May 12 2009
How To Sell Hosting In Such Competitive Market?
A business partner asked how to sell hosting to customers when there are other hosting providers who can offer super large hosting space at dirt cheap rate. For example, 100GB at RM180 only!
While I’m facing the same problems competing in such fragmented hosting industry, these are a few pointers we managed to come up with.
Firstly, don’t try to fight them with even larger space at even lower price. How about going to the other extreme, by selling small but enough hosting space at half or quarter of their prices? For example, selling only 100MB at just RM80? But the customers need to be educated that they actually won’t make use of so much space.
Secondly, expose the tricks (even deception) used by hosting providers. Nowadays anyone can sell any large amount of hosting space at cheap rates using the “overselling” kind of business model. This works because statistically an average customer will not use even 10% of the space promised to them. Some customers are “space-greedy”. They need to know the inconvenient truth in the hosting industry.
Thirdly, bundle hosting service with other services with prices you have more control on, such as web design. This way, customers may not know even if you charge them double the hosting prices.
Fourthly, but a very bad strategy – fight the competitors with even larger space at cheaper price! We know some customers will be lured into this but actually never use so much space anyway. Nevertheless, I’m against this as it is over-promising.
Last but not least, seek out blue ocean strategies that you no longer need to compete with other hosting providers in such a red ocean. But seek out new markets and sell to them some services which include hosting service.
Just as an example, how about an online service for couples getting married? Many couples get married every week. More and more couples start to want a wedding web site to commemorate such big event! In providing such service, you no longer compete with other hosting providers but customers will have unknowingly bought your hosting service anway. 
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Check out Aflexi or other CDN platforms/marketplaces to sell your unused bandwidth/disk spaces.
I guess the price war looks to be the demise of new hosting providers. But I’m sure there are other services or co-related products the hosting providers could think of doing. After all, they’re not only hosting specialists. Based on their expertise, I’m sure they could offer the market something different.
If you want to grow your business, you have to network with the right people. With BNI, it looks very possible to get good quality business referrals.
Ricky, you are very right… its hard to compete with companies offer unlimited spaces etc knowing very well that there is nothing like unlimited. We need to educate the customers that unlimited is just a gimmic to get customers and in real is a very bad strategy but somehow this strategy pays off for the hosting company.
i have better idea.
Just try to make resellers or business alliance for Hosting sales, and share profits with them. Through this you have an unpaid marketing team, and reach large volume of customers. IT Consultants are the best people , who can sell Hosting products very easily. I am always open for IT Consultant / Resellers.