The Profit in Cheap Hosting

Unlimited hosting, unlimited domains, very low costs: how is this type of cheap hosting feasible?

How are hosts able to charge so little and make money?

The answer lies in the economics of shared hosting. It’s very cheap and very profitable.

The Cost of a Server

Smart shared hosts don’t cut corners on the hardware because it’s one of the cheapest and most important pieces in the puzzle.

Hosts have to place hundreds, if not thousands, of accounts on the same physical server, so a good server is worth the investment.

Not only that, software licensing fees are lower because software like cPanel is licensed per server – not per account.

The Cost of Support

Support is the most expensive part of shared hosting.

Data centre staff, sales teams and technical support teams all need to be paid for.

But with shared hosting, a good support technician could field 100 tickets a day – possibly more.

In order to make their job speedier, some hosts don’t offer phone support either.

The Cost of a Customer

A good percentage of shared hosting accounts are rarely used or totally abandoned.

Many also never go anywhere near their resource allocation.

That costs the hosting company nothing, yet they still charge a monthly fee.

The Economy of Scale

Shared hosting is cheap because it is about piling space high and selling it cheap.

Hosts pay for hardware, bandwidth, electricity and personnel but make far more from placing thousands of customers on one server.

That’s why some of the biggest hosting companies in the world charge a few dollars a month.Keep up with posts like this by subscribing to our RSS feed, or following @WhoIsHosting on Twitter.