Marketing Gimmicks Web Hosting Companies Use
A Brief History of Web Hosting
In the early days of web hosting, in the early- to mid-1990s, web hosting accounts were super expensive. Companies then charged in the hundreds of dollars a month for very small and very basic hosting accounts. And the only companies offering hosting in the very beginning were the giant telecom companies like Verizon – who had virtually no idea what they were doing at all!
I founded LazyLizard in those days because I saw that hosting accounts could be much, much cheaper and still yield a fair profit to their owners. In New York at the time, Verizon offered a 5-Megabyte hosting plan (yes, you read that right – 5 megabytes of storage only) for $340 a month! (And yes, you read that right too – $340 per month)!
Since I had already begun experimenting with setting up and running web servers, I saw that it could be done for much less than that – like 10 times less – and still be a profitable business. Those are the conditions under which I began LazyLizard in 1995. About a year later I had a few paying clients and provided them 50 megabytes of storage, which at the time was far more than anyone could use. Remember that back then, web pages were simple, static html. No php, no mySQL, no interactive pages. They functioned more or less as online business cards for small and medium-size companies.
My philosophy has always been, charge a fair price, give the consumer a great deal and do so where you can make a small profit on each account every month. That way, you’ll always be profitable, which means you’ll have enough money to spend on updating and upgrading servers and equipment and investing in the infrastructure of the business.
I’ve stuck with that philosophy even through the sea change of the early and mid 2000’s where deep-pocketed companies such as GoDaddy came into the market willing to lose millions of dollars a month in the hopes of taking a monopoly position in the marketplace.
The Gimmicks Begin
Web hosting companies of the early to mid-2000’s always had a trick or two up their sleeves.
When these newcomers began entering the marketplace, I watched as they tried one unbelievable gimmick after the other. Everyone in the business knew they were losing money hand-over-fist with each and every new account they signed up and most succumbed and began matching their ludicrous deals.
And by ludicrous, I really mean, dishonest. They promised unlimited everything. Unlimited disk space, unlimited traffic and bandwidth – all for the unbelievable price of just $1, $2 or $3 a month!
There was simply no way they could actually provide unlimited anything for what amounted to free web hosting. Obviously, if someone signed up for an account and started piling on terabytes of files and attracting hundreds of thousands of visitors a day, they would have been kicked off and accused of some fine-print Terms-of-Service violation.
They also knew they couldn’t provide unlimited storage and bandwidth so they slowly began adding more and more restrictions to the fine print of their terms of service and by the time they were done, their hosting accounts cost more than mine and offered less service.
But on the surface, it appeared their accounts were much cheaper and offered a lot more! They did generally offer more storage space than I did, but that was about it. We were all already offering far more storage space than 98% of our clients could ever legitimately use. But the amount of disk space offered was the big yardstick most new clients used to size up which host had the best deal.
Prices Rise But Gimmicks Stay
In the last few years, since about 2010, more web hosts have begun to do what we did all along – sell themselves based on quality rather than who had the lowest price. Their $1 and $2 accounts just weren’t sustainable anymore and they knew it. Now you see more specialty hosts, who like us, specialize in various niches. Our focus is on WordPress, with servers that are specially configured to run WordPress sites with the utmost speed and maximum security.
We also try to attract small- and medium-size businesses who might need a little hand-holding. Hand-holding has become a bit of a specialty for us because since we’ve always charged slightly higher prices than other hosts, we’ve had a smaller client base and we’ve gotten to know most of our clients pretty well – like friends. When they contact us with a problem, we usually already know who they are, what their website is about and what they’re trying to achieve. This gives us a nice leg up in providing them very personalized services.
But I was surprised today to run across a host who is still running the gimmicks. This is a very large and well-known host that you would think wouldn’t have to employ these kinds of gimmicks and tricks.
So, check this out… this is a screenshot from their website promoting an unlimited account for just $4 bucks a month (or $3.99 as they call it). For this low amount they’re giving their customers unlimited disk space, unlimited bandwidth and unlimited email.
If this were a legitimate offer of truly unlimited disk space, unlimited bandwidth and unlimited email, why wouldn’t Amazon, Facebook and Google be rushing to move their websites to this host for just $3.99 a month? They spend millions of dollars a month on their servers and I’m sure they’d love to save all that money.
Obviously, it’s not a legit offer and they have all kinds of rules and restrictions about how you can use the space that make it impossible to use too much of it. Plus, these accounts are on shared servers, and just like any computer or server, they have space limits dictated by the size of the hard drives that can be put in them.
Not to mention that these accounts are aimed at small businesses, which if anything, have more trouble trying to come up with content to put on their websites than they do having to worry about running out of space! The typical small business website will use less than 50 megabytes in space – and they’ll have trouble filling that up!
So, the offer of unlimited disk space is nothing more than something that sounds amazing but in reality is totally useless to the vast majority of small business website owners.
Same goes for unlimited bandwidth. Small businesses would love it if they had so much traffic that they needed more bandwidth, but instead, they struggle mightily to bring in a few hits a day. So for a host to offer unlimited disk space and bandwidth to a market they know will never come anywhere close to using even a small fraction of that – they know they’ll never incur any cost or liability by offering it. Because most of their clients will simply never be able to use it.
And that’s why we’ve never offered unlimited everything. We like to keep everything straightforward and honest.
Here's Where the Tricks Begin
Now that they’ve gotten your attention with a super low price that promises the moon, they still need to make more than $4 bucks a month if they’re going to earn enough to pay for all their equipment, connections and support personnel.
The First Trick: The first trick is that while the account is advertised at $3.99 a month, you can’t get that price unless you agree to pay for two years worth or 24 months – up front! So you’re not going to walk out of there today with just a $3.99 charge to your card. No! To get that price, you’re going to spend at least $95.76 today. And you’re going to hope with your life that you’ve made a good choice and that their service is going to be solid for the next two years.
This is what you see when you hover your mouse over the Order Now button.
So, let’s go with the one year plan at $4.99 per month and see what happens as we go through the ordering process. First of all, at $4.99 for the annual contract, that means we’re going to spend at least $59.88 today. Or, let’s just call it $60.
One reason they do this is to make it difficult for people to try out several hosts at a time to see which one really works best for them. If you really could checkout for under $4, you might be willing to try out five or ten hosts, but not if you’re going to be spending $60 to $100 for each one and getting tied into a year+ long contract.
At LazyLizard we always have and still do charge literally by the month. We’ve never done annual contracts and we don’t like them. If you sign up for our $7.99 a month account, that’s exactly what you’ll pay and you’re only tied in for one month. If you don’t like it, just let us know anytime before the next month starts and we’ll cancel it when the time you’ve paid for us up and you can move on. (Yes, we’re that confident most people will be happy enough to stay).
Now, let’s take a look at some of the things that don’t come standard with these accounts. And by the way, all these things come standard with all LazyLizard accounts, even the cheapest one.
So, to start off with, we’re at $59.88 and that’s just for the basic account for 12 months. Next, we’re given some optional add-ons that we might be a good idea for us if we’re halfway serious about running a safe and secure website.
Keep in mind that with LazyLizard, we consider all of these “options” essential and they come included on everyone of our accounts for the price you see advertised.
Backup Manager: Wait, what! Backup Manager? For $2 a month extra! Are they kidding? Well, no they’re not. If you want the ability to perform backups (which you’ll have to do yourself), you have to pay $24 a year extra.
At LazyLizard, we backup all servers every night. So there is always a backup from the last two days plus a backup from the 15th of the prior month. And we don’t charge anything if you need us to restore a file or your entire site from one of these backups.
We do also recommend that our clients make their own backups – because when it comes to backups – the more the better. But they can do it for free, using the cPanel Backup Service that comes free on all of our accounts.
And one other thing to make a note of here. Notice how they say this will allow their customers to perform backups to off-server storage? That means they don’t provide any place for their customers to store their backups to which means customers will have to pay an additional $5 – $10 a month to an off-server storage facility to keep their backups there.
We backup all our servers to off-site storage every night. So your site and the sites of all our clients are always backed up on-site as well as off-site. And not only that, but we send the backups to TWO OFF-SITE FACILITIES – not just one. So, we have backups in three separate physical locations.
We still always recommend to our clients that they keep a backup or two as well. Optimally, they would backup to their own computer and to an off-site storage service as well. That would make for five separate copies of every site and would provide plenty of redundancy in case anything goes wrong.
We know most of our clients don’t do this however, so we provide three separate copies, each in a separate physical facility and we consider this a duty of a responsible host.
Anyway, now that we’ve added the $24 a year in extra charges for the ability to download a copy of our site to our own computer or offsite storage facility, we’re up to $83.88 for the year. And wait until you see what comes next!
Dedicated IP: This is something most small clients could do well without. It’s not really a necessity. At least for LazyLizard clients it’s not.
We provide a static shared IP for each server. So all the sites on a single server can share the same IP address and if someone really needs a dedicated IP that’s all their own for some reason, we can provide that for them. However, once in a blue moon a client requests this.
In-motion says they offer dedicated IPs for clients who want to use SSL security certificates or to improve their search standings with Google. But at LazyLizard, we provide SSL certificates, free, for every single account – even the cheapest one. And none of our clients need a dedicated IP to benefit from the advantages of having a secure, encrypted SSL connection to their site.
The way many hosts are still selling this is really a throwback to an earlier time when you did have to have a dedicated IP to have an SSL certificate. And you had to pay big money for the SSL certificate – something over $100 per year. However, thanks to advances in technology, it’s just not necessary anymore.
But why should that stop these hosts from continuing to make a buck off of it, when they know, a lot of their new customers will think they need it. So why not make an extra buck off of something people think they need… even though you know they don’t. It’s really infuriating to see this.
That’s not to say that there aren’t a few people who might legitimately need a dedicated IP. But the only real reason someone would need that today is if they’re running some specific programs or software that require it. So, out of their list of five reasons people should get a dedicated IP, only one of the five is an actual legitimate reason.
And lastly, they offer an actual legitimate add on! A $99 design fee to create a single web page for new customers who just really need some extra help. I think this is a little oversold but all in all it’s something that can help a few people who just need to get something up and running and have no idea where to start.
It’s not a bad price and someone will have to spend a little time on it. But basically they’re going to spend 30 seconds to setup WordPress and then they’ll use a free template to add in some generic photos that relate in some way to the business. Then they’ll put in some basic text that the client will obviously have to write out. And they’ll link to your social networking pages, if you have any.
Out of all their add-ons, I think this is the only one that is reasonably priced and will provide a decent value for their customers.
So, let’s say, for the purposes of our test, that we’re going to take that service too. After agreeing to all these seemingly essential add-ons we’re now up to a grand total of $230 for the year.
$230 for the year which comes to $19.24 a month. So, you thought you were going to get away with $4 a month and by the time all is said and done you’re up to nearly 5 times that amount.
All I’m saying is, why don’t the giant web hosting companies stop playing with smoke and mirrors, be transparent, and just give people an honest price with a straightforward list of services they’ll receive.
And show a little integrity. Provide the things you know are truly essential like backups and SSL certificates, provide those things in your base price. Don’t use gimmicks and tricks charging extra for every little thing that you know should be included anyway. It’s like selling a car without a steering wheel and charging extra if the customer decides they’d like to be able to steer the thing!