I just returned from HostingCon 2007. I left a day early but do not expect I missed too much. Overall, the quality of the event management and the few sessions I attended was well below that of LT Pact. I gained more from some conversations with other attendees and audience questions. One thing that is apparent is that many shared hosting providers are simply blind to their customers needs.
About two weeks ago, I sent Isabel Wang a curt email about how shared hosting providers miss a lot of added income opportunities. She posted it to her blog and got a few responses that better illustrate my point perfectly. I heard similar comments at hostingcon.
The point I was trying to make was that shared hosting providers as we know them today need to change, they need to stop focusing on providing technical bits and learn to provide solutions.
In my email to Isabel, I mentioned linking into VistaPrint to offer the ability to order promotional materials. This would really help start-ups but existing businesses may use it as well. Many people do not know services like VistaPrint exist.
A common objection is that people don't see how this adds value to hosting services. You know what? You're right.
These tie-ins do not add value to hosting services, but they transform your shared hosting company into a solutions provider.
Consider this simple service add-on:
Your client is using a $10/month hosting account, so you earn $120.00/year plus maybe another $20 for the domain. So your current annual revenue per user (ARPU) is $140.00.
What if you had a small business center as part of your offering that provided useful services like printing, promo items or other items.
VistaPrint Order (16% revenue share or more):
$25.00 Business Cards
$50.00 Brochure
$50.00 Letterhead
$50.00 Envelopes
$175.00 Total
Your take: $28.00
CafePress
$50 Branded Work Shirts
$50 Branded Coffee Cups
$100 Total
Your take: $15.00
So with these two deals you could net another $43/year in revenue or a 30% increase in ARPU.
These are just simple examples of the revenue potential being missed because shared hosting companies often do not know what their clients need.
Now here's the real danger. A company that gets this right will make enough off of business solutions that they can give away the hosting. Google gives away a Analytics, which used to cost $800/server when it was Urchin. Google, Yahoo and Microsoft can give away small business hosting accounts if they earn enough from add-on services.
