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LET is not a loss leader. The margins are thinner than some of the other competitors but most vendors make up for it by economy of scale. On an extreme you can see Boomer.Host. Their profit margins are estimated to be around a little more than a couple thousands dollars.
LET and LEB are two different systems. LEB is the blog site that features curated vendors and tries to drive readers and engagement through comments (and growth in conversations to LET). Therefore, a marketing/sales funnel for companies.
LET is the community engagement arm that has now started transitioning to a stronger revenue-generating site (previously just ads through BSA) by creating the Patron Providers group (with membership fees) which basically gives you access to advertise to the community using your own forum post/medium/method. Beyond the Patron Providers access for posting offers, there's (technically) nothing specific the LET staff does to try and boost your posting.
There are other avenues to advertise that are weaker and stronger. This is simply another medium.
You are well prepared to defend current ststus quo for the providers. I will not question the intentions behind this.
My opinion - marketing source (forum and blog) for providers should review price periodically. This is done by all niche players: whmcs, cpanel, directadmin etc. Initial backlash would settle soon enough after first sale event (black friday for example).
That happened after initial 200, that will happen after increase.
Discussion about scam deterioration effectiveness after increase is pointless, as it should prove in reality, not theory. I say it would be positive impact. But that's only my opinion.
I'm not saying keep it the status quo, because obviously this shit's broken. I'm not a provider. I've had my own scrabbles with bad vendors. I'm not saying others need to experience similar things but trying to have the community staff field all of the responsibilities are unrealistic.
What I'm saying is that this solution is not going to solve the problem you're trying to address. It's targeting the symptom, not the actual root of the problem.
I'm saying this as an individual who used to support/admin a competitor to LET and had to address similar problems. I've learned a lot based on that experience and lessons learned have translated well to other areas of my day-to-day work. But I don't think increasing fees will actually have the effect you're theoretically thinking it'll have.
Yes I've had direct experiences with what you're suggesting. My opinion is that you're mis-understanding on how it'll actually play out. But hey I'm just an old man complaining on an internet forum. Not my problem if this website fails or succeeds.
It is impossible to solve the problem. Scammers is a part of the system. But to make entry barier way more harder - money is a tool.
Take a look at recent, repeated failure of ihostart:
https://lowendtalk.com/discussion/191556/ihostart-again-2-of-3-storage-nodes-toast
Increased fee would prevent such entities entry into ecosystem of let/leb. Do we really need such clown level establishments here?
I'm familiar with ihostart and I've been advising people against using them ever since another vendor got hacked and @Calin emailed the hacker and asked them sell the WHMCS database to them in 2021: https://lowendtalk.com/discussion/comment/3354199/#Comment_3354199
(Edit: Also it took me bitching and twisting the the staff's arms to get him actually banned for doing that shit.
https://lowendtalk.com/discussion/comment/3371720/#Comment_3371720
https://lowendtalk.com/discussion/comment/3371748/#Comment_3371748
https://lowendtalk.com/discussion/comment/3371958/#Comment_3371958
https://lowendtalk.com/discussion/comment/3372000/#Comment_3372000
You also posted in these threads. Basically, I'm not saying I like Calin nor am I trying to defend shitty behavior. I'm saying that I want the same goal you do, but I don't think this proposed solution is actually going to solve it and we're going to be sitting here a year from now saying "well why is this still shitty?" but with way less vendors to actually work with.
End of Edit)
He only got temporarily banned and then came back. This is just another series of problems that vendor has had. However...
This is risk management. Yes $$$ is a medium you can control to try and mitigate vendor-related risks. But right now with the current experiment we've found that trying to bound $$$ has not reduced these problems yet or as effectively as originally argued for. Patron Providers tag has been inefficient in resolving their intended goals, but is a profitable revenue source for the website so it's probably going to stay. In addition, this fee has put up a (relatively) small but still a barrier against others. As a community member, wouldn't you rather focus on exploring different methods to mitigate this risk if one solution, the patron provider fees, was not as efficient? Wouldn't you want a solution that enables others to also join in on the market (aka, maximize the intended benefits of a free market-based economics) while also minimizing risks for the consumer?
@LeroyJ , I like you, just make some effort to understand us also, the price of the TAG has nothing to do with the protection from the scam, you as a customer are also part of the equation.
I can vouch for @SGraf and @risharde said regarding costs.
Most got scammed getting something at unrealistic price.
Giving services at ultra low prices is doable in limited quantity, it is called a sale/promotion. I as a provider can sell out a few VPS/DEDI at even sub acquisition cost to prove I am worthy, that my network is good and so on, it is also called advertising.
This cannot be done in number of hundreds that is a red flag. If the customer bought something that is unbelievable cheap and has unbelievable specs and was on high stock/inventory at the seller at that moment, well, what do you expect? Either scam or deadbool in a few mo, or extreme low quality.
There is no protection from being naïve – not to be disrespectful to anyone here, the solution to that is to be more informed as a customer of what happens around you, understand that if a product costs 35 USD, you might get a promo at 7 USD limited supply, but that 7USD is not the real price, so do not ask that to be the baseline at all providers.
I fully understand you as a provider - money out is money out
.
Besides scam, increased fee would drive away very low quality providers, or at least force them to some minimum standards (normal DC for example).
I sense that I'am repeating too much here. Let us setle this discussion and wait for results, which should come next year I believe. JB has enough matterial for thoughts.
But that's the thing. Forcing vendors to spend more money on a website fee isn't going to increase their spend on infrastructure or other services that increase the overall quality of the product. There are other markets beyond what's here at LET that they're going to compete in and with historic pricing here people already have an opinion on how much they're willing to pay for resources. That means the price is fixed. By increasing fees you're increasing the costs of service but they'll have a harder time increasing the price of the service (revenue), meaning they have to cut costs somewhere else to keep the equation working.
This is the basics of market-based economics and business. This is why I'm saying the proposed solution isn't going to have the intended effect you're thinking. You're targeting the wrong solution to mitigate a problem and it's actually going to have an adverse impact on the site. Sure a thousand isn't that big of a $$$, but it's still not nothing for someone. Either:
If you want what you suggested/proposed for higher minimum standards, this is where the assumed perfect free-market economics comes to play. Where the assumption here is that by market competition you'll have vendors who want to show they're better by increasing value but decreasing costs and being the more attractive offer. That means you need more vendors/players in the game. Increasing the vendor fees goes directly against this.
If you don't have money to start half-decent business - you probably need to rethink your venture. But of course there is a layer of customers which accepts basement hosts if cost is low enough.
Low end can be achieved with normal conditions. By allowing basement hosts to enter market we give them illusion that they are doing acceptable things by cutting corners to such extreme as using third hand hdds, wooden racks and residential connection. Where is the bottom?
The lowend market was built off of people who... lets say... aren't as well capitalized where every hundred dollars count. There are various vendors who have different strategies and historic vendors like ChicagoVPS, BoomerHost, or potentially RackNerds would offer resources at outrageous prices (because people love to idle here) and cram as many VPSes on a single node. Those who complain get moved to a less dense node. Rinse and repeat. It seems to work for their customers. While they are now a bit more established and a thousand probably isn't a big cost for them, you're basically shutting the door behind them. I'm not saying I support these vendors, I'm just saying it's a different flavor/strategy to service offering and you're basically trying to fuck these kinds of vendors over..
The bottom is what the market has defined as acceptable.
I'm going to level with you here. Most consumers come to LET because they're extremely price sensitive (a nice way of saying cheap as fuck). So people only look at the $ to RAM ratio (sometimes bandwidth, CPU, and/or Storage, but mostly RAM which is why it's often listed first or in the title of every offer) and then buy based on whoever offers them the best offer for their chosen geography. The incentive here then is for the vendor to try and reduce the $ to RAM value (while still covering their expenses) as much as possible to get the most market share (therefore profit through economy of scale). That means anything that isn't directly contributing to "5 dollars a month for 16GB RAM + 1TB SSD" is going to get squeezed/cheaped out on. Some made it work, others, not so much.
There are some who took it to an extreme, like IHostArt and his basement dc wooden rack "business internet" setup because that's all he knows to try and stay scrappy to appease customers. The dumb part is that there seems to be a market for this on LET (probably people from significantly economically limited markets or marginalized groups like those in Southeast Asia, Africa, or other regions around the world). People are buying this and since then he's grown his business. I don't approve of this but hey, I have more experience in this market space and know what level of risk I'm willing to accept and what level of risk IHostArt offers.
This is why I'm saying there needs to be an educational component to it. Your standards are different from my standards are different to Calin's customer's standards. Actual production for me means using AWS/GCP/Azure because I know they spent more time hardening their datacenters, keeping hardware up to date (no buying VMs on a 4+ year old hardware), and have strategically placed their datacenters in areas with consideration for natural disasters and target markets. Operating risk management rules dictate I don't want my services running out of a converted office building with a single backup generator on site and limited built-in redundancy. Remember Delimiter and their DC power room "explosion"? That sucked but that was their single point of failure. Others are willing to accept these risks or can't pay for AWS/GCP/Azure and just go with the "right level of service". Not saying AWS/GCP/Azure are the best of the best but the level of redundancy, intention, and stability they offer is leagues better than what's usually offered here. Also, I'm not saying the end user needs to know all of this but at least being aware of what the different risks associated to it are and why they're different matters for anyone's business. This is a relative metric different from person-to-person. Trying to establish an absolute "baseline threshold" on this isn't going to fly very well because... again... this is different from person-to-person. That's why people care about reputation so much here, because reputation basically means "yeah that person makes the right cuts" or "yeah that person's a fucking idiot". A new user isn't going to know people's/vendor's reputation but that's kinda true with any market/industry/sector.
I'm not saying 1000 dollars isn a lot of money because it really isn't. But, in my opinion, there are different (and more effective) ways to try and manage this problem. Transparency requirement on their supplier stack is definitely an avenue but for many it's part of releasing the "secret to their vendor sauce" and the incentives really aren't there. It has to be a higher level of education on the consumer's side.
And if you don't read this because "this is too long" then well. We're running in circles and probably not worth the time trying to spell this out for you. I'm sure many others feel this in the same way.
I agree. The loss leader thing really makes no sense, especially when we're talking about something you have to continually service/provide (aka costs you money) and isn't a one-off transaction with a bunch of high-margin upsells.
You're on low end talk. That $1k provider fee could easily be the capex required for 1-2 mid range servers housing 50-100 VMs each. It's a viable method of bootstrapping your business for a certain segment of the hosting market. Not everyone is going to show up with 500kW of T3+ cage space and 500+ chassis ready to go. Maybe I'm nostalgic for when I used to use LEB over a decade ago to find nice deals for little projects on an extremely limited budget. I don't see a problem with a 'basement' host as long as they're not obfuscating it.
Everything you said about @Calin has been well-documented here and is available for all to see if they lift 2 fingers to search or is referenced in nearly every sales thread by the community. I'd even go as far as to say most people buying from him now are relatively well-versed on what they're getting given that the thread about him losing 66% of his storage nodes was met with a resounding "meh". I don't see how a $1k provider tag fixes anything here.
Maybe the audience is changing here, but I don't see a way around the personal responsibility associated with doing your own due diligence.
I disagree on that also. I do believe my services do offer quite a bit of quality and value. That said - I wouldnt see the point in spending the 1k in recurring fees to advertise here. While its not really "a lot",...there are other avenues that i am able to explore for the same amount of money, with better leads and more sustainable margins.
So instead of driving out the "low quality", you will potentially end up driving out the ones that have better avenues to explore. This may result in exactly the opposite effect of what you are intending...
Don't believe me? that is fine...
Looking at a few numbers/metrics from hosting providers that posted (past) and (still) post here - as i was offered the chance to acquire some of them..... i do feel confident that views on the topic are at least somewhat accurate...
A few arguments made in this thread like to suggest that services sold here should be considered "loss leaders". Maybe for someone starting out, but realistically nobody can sustain a business on "loss leaders" alone in the long term. I think we can all agree on this.
Regarding the "get the word out" comment and referrals from "lowend users" translating into their contacts paying the "website price instead of waiting for offers".... Many providers here will likely not see this (in meaningful amounts).
>
iHostART started as a project for cheap prices, because when I was a small child I didn't have the money for netflix or to host a simple minecraft server, the "i" from "i"HostART
comes from the romanian word "ieftin", which in English translates it's "cheap" , cheapHostART practically
That it's cause why we accepted Ignore DMCA and torrents , because lot of people don't have money for pay for lot of stream networks , netflix , HBO , disney+ and lot of other millions platforms
And about free speech and anonymity , I accept this because of some things that happened in my personal life
I'm really try to make cheap prices but in same time decent quality , just a example , in last months we investment over 1.5K euros just for lot of HDDs caddys and server rails,we hope that in the near future we will evolve even more with the quality when we can colocation the servers, for now we are still in the fundraising stage
Regards
Yup. You're boostrapping it to be as cheap as possible. You took cuts to keep it cheap that others wouldn't and the quality and reliability of your product suffers from it. You're then re-investing the "profits" from the current service back into the business.
1.5k euros really isn't a lot of money. But good on you for doing it. I'm just saying instead of paying you I'd rather pay someone else. To be perfectly frank (and a bit dickish). Because I wouldn't trust your hardware for anything.
Just wait until DIICOT's Brigada Crima Organizata comes to your door and brings joy and happiness along with some free speech.
There's a known case when they came to a home-like hoster from Brasov and took all the equipment, ripped cables, broke stuff, kept him a while in a cold meditation area full with free speech and anonymity. Well known case to us, old people in the industry. Maybe @host_c knows what I am talking about, even if he doesn't seem to be too old in the area (from whois at least).
Knowing how they work I am 70-80% positive you are already on their subscription list.
Don't increase it.
Why? Cause half of the providers here would dip into yearly negative if you made it 1000€/year
Also, more scams and drama this way. The fools will part with their money anyway. Might as well get a show out of it.
The loss leader argument is redundant - we’ve recently stopped pushing offers to LET, mainly due to it attracting spammers, clients demanding refunds and filing chargebacks 5 mins after ordering due to fraud checks, we’ve not seen any link between sales here and organic sales on our sure.
Not to say we won’t come back with some LET offers, but they definitely won’t be VMs - those in particular attract the type of client we’re not looking for.
We’ve actually seen higher sales in the past 3/4 months when we’ve stopped advertising here, to when we did beforehand 😂
Simply put, with the current price limits, it is VERY hard to put together a compelling offer, whilst trying to maintain a premium level of service, transit blend and location, there is a lot of cost and it simply doesn’t make sense for a lot of providers to sell a bunch of low margin services. One thing previous businesses has taught me is that you need to have good enough margins where you can withstand a tough few months, selling VMs at $1 a GB when you’re not razor thin margins simply does not make sense as there will always be some form of unplanned expense.
Let’s break these margins down for a small provider with a single cab, in London, because it’s where we’re most familiar. Prices aren’t exact but are based of what I’ve seen to be pretty common, very rough pricing but should give everyone an idea of these margins
Power (300 per KW) (4KW minimum usually)
Bandwidth (450 per TB for DDoS mitigation
Let’s assume this cabinet is filled with Ryzen 5 7600 machines, a dedicated server which is pretty power efficient, and cost effective, approx £750 per server. For a Full cabinet you’re looking at 2.2k minimum in OpEx (especially considering LET users like to use all their bandwidth, I’m assuming 20TB per server)
40 servers sold at the price cap of 98GBP, 3.9K revenue, let’s say 3.5K after you pay someone for some basic remote hands once a month and payment processing fees. This results in 1.2k ROI Per month, on a 30k minimum investment (assuming you can sell every server on day 1, and have no other start up costs of wages to pay
Congratulations, you’ll break even in 30 months if you’re lucky, at this point these servers will be old and worthless, and this assumes no major incidents happen that require you to spend money. Even IF you’re comfortable with these margins, you want to go on holiday for a weekend? You come back to 15 LET threads about how bad you are and how your support sucks, and the like.
Increasing the fee won’t do anything, the issue here is the price limits, when companies are selling at razor thin margins just to attract clients, this increases the risk of exit scams and deadpools significantly. Look at the margins, do you really think that pricing is sustainable long term? Especially when everyone here demands ultra premium support and quality for rock bottom prices, and when considering this is the MAXIMUM you can charge.
Unless the price caps are revisited, or you’re got 6 figures to invest and do this properly (in which case LET will not be your primary market), the business simply doesn't make sense to offer actual quality
sounds like LET is not good fit for your business model
We have a Romanian provider who moved his DC home and even took out big loan to invest in more servers to sell VPS.
Yup. I mean LET has a max price limitation and increasing the base fee is just... being a dick imho.
The lowend market focuses on being the cheapest and most value-driven server market. That's why we have price limitations, or else it'll be WHT with a E3 selling for 20 dollars to 135 dollars a month with no specific taxonomy or identification as to why there's such a wide range.
It's like people forget the lowend market is supposed to be a bit ratchet, trying to target one of the more extreme market segments and seeing what resources you can squeeze out of it. Remember the Lowend roots started with 32MB RAM VPSes and 12MB RAM VPSes and how to run Wordpress or even a Minecraft server on it.
Now that RAM's cheap enough, it's less focused on optimization and rather what's the best bang for the bucks.
Remember when 1GB RAM servers were 512MB RAM and 512MB swap lol.
Oh fuck. I totally blocked that part of my memory out.
I still remember the days of when URPad had 384 MB of RAM or something like that on an OpenVZ and limited the CPU to like 800 MHz.
in 2012 I signed up for a free VPS server trial. I used it for 7 days for runescape botting and forgot about it.
Another week later, the provider called me to a school and asked if the VPS was good and if I want to buy it lol. I answered with scared voice that I did not need it any longer with broken English back then. I never expected them to actually call me lol. (This was some USA provider and I am in Finland). The call alone costed more than a month of that VPS.
Then I used 00webhost for a free website, and it was later breached and some chinese dude stole my runescape gold with that login info which was the same for both sites. (Runescape showed last login user agent/country on the login screen). @HostingerNL I can't believe you run this thing nowdays.
I never used any trials after that.
I definitely believe that $200-400 is enough to keep the bad actors away while still being feasible enough for aspiring providers.
What is left now is for people to do their own due diligence on filtering the worse providers, doing background checks and reputation checks is important, the provider could be the cheapest out there but they have the crappiest service and or an actual summerhost scam that just deadpools 6 months after they opened their company. To maintain quality people must be information literate and not just braindead thinking.
Please note: I genuinely wish him all the best of luck and success.
That said, how do you think his operation will continue? If you look at the threads about his hosting ventures, then you see a lot of issues related to "cutting costs" such as failure of old/used hardware. When he want to grow, he will likely need to improve his connectivity (routers, network-circuits towards upstream providers, IP-Transit,..) and start picking up newer hardware. Doing so will reduce his margins (if existent) or drive up the price of the service.
You (and even he) may argue this is not the case, but that is the way it will go.
Right now this all seems to be built on "nothing will go wrong". It will be interesting when (at some point), the prediction @Andreix made comes true. Legal council, replacement hardware, re-targeting your marketing for a different market segment,... all of this is can result in quite a pain for the provider you mentioned.
Earlier in this thread he proudly wrote that he spent 1.5k on (presumably used) disks over the last months, like if it was a huge amount (...it isn't). So if 1.5k feels like a a big deal to him, then anyone can guess how slim the margins on that operation will be.
That statement is genuinely entertaining, considering this thread started as a discussion about reducing the number of "basement hosts", "scams",...
So you either want offers that bring value (quality, specifications,..) at a reasonable price-point with low percentages of "deadpools", "scams",... OR you want the lowest possible price (regardless of quality, or if the service exists a few months from now). - You cannot have both.
So what will a larger fee accomplish, that the current fee has not?
Nothing will reduce or be gone. Providers will adapt. As they adapted to initial blow of 200$. Once again I should reitterate: providers are not the victims here. They are stronger side, receiving direct monetary benefits.
Yes I know, My WHOIS might be young, I am not, and actually seen a few of this "police raid" first hand a few years back.
I had a chat with @Calin and explained that the "I ignore whatever shit DCMA is in the name of freedom" might bite he's ass one day, he understood the outcome of what that can be. Whatever he will do, is on him.
Romania might be a paradise to who thinks that ignoring DCMA is not a problem, facts say otherwise. Legal implications of hosting copyrighted material is dealt differently in EU versus USA. I will not debate this any further.
I will not repeat what others said before me in this thread, I share their point of view.
Increasing the fee will not help anyone, will not filter out the scammers, and actually might have a negative impact on the community.
As discussed in other treads here, there are much better ideas for vetting. If some of those will be put in action, the impact will be positive on this community.
If most think that a 1000$ Provider entry is a must, I as a provider want a 20$ entry tax for members also, so we can get rid of the 7$ scammer that asks for cashback after 24H of getting the service, because he's plans of doing shit did not play out.
Happy Holidays to all!
why not go with the insurance idea others mentioned
provider pays xyz$$ and it shows up in their profile, so buyers have an idea of how sustainable the offer is
it wouldn't be mandatory but if providers want they can pay it to get more rep / trust from buyers
in case of an exit scam / deadpool the buyers get some reimbursement
this would def be a lot of work admins in case someone exit scams tho
verifying and paying thousands of dollars
holding the money would be risky
refunding the amount if buyers wants to withdraw
==========
what about like a community verification where sellers need to be verified by community members?
this would also have its own problems, like community member being biased against some people or they way their stuff is marketed
and some providers who are selling pretty good services now (at-least for the price) would've failed it because of their past or current setups (basement hosts)
===========
another idea would be like the community notes in twitter
a small message describing some controversies or just shady stuff the provider is associated with (as long as it is relevant) added by the community members to the post, so that new buyers / members can view it and decide if the offer is worth the risk
this can be weaponized but with community moderation + admin moderation should be good
To hold someone else money you must be a bank or insurance company. There is a ton of problems doing this, simply not viable.
@neverain
in real life, BMW, Mercedes, Audi, Toyota and so on pays the insurance on your car? or the user?
Same on Housing, the developer pays the insurance or the owner?
On a jewel, phone, tv, boat, the seller pays the insurance ?
Wake up, this is not the MATRIX.... or is it?
EDIT:
Even better, on a high risk investment, does the bank make an insurance policy to the client?
I can go on all day.
true, insurance would be the wrong word for it.
what about "optional security deposit"