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WEB DESIGN -- HOSTING RESIDUALS?

by Jon Martin
7 replies
Hey Guys,

I'm thinking about charging $19/month for hosting. This way, I can build up my client base and eventually generate a solid income from hosting residuals alone.

Anybody else do this? How much do you charge?
How many clients do you have paying for hosting?
How long do they typically remain a customer?

Thanks!
#design #hosting #residuals #web
  • Profile picture of the author iAmNameLess
    $50/mo is what I charge... used to do it yearly but $50/mo every month allows more trust to be built instead of once a year, so they are already more primed for an upsell.

    If it is a company that has more of a focus offline than online, then they will remain a customer much longer, years and years. If they have a huge focus online, the average lifespan is probably about a year. The reason is, if you aren't the one doing ALL online services for them, so many people like to play the blame game if results don't occur. The easiest thing to blame is the website.
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    • Profile picture of the author Jon Martin
      Originally Posted by iAmNameLess View Post

      $50/mo is what I charge... used to do it yearly but $50/mo every month allows more trust to be built instead of once a year, so they are already more primed for an upsell.

      If it is a company that has more of a focus offline than online, then they will remain a customer much longer, years and years. If they have a huge focus online, the average lifespan is probably about a year. The reason is, if you aren't the one doing ALL online services for them, so many people like to play the blame game if results don't occur. The easiest thing to blame is the website.
      Thanks for the help man!

      Does anybody question the $50 monthly cost? What do you tell them? I'd love to charge that premium of a rate -- i'm not sure how to make it fly.

      Appreciate the feedback.
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      • Profile picture of the author iAmNameLess
        Originally Posted by Jon Martin View Post

        Thanks for the help man!

        Does anybody question the $50 monthly cost? What do you tell them? I'd love to charge that premium of a rate -- i'm not sure how to make it fly.

        Appreciate the feedback.
        So the key is to target people that can afford your services of course, and the people that have more money than time. There are people that spend more time in training people how to make updates themselves, and lose out on recurring money as well as time and customers because people don't want the hassle. Then if they mess something up, they need to find someone to fix it and that person may not be you.

        Every now and then people are hesitant because they don't like monthly fees, so then I will charge a yearly fee, and knock some off a bit. I always tell people that they can also host it themselves but when there's a problem with the server, php upgrades and compatibility issues, they're responsible for fixing it which could end up costing more than they paid for the entire website.

        Unlimited updates (not design changes) security upgrades, backups, search engine monitoring service (more about making sure there are no indexing issues), etc.
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        • Profile picture of the author savidge4
          Originally Posted by iAmNameLess View Post

          So the key is to target people that can afford your services of course, and the people that have more money than time. There are people that spend more time in training people how to make updates themselves, and lose out on recurring money as well as time and customers because people don't want the hassle. Then if they mess something up, they need to find someone to fix it and that person may not be you.
          This would be where I am at... I don't collect reoccurring funds. Minor changes I will do. depending on the time between go live and when the change is needed I will generally charge $50 to make a change. ( new site within a 90 day period, I will make changes for free )

          I do have clients that want me to update the site for them.. calendars and the like. don't get me wrong I do, do that. but not on a flat monthly rate. minimum is $50.00 or its $100.00 an hour. Why should I make any less updating a site than I do making one?

          I think its volume that comes into play. do you want to get choked with existing clients.. or keep pulling new ones. You have to really look at the money that is being made by providing a service contract of sorts.

          Just farm the work out people say... well lets lay that out real fast. 24 hour support. that's 168 hours a week. say you are paying your help $10.00 an hour. oh geeze that's $1680.00 a week. obviously that's not going to work.. so you bring someone in 40 hours a week, and send the remaining 128 hours a week off to a message machine. you are now only in $400 a week. average $1600 a month.. oh wait we live I the USA and now you need to pay taxes insurance etc. your in to about $3000 a month for that 40 hour helper...

          100 sites even at $50.00 a month.. you are left with $2000.00. wow 40% profit on that investment.. I would say it is a loss.

          Bring in that same person... get them servicing and building sites that bill at $100.00 and hour. they just made 4000.00 gross for the week. $16,000 gross for the month. you let him telecommute and pay him as a subcontractor. of the $16,000 the programmers share is $3200. you just NETTED $12,800. That's a 640% profit gain over the model above. so does monthly service pay?

          The monthly service model is dated and simply not financially efficient.
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          • Profile picture of the author iAmNameLess
            Originally Posted by savidge4 View Post

            This would be where I am at... I don't collect reoccurring funds. Minor changes I will do. depending on the time between go live and when the change is needed I will generally charge $50 to make a change. ( new site within a 90 day period, I will make changes for free )

            I do have clients that want me to update the site for them.. calendars and the like. don't get me wrong I do, do that. but not on a flat monthly rate. minimum is $50.00 or its $100.00 an hour. Why should I make any less updating a site than I do making one?

            I think its volume that comes into play. do you want to get choked with existing clients.. or keep pulling new ones. You have to really look at the money that is being made by providing a service contract of sorts.

            Just farm the work out people say... well lets lay that out real fast. 24 hour support. that's 168 hours a week. say you are paying your help $10.00 an hour. oh geeze that's $1680.00 a week. obviously that's not going to work.. so you bring someone in 40 hours a week, and send the remaining 128 hours a week off to a message machine. you are now only in $400 a week. average $1600 a month.. oh wait we live I the USA and now you need to pay taxes insurance etc. your in to about $3000 a month for that 40 hour helper...

            100 sites even at $50.00 a month.. you are left with $2000.00. wow 40% profit on that investment.. I would say it is a loss.

            Bring in that same person... get them servicing and building sites that bill at $100.00 and hour. they just made 4000.00 gross for the week. $16,000 gross for the month. you let him telecommute and pay him as a subcontractor. of the $16,000 the programmers share is $3200. you just NETTED $12,800. That's a 640% profit gain over the model above. so does monthly service pay?

            The monthly service model is dated and simply not financially efficient.
            Good insights but I never had that problem. Obviously it isn't as passive as people think but for every 100 customers you have you will maybe have 5 textual changes per month. For me... 1 business may end up requesting some sort of content change or whatever once or twice a year which will take 1 hour at max.... 1 year = $600 for 1 hour of work. I've had customers for 3 or 4 years to never request any change but happily pay the monthly service fee.

            When you charge more for the initial project, like $1,500-$2,000 low end then $50/mo isn't something that they feel they need to milk it for all it is worth. See, the key is to work with business owners that are busy... if they are idle, you're going to have headaches, but busy business owners don't have time to nitpick at changes.

            An acquisition I was a part of before, had very low cost design and their ticket system was a disaster, probably 20-30 tickets a day with about 800 customers. I can tell you that if you were charging appropriately up front, you won't have those issues.

            The highest ticket and change requests you should ever have is 10% on a monthly basis. If you have more than that then something else is wrong. The solution to being overwhelmed with hosting is rather simple. Have a ticket/support system... you can even find a very talented outsourcer for $2-6/hr and have them work 4 hours a day 5 days a week. On average, the average change request should take less than 10 minutes.
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  • Profile picture of the author Jon Martin
    What do you guys think? Feedback would be appreciated:



    I'm thinking maybe I'll bump the monthly up to $29.
    If I can get 100 clients fast (using super affordable base rate), let's see..

    $100 x 29 = $2900 / month FOR DOING NOTHING!

    I could build that up in a couple months tops. Just keep repeating -- 500 cheap website sales later and it's a PASSIVE income of $14,500. Not too shabby.
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    • Profile picture of the author savidge4
      I like the "$100 x 29 = $2900 / month FOR DOING NOTHING!" line that is too funny. "Free text updates / edits/ revisions" will bury you alive. I actually got out of this business model. The monthly service side was taking so much time, I didn't have time to bring in new clients. and 24/7 support..... WOW are you prepared for your server to glitch for all of 3 minutes and have 100 people calling you... THEY WILL!!!

      THERE IS NOTHING PASSIVE ABOUT YOUR OFFER

      I will tell you I charged $89.00 and that was to weed out the winers and that didn't even really work. $29.00 and you are looking at nothing but headaches!

      Why not go look at bigcommerce.com they are charging $200.00 a month. over 50,000 stores... you do the math! and your happy with $2900 <shakes head>

      Originally Posted by Jon Martin View Post

      What do you guys think? Feedback would be appreciated:



      I'm thinking maybe I'll bump the monthly up to $29.
      If I can get 100 clients fast (using super affordable base rate), let's see..

      $100 x 29 = $2900 / month FOR DOING NOTHING!

      I could build that up in a couple months tops. Just keep repeating -- 500 cheap website sales later and it's a PASSIVE income of $14,500. Not too shabby.
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      Success is an ACT not an idea
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