: X / 30 (30.416 is the avg number of days in a month, but forget decimals).
    All right you now have the amount you pay your host per day! Fill that into the appropriate slot.

    2. How much do you pay per hour?
    Let's do some more simple math! Take the number you got in the past box and divide that by 24!
    You now have your pay per hour.

    You're really getting the hang of this -- you should be a math teacher!

    3. So now you have both pay per hour, pay per day and pay per month (X) filled in.
    You now know what you currently pay your host per hour for your package - not including expenses (support, electricity, their office, phones, servers, bandwidth, licensing fees and other expenses, and many more).

    4. Now let's fill in the amount YOU make per hour in 'Amount hourly:'. Also feel free to fill in your position under 'Job'. Now we have a few details about you and what you make.

    We're finally getting somewhere.

    Now let's get started on section 2

    Section two is going to teach you a little about your hosts expenses.

    First off let's make a few agreements: I really like agreements -- ink or sink!

    Let's agree that your average hosting technician (he's 12, spikes his hair and loves his girlfriend) gets paid 10 dollars per hour. That's not too much to ask, right? Afterall you expect him to:

    1. Know how to code (you ask him questions about html, php and your scripts you setup), manage the server you're currently on, speak proper English and be able to coherently write it.

    All right -- so your average tech. is 10 dollars per hour.
    There are 24 hours in a day -- you expect your 24/7 support, otherwise you'd switch hosts, right?

    So that's 240 dollars in a day (minus office, phones, bandwidth, servers, electricity, licensing fees and other expenses) for your 2 technicians who run the 24/7 support (maybe a few more but they're all 10 dollars an hour, right? ha!).

    Let's do some more math (afterall you're really good at it!):

    240 (dollars per day) x 30
    You now result in: 7,200 dollars per month. Phew!

    That's an awful lot, espescially since it only includes the technicians (and ones at 10 dollars an hour who only know how to fling bananas).

    Now let's do some math on those expenses.. let's divide what they're paid an hour by what YOU pay per hour.

    10 (dollars per hour) / what you pay them per hour
    The result? Not pretty, is it?

    Now let's do even more math!
    Let's take the amount they get paid per month (just for them existing and showing up to work) by what you pay per month.

    7,200 / what you pay per month.
    Now we're getting somewhere.

    See that result? That's how many other clients EACH support representative has to support (and that's not including expenses -- so it's actually a lot more!).

    Now you want livechat? phones? 24/7 e-mail? Livechat and phones means 1 representative can only handle 1 client per 15 minutes on average it gets even uglier as they would need more than 1 representative on during a shift.. thus doubling or even tripling the support costs..

    Now.. let's forget all of the other expenses: As they're huge and the math would be quite complex.. (I'm too stupid to do it, that's for sure).

    But think of it this way:

    1. Your host most likely pays 30-150 dollars per megabit (300 gigs of transfer per month). If you have a lot of bandwidth and actually use it: You're probably making your host lose money.

    2. You want your host to have an office? Throw on another 650 per month per employee (unless they're in the woods and ask Billy Bob all the "hawd quesshuns")

    3. You want your host to have a decent, reliable datacenter? Ha, at what you're paying? Come on! Stop pulling my leg..

    You can see where this is going.. we're only digging ourselves deeper.

    What support really is:

    Support for a host isn't supposed to be questions like "Can I do this in html?", "Can you help me configure phpBB (or any other script)", "Can you help me learn to tie my shoes?".

    Support is there to:

    1. keep your servers up.
    2. keep your servers fast and reliable.
    3. communicate during emergencies.

    You're expecting an awful lot out of your host. In fact you're expecting the world for nothing.
    If you've asked your host a question that's out of the scope of their support (scripts, html, or other stupid random things): Would you be willing to have me or your boss call you up at 3am in the morning and ask you stupid questions about your job for (insert amount you pay your host per hour here) per hour?

    Be nice to your host. Thank them once in awhile if they're doing a good job. IF they're doing a crappy job: Find another host, there's a million out there who'll give you the world for less than nothing.

    Note: Now post the results of your findings (pay per month, pay per day, pay per hour, your job and what you get paid) so we can compare with everyone else.

    And my last and final statement!

    Hosting is most certainly a business that companies/people can profit in. I'm not questioning that -- my point is that you're expecting an awful lot for the amount you pay. You wouldn't offer 1 on 1 livechat, phone support or e-mail responses in 15 minutes for what you pay your host per hour. You expect them to. That doesn't mean you're not somehow 100% pure profit to them (in fact you could be if they do things right) BUT you're paying less than nothing. Be nice to the technicians who are helping you, thank them -- and let them know you'll google next time or post on their forums instead.

    Just be nice!

  2. #2
    Join Date
    Oct 2003
    Posts
    9,264
    I also decided I'd go ahead and fill it out myself for my provider: Steadfast networks

    Amount I pay Steadfast:
    Pay per hour: 33 cents
    Pay per day: 7.9 dollars
    Pay per month: 239 dollars

    Amount I'm paid:
    Amount hourly: 10 dollars
    Job: Support representative for a hosting company

    I don't get paid a huge amount myself -- I'm just your average tech. who flings bananas and takes livechats but I should still thank my host more often.

  3. #3
    Join Date
    Sep 2005
    Location
    Airdrie, Alberta, Canada
    Posts
    197
    The scary thing is he's right.... Too many people out there expect the world for next to nothing. Sometimes I wonder why some of us aren't hosting 150000 accounts on a single server....
    Dan Bulmer
    CRUSE Hosting Services
    http://www.crusehosting.com
    Full H-SPhere Clustered Servers

  4. #4
    Join Date
    Jun 2003
    Posts
    1,071
    I like your points, David! Good man!

  5. #5
    Join Date
    Oct 2003
    Posts
    9,264
    Quote Originally Posted by gearworx
    I like your points, David! Good man!
    I think the majority of them are really just common sense -- clients need to step back and take a look at what they're paying before getting irate or attacking their hosts.

    They'd never consider offering the same services with their job: They should allow some leeway..

    Now with that said the ENTIRE blame should be on the hosts shoulders for not being very stern at what they offer, lying about 24/7 support (in a lot of cases -- even some pretty massive companies who blatantly lie).

    Anywho: Late night so I better jump ship!

    Jspired,

    Nothings above me but I'd recommend you read a few books on English, although after rereading my original post I probably should take my own advice.

    Crusetech,

    Sometimes I don't know either -- but I hope hosts do take a look at what they're offering and start cutting back and being realistic. In the end it'd be better for the entire industry..

  6. #6
    Very few people call customer service/tech support if things are going well. The % of calls vs customers must still be pretty small.

  7. #7
    Yeh but you can still get the odd few people that don't have a clue phoning up all the time.

  8. #8
    Join Date
    Aug 2003
    Location
    PA
    Posts
    1,914
    David, definitely a great idea taking the time to post this. Hopefully it will enlighten some readers to the costs involved with hosting.

    IMO it might be a good idea to ask the mods to rename the thread to say Web Hosting buyer's guide or something along those lines David.

    I do fully agree for the price some people pay for services I'd have to say they might want to rethink the hosting provider they choose. It's blatently obvious sometimes when a company has to be overselling drastically to even make ends meet (much less turning a profit, this is business right?).

  9. #9
    Join Date
    Apr 2003
    Location
    New Jersey
    Posts
    298
    Economies of scale.

  10. #10
    Join Date
    Jan 2006
    Posts
    50
    Funny yet highly informative! Nice one!

  11. #11
    If you think your customers are demanding too much of support based on what they are paying, then maybe it's time to raise your webhosting fees to cover the costs to match the level of demand. Oh, gosh-- maybe you could even charge them an extra fee whenever they contact support.

    If your customers are running to support for issues that relate more to webmastering than to tech issues, then the solution is simple: set up a member-run forum where more experienced customers can help the newbies. Or maybe set up a knowledge base. Y'know-- make them more self reliant.

    See how easy that was? No sarcasm, insulting the intelligence of your clientele, or talking down to people needed.

  12. #12
    Join Date
    Oct 2003
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    9,264
    Quote Originally Posted by hfguide
    If you think your customers are demanding too much of support based on what they are paying, then maybe it's time to raise your webhosting fees to cover the costs to match the level of demand. Oh, gosh-- maybe you could even charge them an extra fee whenever they contact support.

    If your customers are running to support for issues that relate more to webmastering than to tech issues, then the solution is simple: set up a member-run forum where smart customers can help the newbies. Or maybe set up a knowledge base.

    See how easy that was? No sarcasm, insulting the intelligence of your clientele, or talking down to people needed.
    There was zero offense meant by anything I wrote: Yes, it contained hints of sarcasm but just about everything I say does.

  13. #13
    Quote Originally Posted by David
    There was zero offense meant by anything I wrote: Yes, it contained hints of sarcasm but just about everything I say does.
    If no offense was meant, perhaps you should use a different tone when addressing clientele. Some of them might look at the vaguely insulting tone of voice underlying your post as putting them down or belittling their alleged *ignorance* for you and your peers' amusement.

  14. #14
    Join Date
    Oct 2003
    Posts
    9,264
    Quote Originally Posted by hfguide
    If no offense was meant, perhaps you should use a different tone when addressing clientele. Some of them might look at the vaguely insulting tone of voice underlying your post as putting them down or belittling their alleged *ignorance* for you and your peers' amusement.
    I'll accept any backlash I receive from it as lightheartedly as I wrote the original post.

    Have a great evening.

  15. #15
    I really appreciated this post, just from a logical point of view, you get what you pay for, if you are paying $5/mo, don't expect world class, 5-star service.

  16. #16
    Thanks for the tips dave I really love this post.

  17. #17
    Great post, David you looking for a job $12 an hour ? lol

    Good points.
    Data Republic - UK Managed Servers - Server Management - Managed Backup/R1Soft
    Follow us on Twitter to get exclusive sales & updates.
    R1Soft Agents Monthly !

  18. #18
    Join Date
    Nov 2004
    Location
    FreeBSD 6.2
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    474
    yet, hosts need to go the extra mile to survive and thrive.

    doing silly calculations for their customers and potential customers is not helping your reputation.
    George Donnelly / Systems Administrator
    High Speed Rails inc. / FOSS Hosting
    http://highspeedrails.com
    "Linux is Luke. FreeBSD is Yoda."

  19. #19
    Join Date
    Oct 2003
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    9,264
    George,

    That's quite fine -- hopefully everyone does see the issue at hand though: You get what you pay.

    TrafalgarWeb,

    Increase that by 65% and we have a deal my friend.

  20. #20
    20 bucks an hour ...

    Well , maybe , if your good, although i think we shall take on a few more resellers and dedicated server sales before we pay that much per hour.

    But i will keep you in mind
    Data Republic - UK Managed Servers - Server Management - Managed Backup/R1Soft
    Follow us on Twitter to get exclusive sales & updates.
    R1Soft Agents Monthly !

  21. #21
    Join Date
    Mar 2002
    Location
    Mass
    Posts
    727
    Quote Originally Posted by HSRGeorge
    yet, hosts need to go the extra mile to survive and thrive.

    doing silly calculations for their customers and potential customers is not helping your reputation.
    Sure, keep doing business that way if you'd like. While you're pulling your hair, I'll be out enjoying life with what little time that I have.

    I'd take less customers, at a higher monthly rate and assist them more. Rather than dropping everything for that $5/mo customer that needs two hours of my time every two days. The customer who pays more per month has more value in what they're trying to accomplish. They might actually listen to you, when you try to educate them on certain topics. Also note that, it's important for business owners to consider how valuable their time is.

    Of course, I'm including the people in this industry that know nothing and expect their hosts to run the business for them. I'm also including that $5/mo customer that submits four requests per day. That guy who knows you don't install third party software, but you do it for him once. Then said guy asks you everytime he's interested in some software that he'll loose interest in a week. What about that guy that is always going from provider to provider to find the cheapest deal, then complains about the quality of service? This could go on forever.
    Jason

  22. #22
    Join Date
    Nov 2003
    Location
    Toronto, Ontario
    Posts
    651
    Well, maybe i missed the point, BUT.

    Everything is oversold, including support staff. As a customer, just because you are not paying enough to cover the cost of a tech, does not mean you should not have their full support when you need it, when your hosting comes with support.

    To our company I am worth over $50/hour lets say... but I spend time working on issues for clients that pay 3$/month. Why? Because thousands of customers are paying 3.95, but only a small percentage of them require my time.

    These are all the advantages of going with shared hosting providers, so you are not paying dedicated server, support, etc costs.

    And this is coming from somebody who has employed staff from day 1 for supporting customers.

    I'm not saying our support is flawless because we know there is a huge amount of room for improvement. But we do our best, we answer every call during business hours as fast as possible etc.

    Also a rule of customer service, is to understand people get mad and unreasonable when something isnt working no mater how small it is, and you have to not take it personally and do what you can to turn it around and make them a satisfied customer again like they were last week before their .htaccess file broke.

    I learned this very early in I.T, no matter how small the issue, i.e. broken keyboard, printer problems, etc.... these issues are of absolute importance to the affected person who has become so dependent on the technology, they expect & need the support to accomplish whatever it is they are doing.

    This is shared hosting.... if you are trying to make money off every single customer, you will fail. you have to deal with the customers that are on the phone every day.. the people using their entire quota's... its part of the territory.
    Last edited by Kevin; 09-08-2006 at 10:52 PM.
    Kevin

  23. #23
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    Oct 2003
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    9,264
    Kevin,

    If you increase your pricing by 50% and only lose 50% of your sales you're at the same spot, yes you would require a bit more advertising due to the lack of word of mouth but you would then have a 50% smaller customer base to support.

    In this industry support is everything and one of the highest costs associated with the business.

    Meh, you'd have the potential to save a lot. In your case where you simply choose not to have any support you end up with a massive churn rate.

  24. #24
    Join Date
    Nov 2003
    Location
    Toronto, Ontario
    Posts
    651
    David.

    I have not advertised in over two years, I have retained my client base very well which speaks for itself. And we continue to improve. Our support team might be small, but its bigger then most,

    Back on topic now. Taking the approach you originally stated, increasing your pricing by 50% or 100%, you are only getting a few extra cents per hour per customer for support right?

    I think this thread is 100% wrong with the points it made and customers should know not all companies rate the importance of each customer on what they are paying.

    But I can understand why some people (business "owners") might be frustrated, the benifets of shared services both for the customer and for the company don't apply to a hosting company that has only a few hundred clients, no staff, operated more or less as a side project/hobby.
    Kevin

  25. #25
    Join Date
    Oct 2003
    Posts
    9,264
    Kevin,

    The few additional cents per hour more than make it worth it with the reduced clientbase to support. Whether that makes sense to you or not doesn't really matter to me.

    I think this thread is 100% wrong with the points it made and customers should know not all companies rate the importance of each customer on what they are paying.
    I distinctly recall someone (Perhaps someone in this thread, above my post!) telling me his clients weren't worth his time in multiple instances and that he was too busy to support them. When they had issues that had to be escalated beyond the level1 support his recommendation was 'have them cancel'.

    Bring anyone specific to memory?

    Note: http://www.ipwalk.com/webhost/total_...ostingplex.com -- not advertising and staying even doesn't mean all that much.
    Last edited by David; 09-10-2006 at 08:15 PM.

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