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Let's keep it Simple: DO is established and reputable. With Budget providers like these it's like
It either works out or is a letdown. Dealers choice xD
It's not uncommon to see offers like that to act as 'float' for these companies. When everyone and their dog were getting on the $15/year train years back many companies offered them as a way to try to make the following months bills and just keep things going. That's why most people refer to them as 'loss leaders' since long term they're likely a wash for the provider but it gives them that short term income they desperately need.
You can watch around these forums and see certain deals go up that are last minute, insane resources, etc, to just cover bills further.
Then again, you have those few providers that have a lot of saved revenue to invest into this idea (the standard recommendation is have a year worth of costs covered in hand + to cover your time) and they're able to support it.
Unfortunately what usually happens is upstream vendors are the ones that get a deep dicking in this since these providers pick up a bunch of rented equipment and sit X months in the rear all the time because they either can't afford it, or they could've but the owners have expensive lifestyles, girlfriends, addictions, etc.
I know at least a couple providers that are getting stuck pretty hard because of some of the more recent failures within the low end bracket. I kinda think it's why you're seeing more datacenters compete with their users, just as a way to cover their asses a bit better.
Francisco
cough that one budget provider that everybody loves doesn't offer $10/year VPS anymore due to their limited IPs cough cough
So my business plan of starting a VPS host might not cover my cocaine addiction?
Given some of the owners, the cocaine addiction is paid first, then the owners wage is page, and then the vendors get paid after the first disconnect and then employees are paid.
I wish I was kidding.
Francisco
@Francisco: Isn't that the plot of "The ChrisG Story"? ;-)
There's a missing 'sucker punch girlfriend in the mouth' step then >_>
Francisco
buy a kimsufi server and oversell it?
maybe soyoustart becuase they have raid1 and kimisufi raid 0
That's awful, for all involved.
you got it
Having owned gear gives a lot more luxury than having rented gear. We started with rented gear and it sucked. It gets expensive really fast.
We also didn't start from 0 since we got into the VPS market after our game servers were profitable. However, for a few months from one day we strictly did monthly payments for game server orders. I refused to take payments for months/year in advance without being 100% certain that we could keep our word on it.
A lot of the crazy deals coming from new providers overnight is because they want to make a quick buck and sadly go deadpool
Roilan
love this!
Oversell, oversell, oversell. You've gotta be quick on your feet, willing to do the work of 3-4 people, and you've gotta have a good mind for running servers.
Else, you're just playing house until the first thing fries and then you're closing up shop and fighting PayPal disputes.
Yep. That's how I built MXroute and I did the same with Catalyst. The key is, if I failed, I could float the entire thing out of pocket (or Ryan could, if we're talking Catalyst). That's a significant difference. A lot of new one-person hosts don't have anything but the will and a pair of dice. But if you can back it up personally and you're prepared to do so, you can weather the storms and see the other side.
There's a big point you just made though, you can afford to float things if the idea didn't work out. There's more than a few offers I see go up that obviously look like 'if we dont get this we arent covering costs'.
Francisco
Quoting both of you in one because it is easier then quoting individually.
Can't agree more. Having a backup fund is crucial for any kind of investment. Be it business or house or hell getting married. Have strong financial backup and having plan B to Z for when plan A and the rest fails.
Biggest reason I have seen way too many hosts dead pooling is because most of them starts with their lunch money and the hope that turning money for Slice or pie into a whole pizza with soda money. But failed to realize that if that money is gone, they won't even have money to by fries. Forget slice.
And Tada. > @Francisco said:
Automation is key, efficiency is a great way of saving money.
Automation and very strict fraud detection
Automation and having own hardware/IPs save a lot cost. So even after low price,hosts make money.
When did that happen? I must really be out of the loop these days to miss that drama.
Rumor is within the past couple months. He was 100% arrested, pretty sure it was California.
Francisco
Another sensible alternative is to do essentially what Amazon did: back it up with a business need. 90% of the technical services I offer are because I had to go to the trouble to learn them to do the other 10% of my business. The expense is a given, so why not consider if there's a profit to be made somehow?
DigitalOcean has their own control/billing panel, data center staff, UI/UX designers, community managers and they also organize meetups, participate in conferences. So competing with rock bottom prices isn't possible.
DigitalOcean isn't really a good provider to look at here. They run primarily off venture capital.
Never said all those things made them good. Just saying why their prices aren't as low as some other LE providers here.
I'd appreciate any place you can point me to the leakage of financial data (budgets, income statements, etc). Thanks!
It's just the jealousy some people have on new companies receiving millions from venture capitalists
I think another mistake people make is to price their products too low to start, or attempting to price themselves into the LEB market.
Our base package is $12 per month, if I decide I want to post an offer here I just discount it. It's then more future proof with pricing increases and then I don't have to deal with complaints on raising prices, I simply don't discount as much.
I don't mean "good" in terms of quality. I mean "good" in terms of "relevant to the question that OP asked"
Plenty of public data on DigitalOcean's investment rounds. I don't need to know exact budgets to assess that this makes DO a poor candidate for looking at how smaller providers stay afloat, because such investments are not common in this market.