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Ridiculous Prices?
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Ridiculous Prices?

OneTwoOneTwo Member
edited February 2012 in General

I was thinking that $10-$15/year for a VPS is pretty ridiculous. What profit does the provider make? How much reliable and not oversold the servers will be? It just forces you to get more and more VPS that you will do nothing with. Just ridiculous.

Comments

  • Is whining all you do?

  • @Zetta why don't you take some time to write a decent comment?

  • BernardooBernardoo Member
    edited February 2012

    @OneTwo if providers manage to make it there are uses for this 15$/year VPS offers ( didn't see any 10$/year offer yet.

    You can look at BuyVM for example where almost everyone seems to be happy :)

    Its also a good marketing tool this 15$/year offers.

  • CVPS_ChrisCVPS_Chris Member, Patron Provider

    Pretty soon we will be offering the same deal, but wont run out of stock and possibly better specs. Ill let everyone know.

  • @CVPS_Chris contribute to the thread without advertising.

    for example tell us what's your plan to make profit.

  • @OneTwo You haven't answered my question.

  • @Zetta to answer it no. furthermore skmbls.

  • CVPS_ChrisCVPS_Chris Member, Patron Provider

    @OneTwo said: for example tell us what's your plan to make profit.

    When you own your own equipment and space, and are large enough to get the pricing you need on BW, etc. Its easy to make a profit.

  • ZettaZetta Member
    edited February 2012

    @OneTwo Alright then. Anyway I'm pretty sure all those companies have special pricing contracts with their datacenters that allow them to be able to make a profit at that price. And it's probably confidental so you won't get any actual prices on this thread.

  • @Bernardoo said: didn't see any 10$/year offer yet.

    I have. €5/year UptimeVPS, $10/year 123Systems. The second one is actually still alive.

    I think I've seen more.

  • @OneTwo said: I was thinking that $10-$15/year for a VPS is pretty ridiculous. What profit does the provider make? How much reliable and not oversold the servers will be?

    Small annual plans should never be a driving profit point for any company. For responsible providers, they are a way to utilize unused resources, while offering a good deal to clients without taking a loss.

  • @OneTwo said: for example tell us what's your plan to make profit.

    Overselling, overselling...

    Thanked by 1alex
  • prometeusprometeus Member, Host Rep

    I think that some math can be done owning all the equipment, ip address space and having good prices for colocation and bandwidth.
    :-)

  • CVPS_ChrisCVPS_Chris Member, Patron Provider

    The larger you are, the better the pricing with a reputable provider.

    You can go over to Continuum and be down every other day and have HE as your BW provider and hope to god either one of them doesn't go down and pay pennies haha

    Easy as that.

  • prometeusprometeus Member, Host Rep

    @aldryc is right, you should mix more profitable plans with some "deals" to optimize resource usage...

  • 30Gb /128Mb * $15 = 240 * $15 = $3600, = $300 a month. That appears to give the cash flow to get you going for the first few months after purchasing the hardware and data center costs. I guess if you've got solid hardware and administration and provisioning skills it is doable.

    If you are doing OpenVZ and not everyone maxes the 128Mb and their bandwith it is doable.

    Newbies and 9-5 ers need not apply.

  • I honestly think that these $/year packages are just there to either to help break even or to fill up space on a server with regular plans.

    My TinyKVM from RamHost is on the same exact node that my regular KVM is on. So I'm guessing RamHost was just filling it up to it's capacity without overselling.

    I'm just speculating, don't go thinking what I've said is fact... even I cannot afford to do bargain yearly plans.

  • @AsuraHosting said: I honestly think that these $/year packages are just there to either to help break even or to fill up space on a server with regular plans.

    It's not that cut and dry, I've offered yearly pricing at the cost of 10 months for the past 6 years on all the plans/packages I offer, from shared hosting and dedicated servers to VPS. I only offer the small VPS plans as there is demand for them, but only offer limited amounts, and a small number of these clients do upgrade to a larger plan as their needs grow.

    So yes, I think you are right on many of the new comers, and they may only be trying to raise cash, but I offer it just to offer the customer what they want, more choice.

  • DamianDamian Member
    edited February 2012

    Our promotional plan we were offering towards the end of 2011 was originally going to be 99¢. We needed to go with $1.25 per month because we're paying 37¢ per IP address, since we're not large enough to have our own IP block yet (although it's in-process with ARIN).

    It was enough profit off of $1.25 per month VPS's (even charging per-month and the resultant Paypal fees) to make it worthwhile in terms of money, however, what really happened is that we attracted a lot of the bad element, such as spammers and DDoSer's. And THAT issue is what made it not really worth it. We'd continue to offer plans at that price, but the ratio of good to bad was not enough to warrant the time and headache to continue doing so.

  • KuJoeKuJoe Member, Host Rep
    edited February 2012

    I ran some numbers a while back when I was trying to make the BuyVM business model work for us except using our 96MB plans instead of 128MB and here's what I had come up with at the time (a bit out dated because a lot has changed since then):

    A $15/year 96MB OpenVZ VPS would bringing in around $11 after IPs, processing fees, and with the hardware node being paid off that same year.

    We leave 2GB of RAM unsold on each hardware node so a 16GB node would fit about 150 clients. That would bring in $1650/year per node which isn't a lot, but if you sell out one node a month, those 12 nodes are bringing in $19800/year. We estimated that each server was costing us about $50 to run when we had 10 servers online so I'll use this estimate for 12 servers as an estimate (cost includes power/space/bandwidth/licensing). Total data center costs would be $7200/year for 12 servers so that leaves $12600/year (once the hardware is paid off). Unfortunately, that doesn't take into account the other operational costs involved but it should give you an idea what a $15/year, non-oversold OpenVZ VPS could do.

    This post does not reflect our business plan and was written as an informational post. This does not reflect our current prices, costs, hardware, or income in any way (as you'll notice we do not sell VPSs for $15/year nor do we sell out each month).

    Thanked by 2Soylent zjen
  • Slightly off-topic, but as someone that's been considering getting into the lowend virtualization market for a while, I considered doing a $15/year deal to attract customers. In the end, I decided that this would be a really bad move for me to start with, as I'd likely end up with more customers than I'd be able to realistically handle responsibly. I'd rather have 400 happy customers and a good reputation than 4000 customers and be hated.

  • KuJoeKuJoe Member, Host Rep

    @caffleck very good observation. We made that mistake of competing with other providers on price and were forced to purchase hardware faster than expected (10 servers in less than 2 weeks after we opened). We've constantly had to stop taking orders just to catch our breath. We were forced to grow faster than we could have ever imagined and it was a rollercoaster ride mixed with both good and bad experiences.

    Thanked by 1caffleck
  • @KuJoe said: both good and bad experiences.

    Neither good or bad, all learning experiences

  • KuJoeKuJoe Member, Host Rep
    edited February 2012

    @ miTgiB Actually there was one defining bad experience and that was when we dropped from a 3 person team to a 2 person team. Still leaves a sick feeling in my stomach when I think about it.

  • I don't think a company is going to tell you how they do it. It is possible but profit is very minimal.

    $6 a year just goes towards IP costs. If you colocate and own your own hardware it is definitively possible.

  • I read somewhere on WHT where Franscisco said the $15 / year deal from buyvm only costs buyvm $5,-
    So I guess it's good business.

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