Understanding Why a Hosting Review Shows such Different Web Hosting Prices + Costs
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A question from Bianca in New York: What is with hosting costs? Each web host I review seems to price their web hosting at a different level and I don't understand how the prices of web hosting can vary so much. Why do web hosting costs have so many differences between each web host?
Web hosting costs have a high degree of variation within them. There are three main reasons as to why hosting costs are so different.
The first reason for differences in the monthly cost of hosting relates to how automated a particular web host is. For those web hosts that price their product under $10 a month - well-regarded hosting providers such as HostMonster - they can offer web hosting costs that are very cheap in price because their sign-up and technical support process is largely automated. If you offer a control panel for your customers, much of the day-to-day technical support that would have otherwise been done by a technical support rep can now be self-served by the client. The costs of technical support involving a web hosting company have a huge impact on why there is so much variance in a web host's cost of operations. Thus, the pricing for their web hosting plans varies
The second major difference as to why web hosting costs differ so much amongst hosting companies is their age and established revenue base. The prices for web hosting are in a general year on year trend to lower levels. If you are a web hosting company that started your business in the 1990's, you have a large client base potentially paying $24.95 per month in price for hosting costs when today the market average for that product might be $9.95 per month. However, if as a web host you lowered your subscription fees for hosting prices, your revenue base would fall in half because you need to offer that price to all your customers. Thus, many old web hosting companies have not reduced their costs and hence the reason for their web host costs to be so much higher than other hosting services.
The third major basis for the differences in web hosting prices is that web hosting costs may not be comparable on a product by product basis. For instance, some web hosts offer Windows hosting, which has a different cost base, than perhaps a Linux provider does. The monthly hosting cost reflects the need to cover licensing costs and software purchase expenses. If you are reviewing your web hosting costs be sure to evaluate the same product platform category.
Hosting costs for dedicated hosting and the monthly prices for managed hosting are another animal. With a dedicated server you can have a large variance in terms of network connectivity, physical server equipment, technical support levels, and general managed hosting options. All of these can cause differences in what a dedicated server costs or rather what dedicated hosting should cost. If you are looking for a standard dedicated server, unmanaged, generally the price for such equipment is in the range of $200-300 per month. You can review some of the top ranked dedicated hosting providers and compare their hosting prices at our Dedicated Server Showcase.
Getting a Better Price for Your Web Hosting Purchases: If you want to lower your hosting costs when you buy web hosting you should ensure that you are purchasing the longest contract period you can afford. Another big difference in explaining variances in hosting costs from host to host is the term length that they advertise. Many of the lowest priced hosting costs listed by companies are their multi-year contracts. By billing upfront, they reduce their G&A costs associated with your account and pass along the savings. When you are reviewing two or more hosting products and packages be sure that you are looking at monthly hosting prices on the same purchase period, e.g. monthly, quarterly, annual, bi-annual. How can I save money on my web hosting? is often answered by simply locking into a longer term contract with the hosting company you are selecting.
Web hosting fees are also impacted by state and provincial sales taxes. Many hosts are required, by law, to charge various taxes as an addition to the price they post on their. If you are buying web hosting a local level, one way to lower what you ultimately pay in web hosting fees is to purchase the same quality of hosting account from a provider outside your current jurisdiction. You might want to consider HostMonster and midPhase as ways to lower your current or future web hosting fees.
Thanks for your great question about website hosting costs. For more of the best hosts, you can view our monthly Top 10 hosting list.