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VPS Reservation
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VPS Reservation

jcalebjcaleb Member
edited February 2013 in General

Many times I sign up for VPS promotion because its too good to be true, and from a reputable provider. Thinking I could use it when the right project comes. (E.g. 2GB RAM, 3GB Ram) but ended up idling consuming just 1% of allocated resource, and eventually cancelling after several months to cut down expenses.

What if a promotion for reservation is offered. E.g. customer pay $1 a month, but when he eventually needs the VPS, the provider will provide the service at the target price (e.g. $7 for 1GB RAM or whatever).

Not sure if this make sense. But will this be a viable business? Should be win-win?

Comments

  • If you pay a provider via PayPal $1 they will get around 40cent of it, so its hardly worth it to a provider.

  • AndreAndre Member
    edited February 2013

    The resources would have to be cut when reducing the price though, you can't let them have 2GB reserved @ $1/mo, and then increase the price when it starts to get used.

    Is this not quite the same with regular VPS resource scaling?
    Buy 2GB VPS @ $7/mo, downgrade to 128MB @ $2/mo, then later upgrade again?

    @jcaleb said: (E.g. 2GB RAM, 3GB Ram) but ended up idling consuming just 1% of allocated resource, and eventually cancelling after several months to cut down expenses.

    I have done this more than I'd like to admit, except I don't even cancel them (;

  • jarjar Patron Provider, Top Host, Veteran

    It would mostly depend on the business plan of the provider. There are various reasons that these plans are offered. Not the least of which is to generate income quickly. It also depends on their profit margins and what they are hoping to accomplish with the promo.

    For me, the promo is written into the business plan and it has a single purpose in mind. This is to get you on my server and let you see first hand how it works a month later. A reservation spot wouldn't accomplish that for me.

    It is possible though, if a few variables lined up right.

  • It wouldn't really work on a "mass scale", sure for one client you can arrange something with your provider, but let's say you have a node with 16 GB RAM (just for explanation purposes). I provide an offer with 2 GB of RAM and 8 clients "reserve" this.

    My income would be $8 per month, the whole server would be idling and instead of making money, I would lose money.

  • RobertClarkeRobertClarke Member, Host Rep

    Something about this wouldn't add up, having a customer pay to reserve resources that they could start using again at any time is bad, especially if a provider didn't have stock, or something like that.

    If you don't need a VPS, don't buy one, fi you do need a VPS, buy one, it might even save you more money than the promotion.

  • jarjar Patron Provider, Top Host, Veteran
    edited February 2013

    There's also the other part I forgot, the more devious yet surely valid reason.

    They know you're going to buy it and pay for it for a few months without using it, and that's exactly why they sold you that deal at that price. Sure 6GB RAM for $5 is unsustainable, but 6 fake GB for $5 because they know you've got absolutely no use for it and will end up canceling it later is basically free money.

    I continue to speak of this evil tactic because I think that if it isn't already a reality, it will be (extreme overselling, like 50:1, based on the lack of common uses for high allotments), and we should all be asking the right questions to make sure we aren't falling for it. Heck, when I did the 2GB promo I actually undersold RAM on the whole node.

  • @Jono20201 said: If you pay a provider via PayPal $1 they will get around 40cent of it, so its hardly worth it to a provider.

    ...what paypal are you using?

    @jcaleb said: But will this be a viable business? Should be win-win?

    Would you expect to receive a refund for the 'reservation' if they ended up not using the resources?

  • Something like this might work as a pool. Something to this effect:

    • You pay a $1 /mo. fee to lock in a selected special offer.
    • You may at any time request to use the plan you have locked in at its monthly rate (IE: $5.99 /mo)
    • The provider has up to 7 days to allocate the space dependent on demand. (Example: Most of the time the provider would provide the space same day, but if for whatever reason there's a sudden influx of people requesting space the provider has the ability to setup another machine, etc...)

    I could see my company doing something like this in the future. Obviously it'd really depend on if people kept paying the lock in fees. If they signup for the offer, but drop the lock after like 30 days it's a waist of time. If they signup then activate 30 days later, that'd be fine... IDK maybe set a prepay for quarterly lock ins? ($3 /quarter)...

  • Would be a case by case deal.

  • I do like BlueVM's model. Might need some tweaks though.

  • The only issue I see with that system is we will never be able to buy anything from the popular providers like BuyVM, since in that case someone will just buy all the stock and "reserve" them and try to re-sell them.

    I think the "reservation" system is only fair with the following conditions:

    1. If you reserve, you can never resell (so that people won't "activate" service before reselling them).

    2. Resources may not be there when the users want to activate the service (so that providers could still fill the node as usual) however those who reserve will be the first one to give a spot if someone cancels/new node opens up.

    What do you guys think?

  • @zhuanyi number 2 is pretty much covered on bluevm's layout.

  • Don't forget "No refunds on lock fee" or else it makes no sense ofc :)

  • Yep nstorm that is correct.

  • @zhuanyi - Actually my model covers both. Since the space isn't actually reserved for you, just the offer (IE the price/specs) the provider could easily limit how many can be reserved. If your running a special where you are loosing money your probably not going to be in business for much longer.

  • raindog308raindog308 Administrator, Veteran

    @Damian said: ...what paypal are you using?

    Well 40 cents isn't the right math but pretty close - Paypal is 2.9% + 30 cents. So for $1, Paypal takes 33 cents.

    https://www.paypal.com/us/webapps/mpp/merchant-fees

  • 2.9% my ass :) There is also "cross-border fee" and what not.
    Still for $1 the difference is not that big.

  • We'd pay $0.10 on a $1.00 payment. Maybe you guys should look into micro payments...

  • @BlueVM said: @zhuanyi - Actually my model covers both. Since the space isn't actually reserved for you, just the offer (IE the price/specs) the provider could easily limit how many can be reserved. If your running a special where you are loosing money your probably not going to be in business for much longer.

    Agreed, basically it is more like "resource guarantee fee" of some sorts :) but I still want the no-resell clause since that would discourage people from taking all the stocks in offers and not actually using them.

  • @raindog308 check their micropayments rate. It's only 5c + 5%.

  • @raindog308 said: Well 40 cents isn't the right math but pretty close - Paypal is 2.9% + 30 cents. So for $1, Paypal takes 33 cents.

    This:

    @BlueVM said: We'd pay $0.10 on a $1.00 payment. Maybe you guys should look into micro payments...

    The pivot for standard versus micro is $12, so if most of your sales are under $12, it doesn't make sense to use the standard gateway.

  • So for a year to keep you able to have that plan I would make $3.96 after paypal fees.

  • jcalebjcaleb Member
    edited February 2013

    @BlueVM said: Something like this might work as a pool. Something to this effect:
    You pay a $1 /mo. fee to lock in a selected special offer.

    You may at any time request to use the plan you have locked in at its monthly rate (IE: $5.99 /mo)
    The provider has up to 7 days to allocate the space dependent on demand. (Example: Most of the time the provider would provide the space same day, but if for whatever reason there's a sudden influx of people requesting space the provider has the ability to setup another machine, etc...)
    I could see my company doing something like this in the future. Obviously it'd really depend on if people kept paying the lock in fees. If they signup for the offer, but drop the lock after like 30 days it's a waist of time. If they signup then activate 30 days later, that'd be fine... IDK maybe set a prepay for quarterly lock ins? ($3 /quarter)...

    This is exactly what I am thinking. I mean the client is paying and you don't have to reserve rightaway. It's like overselling but 0% resource allocated to the client and they still get charged. When client avails, then provider can procure hardware much later when necessary.

    But it seems only the bigger providers can provide. E.g. Blue or CVPS

  • We'd be happy to do this :)

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