What are you really getting?
Understanding the philosophy behind low cost offerings Today’s budget web Hosting companies are offering truly unbelievable deals, with shared hosting packages that include more disk space and monthly transfer than most dedicated servers, while often costing less than ten dollars per month. Since the web and its associated technologies are still evolving, many large marketing firms have been taking advantage of the general lack of understanding of what web hosting really is, and the costs associated with provisioning hosting services. Combine this with an ultra competitive marketplace where the number of hosted clients is the only real metric, and the result is the proliferation of unrealistic hosting plans offered below actual cost. Only a few years ago, hosting packages were reasonably balanced in respect to space offered, monthly transfer allowances, and price. There were different levels of hosting from budget to enterprise, and the price and allotted resources were generally in proportion. However, a strong shift in the budget end of the hosting industry forced many companies in that market to adopt a commodity business model and focus on volume, rather than client retention and quality service. This change quickly resulted in bottom of the barrel pricing, but it soon became obvious that price alone would not succeed as the only point of distinction between low cost providers. With multiple web hosts already offering services for just a few dollars per month, the associated plan specifications offered in these accounts exploded, with disk space allotments measured in gigabytes and monthly transfer often in terabytes. Many of these shared hosting plans offer more resources than can be found in some of the largest dedicated server offerings for large companies. But how can Host XYZ offer the resources of a dedicated managed server for less than the cost of an extra value meal at a fast food restaurant? When your hosting account is running fine, you might not be able to tell much difference between an oversold budget priced host and one that caters to the small to medium sized business. However, when a problem arises that cannot be easily answered from a manual of stock answers, this is where you’ll notice a difference (usually quite quickly). Your average budget host has tens of thousands of accounts, all paying a low price. To be able to operate, they often rely on outsourced technical support personnel. (This will be covered in more detail in Section Two.) Any questions or problems that are not simple in nature may require the availability of higher level support staff, who tend to be in short supply. The common scenario is one where your question will either be answered incorrectly, or will need to be “escalated” to the next level, a process that can take days or weeks to occur. If you require advice on your website, or need that personal touch for support in the beginning, you may not be able to find this level of support with a budget host. It is often “hit or miss” with getting the right tech that is truly interested in helping you with your issue. In the budget host company, time is a precious commodity, and too much time cannot be devoted to any one client or the entire model will fail. Once your level of frustration has been reached, and you wish to talk with a manager to get things solved, the typical budget host will insulate their “decision makers” from the customer, making it that much harder to get the support you need and deserve. Often you will see the CEO has a public blog and speaks about true customer service, but when you try to exercise your options to take advantage of this customer service, you may end up in an endless maze of levels of support, or just not get the answers you require. When there are 50,000 customers all paying a low monthly rate, individual attention is not something that is feasible. Each and every account is expendable as the low cost model cannot allow too much time to be spent with the individual customer, and requires that emphasis be placed on new signups as opposed to client retention.
The Ramifications of Outsourced Technical Support Budget hosts must keep their expenses low in order for their business model to remain viable. As with most businesses, a hosting company’s largest expense is payroll. The current trend is to outsource technical support to a company that specializes in this field. This usually results in email and phone support being routed to a call center in a foreign country where wages are much lower, allowing a significant savings for the host. Although for the host this seems like a great way to save money and offer support to their large client base, the trade-offs are significant, and apparent to the end user. Outsourced support will never be as familiar and understanding as a direct support employee. Communication with outsourced techs can often be hampered by a language barrier or a lack of understanding of how the hosting company operates. The outsourced technical support staff is not part of the company with which you are hosting and may also be providing support for other hosting companies as well. Additionally, outsourced technical support representatives are often paid based on the volume of calls/emails they can handle in a given time period, in which case they are better served getting the customer off the phone or sending a quick (insufficient) response, than actually resolving the issue at hand. All of the above translates to less effective support for the end user. Some budget hosts have seen the perils of outsourcing and have decided to keep support in-house. However, since this can be quite costly, the current strategy is to hire near minimum wage workers to be the front line support team. They are equipped with manuals and robotic training to handle the most basic and common types of problems. This creates a buffer for the host and gives the appearance of having great support response times and plentiful support technicians. In reality, this translates into support personnel who can only answer the common questions they have been trained to answer. If the question or problem goes beyond that, they are either not able to solve it, or offer solutions that are not correct. This leads into the next issue that occurs because of outsourcing or low-level, largely not knowledgeable technicians. All hosting companies have a few high level employees that really do know a lot about hosting. For the budget host trying to keep costs down, these employees need to be well insulated from the client base in order to perform all of their own job functions They generally wear a number of hats at all times, which keeps them very busy. When a low level tech escalates an issue up to the next level, it can take days or weeks to be addressed, as the next level of support is either too overworked to be efficient and quick, or your technical support request is given a lower priority to some of their other responsibilities. In the end, a high volume, low cost host will treat its customers as a number not a person, and there is never a solid business relationship. With outsourced support or low level technicians, there is a shortage of time and lack of continuity that is essential for personalized client interaction and full understanding of clients’ needs. This results in longer time frames to get more complex issues resolved, inadequate responses, and an overall more frustrating experience when interacting with the support department.
A Common Trait of Low Cost Hosting Services Next to employees, the cost of hardware and bandwidth is the second largest expense for most hosting companies. Combine this with low priced hosting accounts, and it requires putting as many clients on each server as possible to make ends meet. For example, if a server costs the hosting company $1000 per month to purchase, operate, and maintain, and their average hosting account is $5 per month, it takes 200 accounts just to break even. To generate a profit on this one server (as related to just hardware costs), they have to put more than 200 accounts on the server. Somewhere around 500-700 accounts would be needed to offset other expenses and make the server reasonably profitable for the company. This is a lot of accounts to put on any one server and the consequences are felt primarily by the customer. What is the harm in a lot of accounts on a server? Nothing, if each site is small and uses very little resources. However, today’s budget hosts also offer a lot of space and monthly transfers per account, meaning they attract higher usage sites that are popular and use a lot of resources. Even though your site may be small and efficient, if you share the server with 500 other accounts, many of which use lots of space and transfer a large amount of data, this can exhaust the server’s resources, resulting in your site being slower and less responsive. On the other side of the coin, if your site is one that is larger and resource intensive, but your account is on an overcrowded server, your website may be impacted with slow pages and slow scripts. If the hosting company is proactive and tries to keep things running smoothly for the majority of customers that are less demanding of the server, they may designate your site as too cpu intensive and ask that you move to their larger cost plan, or in extreme cases suspend or cancel your account. Your site may not truly be that large or intensive, but on an overcrowded server there is no room for growth and little flexibility in respect to traffic or resource spikes. These overcrowded servers lead to slower page loads, unavailable cpu cycles resulting in script and database errors, and slow email servers for both sending and receiving. Budget hosts are also more likely to terminate higher resource sites in order to keep their servers afloat, even though your site does not warrant such an action. The host may offer 2000 GB of monthly transfer, but the terms of service may be so restrictive that no ordinary website could even come close to using this level of resources. The host may also say your website is too cpu intensive and restrict your account well before your site approaches the specifications and allotments of your hosting plan.
Hardware and Network
The Importance of Quality Equipment and Providers For budget hosts, utilizing less costly hardware and cheaper bandwidth providers is a necessity to be able to offer the low prices for hosting. Unfortunately, this can cause some serious issues for their clients when components fail. Using less robust hard drives (IDE vs. SCSI, no RAID, etc…) can result in more hard drive failures over time. When a hard drive fails data can be lost, requiring restoring from backups, which can result in hours of downtime as well as the loss of recent emails, orders, and more. Some budget hosts may not be maintaining proper backups, so a hard drive failure could cause the loss of all data on the server, which could be disastrous for many websites. Other hardware failures can be more common for lower quality hardware such as those affecting switches, UPS units, power supplies, and RAM. In any case where inferior hardware is implemented, it will be more likely to fail over time resulting in downtime and loss of revenue for the client. Low cost hosts that work with lower quality or second tier bandwidth providers can be problematic as well. These cheaper bandwidth providers can often have slower routes, resulting in slower page loads. Low cost bandwidth providers may also be less responsive or capable if one of their fiber lines has a problem, making customers wait longer when there is a networking problem outside the control of the host.
New signups over client retention
New Client Volume and High Churn Rates The budget host model is extremely dependent on a constant stream of new signups. Without this, their higher level of churn (those customers not renewing) would result in an unsustainable business model. These type of hosts are always a few signups away from being in financial trouble, as their current client base is not sufficient to sustain the company on its own. Because of this inherent philosophy, these companies put a premium on new signups and tend to treat their existing customers as an afterthought as opposed to a priority. These hosts go to great lengths to solicit new signups with extensive advertising and the unrealistic hosting plans previously mentioned, but their customer support to existing website owners is often less than adequate. It is a company wide paradigm that reinforces this prevalent philosophy of valuing new signups over existing clients.
When it comes to budget hosts, the old overused saying “You get what you pay for” does tend to ring true more often than not. If your website is an important asset to your business and you cannot afford to have recurring issues, endless “back-and-forth” correspondence with technical support, and potential disasters that last for hours or days, choosing the right host as opposed to the lowest cost host will actually save your company money over the long run. Furthermore, you will always be best served by a web host that has a vested interest in your success and is engaged in a working business relationship with you. This will likely result in the website being more effective over time and having a stable place to grow into the future without having to “host hop” and start over each time. One must keep in mind that the true cost of the hosting is not solely the amount being paid on a monthly basis to the hosting company, but rather it must also take into account lost revenue and sales opportunities that could potentially result from many of the practices described in this whitepaper.
About Linux Hosts Ltd.
Since 2003, Linux Hosts Ltd. has been recognized within the hosting industry and by clients alike, as providing top of the line web hosting services and e-commerce solutions. Our experience over the years has taught us what is required to maintain this high level of service, which has solidified our reputation and performed a key role in our clients’ success. We would welcome you to contact us regarding your hosting and e-commerce needs as we believe you will be able to quickly identify the areas in which we can help your business succeed. We value the success of our clients and work personally with each one, which is another thing that you will not find in the budget hosting industry. The hosting provider is a publicly held company located in the UK. Founded in 2003, the company currently hosts over 40,000 web sites in more than 140 countries. The host provides semi dedicated, dedicated, shared and managed server hosting, e-commerce and database solutions, as well as domain registration and VPS services. More information is available at the website of Linux Hosts Ltd.