There're more and more super cheap web hosting plans on the web, It led to us such impression that we paid too much for existing services. Is that really true? In case someone is considering to switch to such service, we're going to illustrate more in following post and review how much exactly we should pay for hosting services.
How much money is required to setup hosting business?
Before we consider how much to pay for hosting service, let's take a quick look about how much it costs to setup the actual service. A hosting service is composed by following parts
Unless you are fans of old technologies, we always want to setup the server with up to date productions including power, hard disk and cpu/memory etc. The popular setup for shared hosting nowadays are mostly DELL server with interl i7 CPUs. Overall costs will bypass $6000. It's just for an empty server. If we want to setup RAID or other features, we'll purchas extra devices that cost hundrends of dollars.
Softwares mainly refer to hosting control panel and cliet management softwares. Take the popular and whmcs for instance, the monthly costs will be around $30.
Unless we have our own datacenter, we have to rent the server racks from a quality DC provider, overall cost per rack will around $300/mo with limited bandwidth. Mostly we will purchase extra bandwidth from upstream which will cost us several bucks per TB per month, from hosting end we always purchase several hundreds TBs per order, means there're at least $500 for DC service.
Web hosting support can be handled fully by ourselves or outsourced by third party group. In order to offer decent support, we should keep it inhouse and employ several support technician to handle. Suppose we're going to employ 3 supports and give out $2000 salary per one, the overall cost on support will be $6000 per month.
Other fees in such as server monitoring and security update etc should also be considered. Add all fees together, we need to spend about $20000 per server for the first month and at least $10000 for continuing months.
What price would be reasonable for shared hosting plan?
As explained from above. Suppose we're going to host 200 clients on the server, we can be profitable only if we charge over $100 per clients. It's absolutely not acceptable for most people. Because most servers are clustered and expanded by extra RAM/DISK and be able to handle much more clients via virtualization techs. The final cost via a shared hosting plan can be limited under $5/mo. This price is for FREE linux OS only, if we are going to offer windows hosting, the cost may go up one buck or more per month as most service related to windows are licensed.
What about VPS? Suppose we're going to virtualize the server into 20 VPS, at least $30/mo will be charged in order to be profitable. Of course, many VPS servers don't have such level configurations so price could go down a bit depends the actual features. But $20/mo is definitely a very fair level for a quality vps server. Any service under this line is either oversold or less powerful host server backend.
How is low priced hosting service being offered?
So in order to very low priced hosting plans, we have to add as many clients as possible on same server or use less quality hardwares or put the server with a cheap datacenter provider. But I don't think it's a good idea doing that.
Why there're so many low priced hosting services? The answer is they just want to get clients and incase they run into problems, we'll be forced to upgrade to reasonable plans with some fees. Just think on seller's point, why should we do something non-profitable by offering something even not liked by ourselves?