How do hosting companies make money? (Eg. Bluehost)

6 replies
Hey guys, I've always wondered this, they offer an insane amount compared to their host pricing and was wondering how hosting companies actually make money?

Eg. Bluehost...
Affiliate: $65 per sale

Cost to buy:
12 month $4.95 ($59.4)
24 month $3.95 ($94.80)
36 month $3.95 ($142.20)

or directly:
12 month $6.95
24 month $5.95
36 month $4.95

Are they banking on the fact if you join for a year, you'll join for another year? As you can see if someone signs up for a 1 year plan doesn't that mean they lost $5 ea sale?

Thanks.
#bluehost #companies #hosting #make #money
  • Profile picture of the author dabesa
    Hi Jerry,
    they set their prices based on the fact that on average customers will stay for years, plus they know that CPU, storage and resources that are becoming cheaper and cheaper over time.

    If today their service cost them for example 2$/month, in 1.5 year will probably cost them 1$.

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  • Say I have a T3 corporate Internet connection with 1M C-class IPs and 100 servers. Say that Internet connection and 1M C-class IP bundle costs $10000/mo with a 1-year lock-in lease. Say I bought each server at $4000 x 100 = $400000. Say my startup capital would be $120K (1-year Internet connection) + $400K (servers and racks) + $120K (1-year office lease plus other office equipment) + $480K (manpower overheads for 4 server and network engineers/specialists, 4 administrative personnel and 6 customer support representatives) + $60K (1-year marketing and advertising) = $1.18M for a 1-year operation. Now:

    Let's say one server can host up to 500 beginner/starter hosting plans (let's also say I only offer beginner/starter plans for now) . That's 500 beginner/starter hosting plans x 100 servers = 50000 beginner/starter hosting plans. Say I charge $5/month for each beginner/starter hosting plan, so that's $5 x 50000 beginner/starter hosting plans = $250000/month x 12 months = $3M gross income less $1.18M startup capital and 1-year operation costs = $1.82M less $500K 1-year server maintenance = $1.32M annual net profits before taxes (with $400K assets in the form of 100 servers and racks). I wouldn't mind using the $5K/month of my marketing and advertising budget to grow my affiliate base and get more hosting account buyers...
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  • Profile picture of the author williamk
    Banned
    They make money mostly with after sales and addons. Not to mention that your plans will need to get upgraded once you hit sizable traffic.
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  • Profile picture of the author manis11
    nice ..

    thats huge income....
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  • Profile picture of the author Thomas W
    there is so many upsales in the cpanel it's redickolous
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    Established webmaster since 1998. Bought my first domain name for $70 and had to pay $1000 a month for hosting. It was the good life

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  • Profile picture of the author Denise Harland
    What makes important here, hosting companies use quantity approach.
    For making it simple, let's take an example.

    Let say you have your own car to be rented. One, two, three, or more who will be your passengers, you will have to spend the same cost for gasoline, and other operational cost.

    See here ? So, the more passengers you have, the more profit you will gain, even you have to spend the same cost for every condition.
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