Why do the majority of hosts fail?

Clancoms

We started as a reseller after 1 year we purchased $30,000 worth of hardware got our own IP's and are just about to do our next purchase of hardware. We were profitable after 8 months in the business it is now 5 years later. it is not hard to be successful in this business just stick to what you know and don't stray. and don't drop your prices to the lowball prices like you find on this website it won't help you it will only hurt your business. Remember your operation costs don't drop every time you get a new customer the only increase so why would you keep dropping prices because all these resellers on LET sell their services for pennies when it cost dollars to actually run them.

Master_Bo

@Clancoms said:
... Remember your operation costs don't drop every time you get a new customer the only increase so why would you keep dropping prices because all these resellers on LET sell their services for pennies when it cost dollars to actually run them.

In fact, your products such as VPS-01 match low-end criteria, even though you do not aim at low-end users.

But as to the rest of your words - I can but agree.

MSPNick

@Clancoms said:
We started as a reseller after 1 year we purchased $30,000 worth of hardware got our own IP's and are just about to do our next purchase of hardware. We were profitable after 8 months in the business it is now 5 years later. it is not hard to be successful in this business just stick to what you know and don't stray. and don't drop your prices to the lowball prices like you find on this website it won't help you it will only hurt your business. Remember your operation costs don't drop every time you get a new customer the only increase so why would you keep dropping prices because all these resellers on LET sell their services for pennies when it cost dollars to actually run them.

I'd agree.

The more you stay with the low-end market the more unmotivated you get.

Good client generators. however not a good business model.

MrRapidHost

Might be all about not having the courage to continue and keep providing quality service.

latic

From what I can see here another reason for business' failing is posts like this which massively inflate the amount that has been invested into the business as a marketing ploy!

SplitIce

@lars said:
There are thousands of web hosts, with new names appearing every day. I've read somewhere that around 75% of these close within the first year.

The failure of small business is not really just related to hosting business. Its just seen more in hosting business due to the lower barrier of entry, and the influence of minors / young entrepreneurs (polite: summer hosts).

Check out the failure rates of small business, last I checked over 50% of businesses failed within 4 years. Multiply this by the pricing pressures (low end pricing), risks and 24-hour costs (i.e incident response, 24-hour support) you see why.

Clancoms

@latic said:
From what I can see here another reason for business' failing is posts like this which massively inflate the amount that has been invested into the business as a marketing ploy!

just wondering who you are referring to?

this is just half of our initial hardware purchase

http://puu.sh/h8RHg/e21ed18638.jpg

HostNun

Well, if not in hosting, in South Africa at least.