I just got an email from a provider and it made me think.
Many people in the LE* ecosystem seem to be pricing their packages with the assumption of stationarity. As in many of these plans are built with an assumption that the pricing won’t change. However, we all know pricing of power, IP space, or other X, Y, and Z changes as time goes on (usually they increase), this is even more true with the impact of inflation.
Some of the bigger hosting providers I’ve worked with sometimes increase their prices once every few years following a certain index (usually a CPI index and an increase of the target 2.5~3%/year). I know one of our contracts has a renewal coming up and we’re expecting them to ask for more $$$.
So in the retail server hosting space, anyone have any opinion on the increase of operation costs?
I’m not in the hosting industry, but from what I observe, hardware has gotten a lot cheaper over the last decade or so. To add on that, about a decade ago, most websites were rendered on the server side (think PHP), but nowadays a lot is done on the client side (Javascript), putting less load on the servers. So in the end things got cheaper because of more computing power, more efficient CPU’s, and more powerful clients. Again, that’s only based on my own observations.
Bigger hosting companies usually have staff and other assets they need to look after, and as things are getting more expensive it’s probably back to getting more expensive in general.
Software is getting more abstracted and that pulls in implementation complexity with higher security risks. Not withholding, standards are evolving to include more edge cases to ensure safety. Nothing ever stays the same, especially development costs. The intrinsic development costs are increasing to keep up with the complexity of delivering something that’s useable.
It’s tough because the hosting market is majorly saturated. Despite that, there’s enough negative sentiment to drive people from host to host routinely.
The most certain way to gain business is by competing on price. If you price yourself to be able to take those hits later without a price raise, your intelligent thinking will lead to being praised by a few while your competitor who only thinks about today will be the one getting the most business.
So it really comes down to client acquisition strategy. If you want to gain them on price, you may need to increase it later because you’ll need to compete at the lowest cost you can get away with. Tomorrow be damned.
My strategy has been working out pretty good. Since I took an angle that wasn’t saturated I focus on getting customers through a mix of competitive price and competitive function. I slowly increase my price for new sales only, and rely on that to slowly offset the increased costs of software licensing.