Is that Low Price Hosting Service Costing Too Much?
Posted by rackAID 10/12/2010
If you are like me, when you get ready to buy something you ask how much it costs. We throw the term cost around loosely. What we are really asking is how much something costs. As you buy more complex products or services, often the price you are paying does not reflect the true cost. The same is true with Linux hosting and server management services.
Price vs. Cost
Prices are easy to understand. If you buy a new car, the price is what you pay the dealer to drive it off the lot. Sure you may have to haggle with the car dealer (unless you buy via fax like I did), but you reach an agreed price, pay up, and the new car is yours. Unfortunately, the cost of that new car is far greater than the price you paid. Fuel, cleaning, repairs, insurance and upkeep all add to your cost. If you have a long commute, that cheap gas guzzler may turn out to be more costly than the higher priced hybrid.
Just like buying a car, if you buy cheap, poorly supported hosting services, you may find your provider burns more of your time than a higher priced, better supported alternative.
When you are pricing Linux server management hosting or support services, there can be many hidden costs. The price you pay may just be a small part of your overall cost. For example, what are your costs caused by?
- Slow response times during outages.
- Project delays due to deployment problems.
- Extra servers required due to poor optimization.
- Data loss due to lack of disaster recovery planning.
- Extra time required to sort out recurring service problems.
These issues are not reflected in the price tag. So while the price may be cheap, the cost may be significant.
About a year ago, we moved a client from a budget dedicated server provider to our managed hosting solution. The price tag for the management, backup and new server at SoftLayer was about three times the price of the previous provider. However, the costs were significantly less.
After moving the client to our services, he noticed an immediate bump in traffic. Since the site is a powered by advertising, every page view you can squeeze out is added revenue. With some additional tuning, traffic was up almost 50% within a week with revenue growth to match. User complaints subsided, further powering the growth of the site.
What was the issue? The prior provider had throttled the site to 100Mbit. They did not offer 1000Mbit networking. So, for a few hours each day, the site was being limited by the low price hosting solution. This was costing significantly in terms of revenue.
I never like to make financial decisions for people. So, at rackAID, I require that we focus on business and technical goals. Once we lay out these goals, we then recommend a solution to meet those needs. By being goal focused, you don’t get sucked in by low priced, special offers that may turn out to be very costly to your business.
What items do you consider as costs associated with dealing with a server management service or hosting provider? Have you ever calculated how much time you spend dealing with recurring service issues? I would like to know what strategies you use to set your web hosting budget.
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