Is shared hosting dieing?

I wonder…
…with the rise of CMS specific shared hosting (i.e., Wordpress hosting), and platforms like weebly, and wix. Is the conventional, shared hosting on is last legs?

While managed platforms for specific CMS is a booming market, amateur web designers are still making WordPress sites for profit in mass quantities, setting up their client on HostGator or GoDaddy, and leaving them to it.

Then three years later the site gets compromised, the client blames the host, the designer won’t update the site without payment, the client won’t pay them because they’re mad, and the client is now ripe to be marketed to by someone new. That someone new does the same thing, moves their hosting, and resets this cycle.

The shared hosting cycle is neverending until something major changes everything.

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I do agree with how mass web designers work, the repetitive cycle quite often caused by the client being cheap.

The issue is most clients are looking for the cheapest option to get a website for thier business, most don’t know anything about website maintenance eg updating CMS and plugins and most don’t want to pay the designer any ongoing cost like a management or support for the site so no one is doing update to CMS themes or plugins.

Go ape when the site is compromised and blames everyone else then jumps to the next designer who will build them a new site for peanuts.

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As a fellow Web Designer, I agree for the most part. Low budgets, high expectations. Why pay for a more expensive hosting setup? Why do we need legal texts? Cookies? GDPR? Please have this live by tomorrow (sent 23:58)…

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No. Shared hosting isn’t on it’s last legs. The landscape has changed and (imho) the product should be packaged in a different way. But the fundamentals are still solid.

Old Habits

The perspective of most people here is that Shared Hosting is the entrance level to hosting. I’m sure many of us got our starts with a cPanel account and a website template. Maybe even Wordpress’s latest.zip for those of us who were a bit more ambitious. While the market and landscape has changed, many still view Shared Hosting as that “entrance” and see the shifting market in that perspective as “Shared Hosting is Dying”. I don’t think this is the right perspective to have.

Most SaaS examples we’re talking about here are just a package of CMS + Server hosting. It’s like a “My First Website” toolkit as it allows users to build websites with limited coding knowledge (HTML and CSS). That’s what majority of the consumer clients need for their non-tech small business or personal sites. This has been a market segment shared hosting was traditionally meant to capture (and it used to) but has been eaten up by Squarespace, Wix, or Weebly today because they just offer better experience, a lower technical knowledge barrier, and a significantly better value. Let me explain.

Value Proposition of SaaS

Squarespace, Wix, or Weebly market themselves as the go-to tool for anyone building a small-business or a personal website. They charge around 10-30 dollars (with most platforms targeting 16 dollar sweet spot) a month for access to their curated ecosystem of plugins and they handle everything. They handle:

  • Server management
  • Software management
  • Software support

They have people hired and available on-demand to offer technical support in language that a non-technical individual can understand. This will help the customer save on the following areas:

  • Less technical knowledge is required (less time spent on reading KB and documentation to set things up)
  • Faster turnaround (less time spent troubleshooting problems when support is there)
  • More time focusing on actually building the site

Value Proposition of Shared Hosting

I’ll start off by saying that each hosting provider adds their “flair” to their shared hosting product. However, speaking in economics, most shared hosting companies we see advertising on LET/LEB/HT/etc. are more or less price takers (and advertise as such). We’ll spend more time focusing on price setters (an easy to understand comparison here) as it’s easier and I’ll “estimate” the price setters as:

  • HostGator/Dreamhost/Site5/EIG brands
  • A2 Hosting
  • 1&1
  • GoDaddy/MediaTemple

Yes you can argue X, Y, and Z reasons about companies here and there. But for the purpose of this analysis, this list should be good enough. Also, for the purpose of this post ignore the introductory price or any loss-leader pricing and focus on the monthly pricing.

Most of these shared hosting providers (in general) offer cPanel + Softaculous or a hosting solution similar to cPanel-esque experience. By that I mean they usually have a a 1-click FOSS CMS/software installer, comes with a PHP Interpreter, usually packaged with MySQL access, and most have an additional “Site Builder” addon. Most of these sites target 4 dollars to 15 dollars a month for 1 site to “unlimited” sites.

Most of these shared providers don’t offer support on the software the customer’s trying to use. Sure they’ll make a “best effort” attempt at it, but there’s no guarantee support will spend the time to walk you through it or maybe they might just send you a link to a tutorial they googled online. Noone “owns” your problems or questions related to the software you’re trying to deploy. That’s someone else’s problem which means you’ll either pay more for specialized support or you’ll invest (an uncertain amount of) time into learning these processes.

However, many custom designers use Shared Hosting as an added-on package to their product. Which is great, but that also means the designer carries those risks and responsibilities.

Customer Profile

For the most price sensitive customers, this matters a lot and these customers are those who LEB/LET attracts and targets. But that’s also the market segment that probably won’t purchase SaaS products outlined above, are those who are willing to spend the time to reduce the actual price tag, and (realistically) are a smaller group (total $$$ wise too).

To someone who just needs a small business or personal site but don’t have that technical knowledge (aka most of the world), difference of an extra 5-8 dollars a month matters but not if they see the value. They’re willing to pay that extra amount if they save 2-4 hours setting up their site and can hand off software updating (and security) to someone else (meaning you don’t have to worry about your website/server on a monthly level and only when you need it changed). Also customer support is willing to walk with you to resolve those problems and situations.

I believe all of this is worth the extra dollars if you never have to worry about your site again. Factoring in inflation, the value of a dollar decreases but most SaaS haven’t raised their prices to reflect these changes. So at the end of the day, you’ll continue to get the support, updates, and benefits for less and less “cost” year after year.

Market Analysis

So the target market Shared Hosting historically has aimed for has shifted from the Shared Hosting Product to an AIO Website Builder product. People see a better value deal with those solutions and it just makes sense to buy it. I mean even a sizeable non-profit organization (non-profits are VERY price conscious) that I work with recognizes the value and they moved from a cPanel Shared Hosting instance to Squarespace. I was involved in the decision process and in the end, their requirements and needs ended up aligning to what Squarespace offers that I recommended the switch.

Shared Hosting is no longer a good product for the target market they’re aiming for. Plain and simple.

Decision Point

So what does shared hosting need to do? Well this is where the business management consultant side of me comes in and says “You should do X, Y, and Z based on your own needs”. But realistically each strategy depends on each hosting company based on their strengths, needs, and target parameters. Shared hosting as a product still has massive appeal and benefits, but I think the traditional way of advertising and marketing it is just keeping the “cycle of shared hosting” going.

This is a perfect area to disrupt with (imho) a better user experience and package. But, for the sake of this post, I’ll suggest two general options.

  1. You can reduce your operating costs, cut more corners, and see what you can make do with the smaller market segment you have access to, to increase profits. Your customers won’t be too happy but as a business operator you have to make the fund balance work. Doing the old “same thing as before” won’t change anything.

  2. Target a new market segment to complement your offerings. I think the core shared hosting as a product is great but needs to be repackaged. Maybe expand on the add-on ness for designers and small-business developers. Take the PaaS route and make it as an easier-to-use app-engine-esque solution built for web designers. I believe these are two products from two “perspectives” within tech that share the fundamental ideas and principles. Utilize that to expand your target market segment with the same product but have someone else handle the “full stack” (or build tools to support them on it). This will change your product from a B2C to a B2B, so the different dynamics from there will not factor into it. But, I think this is a great avenue that is often overlooked.

This is my analysis and overview of Shared Hosting. The customers haven’t “left shared hosting”, but rather have shifted and grown exponentially. More people are on the internet (and buying presence on it) than ever before. Shared hosting as a product itself has not changed or adapted with the market which is why it’s looking smaller. I still believe in the core product but you need to show it in a different light and adapt to what’s needed from the market.

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not sure if this is what you meant, but a starting trend seems to be to offer website development to hosting customers.

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Yeah I was re-reading my post yesterday and realized that you can DEFINITELY tell it was a first pass and done.

Pretty much what I meant. I mean it seems like the most common use of Shared Hosting now is for developers or those who already know how to do it all and just need someone else to handle the backend work. Most people (that I know anyways) just use it as an added-on service to bill the client monthly. The benefit of this is that I think this market can grow. The negative of this is that in this scope, most people look at the price tag as the more they can charge the client but pay you less means the more money they get to keep. Which is fine and all, but then I wouldn’t base the entire “Shared Hosting Market” on that bet either.

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It is getting more expensive if it needs to come with a cPanel kind of interface…
From my perspective it is more that reseller hosting is dying. People that want to resell hosting are often better off getting a VPS or more and setting things up themselves for their customers.

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Man the cost of cPanel licensing has been insane. After being sold the entire company is definitely out there to squeeze as much money out of hosting providers as they can.

Regarding reseller hosting, most people have been using reseller hosting as shared hosting + more features (like how some SaaS gives you base functionality for 5 dollars a month, but gives you more features when you upgrade to the 8 dollar tier). Now the original intent of reseller hosting as a product was “you handle the customers, we handle the tech”. With someone running shared hosting off of their VPS just means “you handle the customers and the tech”.

Let’s be honest, for most of us here I’m sure we’re all comfortable managing and maintaining a server, so running our own instances on a VPS will give us better return for the dollar we earn. But then again, some people might just enjoy playing the marketing role than playing the sysadmin role. I just think that reseller hosting is that “awkward middle-ground” that has a lot of people coming in but also a lot of people leaving as their business grows and they need to port customers over to their own servers to increase their profits.

I think Francisco’s approach to reseller hosting is smart. It’s basically 4 dollars more a year compared to their highest tier shared hosting plan for all the features. It’s the “no shit sherlock” upsell, that nets him an additional 20% annual income for basically no additional work or resources on his end. Hell, I use their reseller plan as my own shared hosting plan and for Francisco he sells the same thing and 4 dollars more out of me. Using reseller hosting in this way will help you retain more customers, have them use it for a longer period of time, and in this day and age I think many people peg it on the same level as shared hosting.

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Shared Hosting has the potential to come back in a big way as IPv4 depletion nears closer every day and when customers can get VPS like performance for hosting websites on a proper shared hosting setup (CloudLinux, BubbleWrap or whatever, etc). Makes it easier to serve more customers with less IPs.

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For the LET/LES/HT market those website builders make no sense. For me when I first started I bought shared hosting with cPanel for like 1.20 p/m. Those website builders are nowhere near that price point. I personally didn’t even consider them lolz. That’s my perspective so no they aren’t dying neither will they be in the foseeable future.