Oct 14, 2011

Similar to the early days of several other industries, clients within the web hosting industry have been brainwashed into thinking that the lowest price solution is the best decision.  Users have been trained by hosting-provider marketing and promotions that “less is more.”  It’s simply not so.

There are no absolutes in life, so there are scenarios when the idea that the most inexpensive solution is the most ideal.  Startups are tight on cash and simple needs clients are included in these.  But in general, they’ll get exactly what they pay for.  Solid online presence and functionality is not a want for a 21st century business…it’s a need.  And a vital one at that.  Server down time means lost sales, revenue and clients.  Yet prospective clients hold on to the “less is more” mentality when shopping for new service like a fat kid does a candy bar.  They risk serious loss to save literally a few bucks a month.  Is that logical?

There are generally two types of clients within the hosting market: the first understands that the best value comes at a premium and views web services as an investment rather than a cost.  The best leveraged investments are those that both generate a positive yield as well as avoid loss.  The second type of client sticks with the “less is more” mentality and often experiences a loss due to lack of proper construct in their system due to constraints and sacrifices resulting from slashing cost.  These clients regularly revert to type one clients as they learn through unfortunate experience and loss that a logical investment always outweighs cost saving risk.

Financial terms that explain this comparison are capital expenditures (“CapEx”) which are expenditures that create a future benefit and operating expenditures (“OpEx”) are expenditures that support an ongoing product or service such as web hosting bill.

Clients should consider that the difference between the two can be in the mindset of how they are invested in, used and leveraged as well as the general understanding of the contrast.

Logical investment determination will vary from client to client, but almost always include a bit of a leap of faith in the form of proactive problem solving and chaos theory assumption.

- Mike Zobitz, Director of Sales

Comments

    Until businesses understand their conversion rates in terms of # of site visits required to make a simple sale, gain a new logo, create a solid reputation or achieve similar goals they will never understand the disservice that budget brands are creating within hosting market.

    Loss leader strategies, shady SEO tactics, fancy marketing slicks and the like have all but destroyed yesteryear’s due diligence checklist. If you really want to make money on the Internet then you need to do your homework and create things like business plans and budgets to maximize your spend both from a dollars in vs. out and, maybe more importantly, time perspective. The Internet should not be used as a get rich quick scheme.

    To summarize: garbage in = garbage out.

    Posted by jcoleis on October 18, 2011 Reply

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