Pricing Strategies For Hosting Resellers

photo by docbaty

Web hosting resellers employ a wide variety of pricing strategies to sell their services. No single method is best; each strategy appeals to a different set of potential customers. A good pricing scheme can attract new clients, retain existing customers, and set a company apart from the competition. Here are some profitable strategies for hosting resellers to consider:

1. The traditional tiered pricing strategy has worked well for many hosting providers.
They offer two or more types of hosting accounts, each with different limits on bandwidth and storage space. Some also impose varying restrictions on databases, email, subdomains and other features. The different types of accounts often have names like “gold” and “silver.” If customers exceed the limits, they must upgrade to the next level or pay additional hosting fees.

2. Include extra services in the hosting price.
For example, one successful company in Florida combines hosting, domain registration, and web design in a single package. Hosting resellers can also include services like online promotion, search engine optimization, and website proofreading. A drawback of this strategy is that it excludes customers who don’t need the additional services.

3. Offer discounts when clients pay for web hosting in advance.
They often use attention-getting advertisements that quote the lowest prepaid price on a monthly basis. Some only offer annual pricing. The smaller quantity of payments can significantly reduce payment processing costs. This strategy also encourages the customer to make a long-term commitment. However, new customers may be reluctant to pay for several months or a year of web hosting in advance.

4. Offer a free trial period.
This helps to attract new customers by allowing them to try the web hosting service without making any payments. When the free trial period ends, customers may transition to monthly or yearly pricing. A downside of this strategy is that people can use free trials and decide to leave for any number of reasons. Paying customers must absorb the costs associated with free trials.

5. Offer low introductory rates.
Cable and satellite television providers often employ this pricing strategy. For example, a hosting company could charge $3.99 per month for the first four months. After that, customers would pay the normal monthly rate of $4.75. This helps to attract clients by giving them the opportunity to try a new hosting service at minimum expense.

6. Incorporate setup fees into your pricing strategies.
Such fees enable them to reduce monthly hosting rates to more attractive levels. Clients are more likely to remain loyal to a company with a setup fee. A customer doesn’t want to waste his or her investment in the fee, and the hosting provider can more easily maintain competitive rates. However, hosting resellers shouldn’t become too dependent on setup fees; there is no guarantee that new clients will continue to sign up.

7. Let the customer help determine the price.
Some hosting resellers successfully auction their services at online auction websites. The sale price may only apply to the first month of hosting, or it can set the rate for subsequent months. However, web hosting services often sell for relatively little at online auctions. Resellers can also let clients request quotes on custom hosting plans with specific amounts of bandwidth and storage space.

Some hosting companies attract customers by offering unlimited web hosting plans with no restrictions on space or bandwidth. Major hosting providers might be able to get away with this, but it’s a very risky strategy for resellers. High-demand customers may use so much bandwidth that the reseller loses money or has to raise rates. Web hosting providers should always maintain specific limits and rules for customers to follow.

Hosting resellers ought to carefully consider each of these strategies and estimate the potential earnings. Some companies successfully combine two or more of these options. It is always worth taking the time to devise an effective pricing strategy. When resellers raise prices, it can result in the loss of existing customers. If in doubt, start with relatively high rates that can be lowered if necessary.