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Hosting Price Changes. What do you think of the practice?
randvegeta
Member, Host Rep
In hosting today, it seems to be that the client expect to be able to cancel the server whenever they want, and in the event the list price drops, the customer would expect their rental to be discounted in line with the new pricing. As a customer of other providers, I value this the flexibility to cancel when I want, and of course if the server is made cheaper for someone else, then of course I would expect to get the same low price.
But how would you feel, as a customer, about a price change. Perhaps the host can commit to the customer that there will be a notice period of 30 days before the price change takes effect. Which is more than one can say about 99% about customer cancellations who in my experience seem to cancel about 7+ days after the supposed renewal date.
This practice sounds kind of 'bad' but also more than fair given the flexibility given to the client.
What's the consensus on this?
Comments
If you trying to get attention by posting crapware - go to WHT, they live for shill
Crapware?
As a customer I would be happy if my provider sends me an email that I am entitled to have discounts (price reduction) on my current active service, considering I'm an active client for +1 year.
I would not change the provider even if I get a lower deal elsewhere. Oh but if the provider is shitty, lots of downtime, rude support, etc. then even if the service is offered for free, I would switch to other provider!
Huh?
I have been with a company, using a dedicated server. They have reduced the price of same configuration server but I am still paying the old price.
I must say that new price should be reflected for old customers as well, but it depends on the provider that how they operate.
What about a price increase?
Sure. Raise your prices with at least 1 months notice to give me a chance to migrate if I can't afford to stay with you and it's fine.
Some idiots seem to think that VPS providers can't increase costs whilst ignoring the fact that just about every other service they use does the same thing.
I had to increase costs on LES recently by a small amount due to increased costs, cancellations I can attribute to this directly are near 0, which is not bad out of 2000+
Granted it was only 0.50 cents p year increase
Sig spam requires, like, a signature, without it is fairly pointless.
Next.
If you are on a month to month term with no further contract terms that's fine, i mean what else should one expect ultimately?
You get the benefit of monthly cancellation, but you also get the downside - price increase on next renewal. Own fault. 30 days is already grateful of the provider in the end.
Other side i expect unless the terms tell me differently that i can cancel a month to month contract/term until the renewal day. If not otherwise indicated that is not really my problem.
No, why? If they require you to cancel and reorder to get the new price that is also fine, this is again just a terms thing. Just that someone else gets the same cheaper is no reason you should also.
But it's just better - from the perspective of managing customers' expectations and mood - to just never raise prices.
Look at panix.com: $100/yr for shell service, and they have never increased that since I first signed up 15-16 years ago. That's a provider that truly never raises its prices and treats its customers right.
I have no response to this nonsense.
Panix.com has been around since 1989 - far longer than any shithost that advertises here and even older than some users here - and they are still going strong!
Clearly they are still selling lots of shells because, it's not necessarily the best price or best technology, it's the best company. They've covered their increased costs by just selling more shells.
See that expectation I've never liked. It's because some people pay full price that providers are able to offer promotions sometimes, and those promotions are designed to attract new customers, not just lower their income at random.
Yeah, sure. Definitely.
I can't quite determine whether you're serious ...
... but $10/m ($100/y prepaid) is a lot for a shell account in 2017. Perhaps I'm naive, but I tend to doubt that Panix attracts a bunch of new shell account customers every month.
You're right that Panix has managed to survive until now. But they offer other services as well (email, internet access, dialup), so it's not only the shell accounts. I suspect that they have a number of legacy customers who continue to pay the not-so-low prices (are you one of them?).
Having servers with them - Their website price is not what they charge in reality. VPS w/ BGP is very cheap.
Panix looks competent/serious. I just tend to doubt that people go to them for the not-so-cheap shell accounts.
This^ When asked to reduce prices to match a special offer, I simply invite customers to take the special offer and cancel the current service, which I have no issue with.
Back in 2005, when it was really early days for our company, we had a rack in Pacific Internet's Data Center in Wan Chai HK. It was a truley amazing deal at that time, all things considered. If memory serves me correctly, a full rack, including power and 2x 100Mbit connection, we paid just HK$4,200 /month, which is about US$550 /month.
There was no cap on the BW with regards to international connectivity, and connection quality was more than acceptable given the price we paid. It is worth noting that at the time we signed up with them, the DC was near empty and over around a 2 year period, we watched as the DC filled up. When the DC appeared completely full, the prices started to sky rocket and the 'included' bandwidth was also having some performance issues.
Prices rose incredibly quickly in HK, and it is fairly difficult to find a rack in HK for less than $8,000 (US$1,000) and that would basically be without bandwidth. And bandwidth prices were insane back in 2007/2008 when 1Mbit dedicated bandwidth from the DC would cost around US$100 /mbit /month.
The incredible price rise forced us out of the DC at the end of our contract.
So it seemed like low prices were offered to new clients until the DC was full in order to cover as much of the operating cost as quickly as possible, even if technically running at a loss. Once full, the started replacing the old clients with new higher paying ones.
As far as business practices go. Fair enough? Or dodgy and exploitative?
@randvegeta Isn't it normal business? If a plane is empty they pull out cheap rates if it becomes full the rates go up. To avoid this only long term contracts can cover this a bit. Same for hotels etc. So yes that is business.
It's not exactly the same thing for Hotels and Flights since they will have to fly those planes any way, and room nights cannot be stocked up.
But still. You think such practices are acceptable? Because I'm seriously considering selling 90% of our available stock (servers, bandwidth and what have you) on the cheap only to raise the price later as available stock starts to decline.
Well a data center can also not expand on the spot like a hotel. So for me this is something similar. For sure not the same. And yes if you Stock is getting full it's ok to increase the pricing. Sure you have to honor the actually contracts but when they end why not increase the price? Doesn't sound wrong for me.
It's more like a bait and switch. Using your airline analogy, imagine if you already have a plane ticket that you purchased for $500. Then after you're on the plane and it's full, they ask you to pay $1000 or leave because a new customer is willing to pay more.
Forcing clients out due to a price rise may be "fair" since they can either stay or cancel, but when the client is already situated, it's an inconsiderate action. However, I also don't think clients should expect a discount to be automatically applied every time pricing changes. The client agreed upon a price with you and that should remain until cancellation. Of course a client can just cancel the service and order at your new pricing, but that natural process is fine: it doesn't force anyone to change anything. You shouldn't expect a provider to take a huge instant hit because they lower their pricing to attract more customers and stay competitive.
Standard. You should have signed for 10 years - Equinix HK did the same when they opened a few years ago and did only raise minimally yet, so this is bound to happen still.
They gave choice of 2, 5 and 10 year contracts at same monthly price - go figure what most probably signed up for... they will face the same as you back then ultimately.
@VirMach
Well an airline wouldn't do it because you have a contract. Same with a data center. But when the contract is over its over for both. So both parties can choose how it will go on. And yes if you are situated it's your own fault not to have long term contracts. When I make a lease on a commercial property I do it for 10 years at least. So why not for colo? If the provider don't want it go to the next one. I think the issue is that most providers that start have no clue from business. They think short term. Or don't want to take the risk on long contracts. But than it's the own failure.
Expecting prices to stay the same sounds cartoonish for me. Sooner or later, it will change.
I suppose when you're running a business it's different, but the company @randvegeta mentioned just raised the price as a shady tactic rather than for any specific reason. If their cost actually went up, it'd be morally fine. Obviously they can do it and you should anticipate it when you're running a business. I'm just talking about the decency of what they did; I don't like those kind of "marketing" tactics.
When you're talking about consumers, it's definitely important to at least try and not screw people over. They're not going to sign contracts with you but you should still try to deliver the best experience, even if you can raise the price.
It may have been a bit dodgy but there was a reason. The reason being they were selling rack space and bandwidth either at a loss, or at best, breaking even and had newer more profitable customers coming in to replace the older 'cheap skates' like my company would have seemed to be (for them).
The prices were low to attract business to sign up in the first place, presumably to cover costs. They fulfill their contractual obligations and then at the end, they ask for higher payment or to leave. Up to you to decide what to do.
I'm thinking more "adaptive." What you think you can sustain on Day 1 is often not what you realize you can sustain on Day 365. In business you learn lessons over time, many of them not lessons you could have learned at the beginning simply because markets shift over time. You can't start out as someone who prices impossibly high and market yourself as "No way we'll ever need to increase prices, just look at how high these damn price tags are." That doesn't work. You compete, and sometimes the low levels you competed at are unsustainable years down the road. That's life and business to me.
But while you're adapting to your new reality, someone else is out there somewhere competing at the low end again. Meanwhile you've hopefully got some customers who aren't just interested in hopping from lowest bidder to lowest bidder, and maybe they stick with you through it because you've done them right the whole time and now they see that you have to do what you have to do.
Or maybe you have no clients like that and it runs you out of business. That's life and business too
I think that a customer always likes the practice of the price fixed for the life of the service. But the trade-off in this case (as others have remarked) is that the customer shouldn't expect to benefit from a lower price if the provider lowers prices (either permanently or as a promotion) to attract new customers.
At the same time, the practice of the price fixed for the life of the service is certainly not a practice that is generally adopted in other service-oriented market segments (e.g., gas, electricity, water, telephone line, banking), and if the practice is adopted that the price may change during the life of the service (e.g., doesn't Vultr adopt this practice?), then the customer does tend to expect that he/she will benefit from any permanent price decreases that the provider may decide on.
In sum, there seem to be two pricing models in practice, and LEB generally seems to prefer the first, but this is probably the less favored model elsewhere.