Pay What You Want Performance Hosting For Entrepreneurs - Idea Feedback Request

[joschi]

Hello fellow Fastlaners.

It’s been a long time since I last posted something and maybe now is the right time to return.

Over the last years I was busy to stabilize my income. Currently I have a typical onetrepreneur business. Even that’s not my goal, it was important to make this experience and prove to myself that I can find customers who are interested in my products.

My current business consist of several parts:

• Hosting
• Web Design
• App Development (mostly games)

Right now we (a friend and I) are focusing on a new idea, and I would like to hear your opinion.

As I progressed with my main business I realized, that many startups have the problem of a very tight budget. So rather than charging for a complete site, I switched over to monthly payment plans.

Same problem appears when it comes to hosting.
I observed that many startups weren’t satisfied with their hosting. They had problems with high response times of their sites (slow loading times, google doesn’t like this!), unresponsive support and so on. That occurred mostly with cheap hosting, that cost less than $20 a month. But they didn’t had the money to buy their own servers. As they progressed, most regretted the decision of buying such a low budget hosting at the beginning, especially with the increased cost of migrating everything to a new hoster. So I offered them inexpensive high performance server and so far I never lost a single customer.

So I thought, it might be a good idea to launch a high performance “pay what you want” hosting, exclusively for entrepreneurs. Basically one can sign up and select his own price. We want to build an active community and help the new ones, so we only allow startups that are younger than 12 month to join the program, once in, they can stay as long as they want.

The startup can select a price for the hosting starting at $0 a month. There will be no benefit for a higher rate whatsoever. The customer can adjust this rate at every time.

The second part of the business is the community and the knowledge base. We want to provide free forum and chat support for all questions there might be, regarding to set up a site with WordPress and which plugins are best for what. The idea is to gather entrepreneurs who can also help each other with setting up their websites. This whole thing might be a little ideological but I really want to do this and give back to the community.

For the first step, we made a little landing page: http://priag.com/ and try to determine if there is enough interest and entrepreneurs see value in the service.

Rules:

• The startup must be younger than 12 Month
• The hosted Website must have something to do with a business, that could be a blog, a shop, an info page or something else, even a forum…
• No illegal content, no pages related to porn, violence or extremism

Benefits:

• Up to 10 websites (Domains must be registered elsewhere)
• 10 Databases
• 10 FTP Accounts
• 2.5GB of high performance SSD Webspace
• 250GB of Transfer (up to 4000Mbps Bandwidth)
• Automated Backups
• Free support

From my 10 year experience I know those resources are enough to grow a company and not to wasteful. Additionally if someone needs more he can contact us.

What do you think? Would you sign up for such a service? Your Feedback is highly appreciated!

Kind Regards
Patrick

Landingpage: http://priag.com/

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[zrail]

Questions that come to mind immediately:

1. What's your cost structure?
2. How will you account for the freeloaders who eventually are actually using their allotment but haven't chosen to pay anything for it?
3. How much do you think people will pay for this service? Your landing page seems to imply "free forever for everyone, including free support", which historically has not been a profitable path without large, regular infusions of VC money.

 

[AgainstAllOdds]

Most "startups" are side-projects. The same way that everyone in Hollywood has a screenplay, everyone in tech has a "startup".

How do you differentiate between the people that actually will have the capability of paying you, and those that say they will?

So I offered them inexpensive high performance server and so far I never lost a single customer.

If this is working then just grow this. No need for a new system.

 

[joschi]

hi and thanks for your answers

@zrail
What's your cost structure?
I have calculated the cost for each customer. The business needs $100 to get started and keept running for the first two month. It is really lean and very scaleable. So if we get more customers we will grow it quickly. I`ve done it several times before.

How will you account for the freeloaders who eventually are actually using their allotment but haven't chosen to pay anything for it?
I actually assume that this will the bigger portion of signups. As i mentioned i will also do this to give something back and give newcomers a chance. There will be people who are using it for free and there will be people who are paying a little for it.

How much do you think people will pay for this service? Your landing page seems to imply "free forever for everyone, including free support", which historically has not been a profitable path without large, regular infusions of VC money.
Thats true and perfectly right. As it is in the nature of this business people will also need other services. First of all we will verify from time to time if the hosting is used in a proper way. So that it is really used for a start-up. the money making will come at another place:

1. We will offer custom services such as moving a site, installing it, help with plugins, design work, custom programming, which is all offered on the page when the service launches
2. at one point the hosting will be too small for a strongly growing company. We will be there to offer our advanced support, deticated servers and so on.

@AgainstAllOdds
We suggesting to pay but we wont enforce it. As i mentioned above its more about building a potential customer base and offering great services. I strongly believe that we can persuade potential customers by offering a great service.

I know that it might be a risky model, but i also know that it seems to be worth a try.

What would you like to see in the service, what is your opinion about it? Do you have other concerns?

Keep the input coming
Regards Patrick

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[zrail]

hi and thanks for your answers

@zrail
What's your cost structure?
I have calculated the cost for each customer. The business needs $100 to get started and kept running for the first two month. It is really lean and very scaleable. So if we get more customers we will grow it quickly. I`ve done it several times before.

Based on the numbers you posted before your edit, I would want more in reserve, at least enough to keep the lights on for more than two months. Also, I think you're underestimating how much support for a free service costs. In my experience, the people who don't pay anything need the most support, so if you value your time at all then your estimates are rather low.

The only way to know if it's going to work is to try it and see, but a USP of "free" seems pretty weak to me.

 

[blackhat]

There will be no benefit for a higher rate whatsoever. The customer can adjust this rate at every time

I could be misunderstanding, but it sounds like everyone gets the same level of service regardless of what they pay. What incentive do they have to pay more?

Edit: saw your above post. It does seem risky, but as you said the cost to try it isn't very high. If you think it could work I'd say run with it. Even if it doesn't end up exactly how you picture it now, it very well could end up working with some pivots as you learn.

 

[joschi]

thanks for the suggestions, yes, i could keep it running for quite some month and i have experience with support from my current business

right now its most interesting for me how many people will sign up for the service, lets see if its needed!

You made a good point, that if there are no benefits people might not understand why to pay... however there are upsels and i dont want that one thinks i will trick him into buying...

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[zrail]

So, if you think the money is actually going to be in custom services, why not just offer the custom services without the loss leader? It sounds like you've already got a customer base, why not sell custom consulting into that audience?

 

[joschi]

@zrail goal is to get into new markets. so far i sold those custom things and offered a hosting afterwards, now i want to try it the other way arround. i just thought that might be a good way of getting new customers isnt it?

 

[zrail]

@zrail goal is to get into new markets. so far i sold those custom things and offered a hosting afterwards, now i want to try it the other way arround. i just thought that might be a good way of getting new customers isnt it?

I think the consensus so far is that the only way to know is to try, and it sounds like a cheap experiment. If I were in your shoes I think I would set an upper bound on it. For example, if you're spending $X per month 3-6 months in (including the cost of your support time) and not making it up in custom services, it's time to pull the plug.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[joschi]

Might be the best
My biggest issue is finding new customers... I rly just dont know how to do it. Thats also a reason to try this service. I can proudly say, that in 1 1/2 years i never lost a customer. But finding new ones is rly something i struggle with. Iam also not sure how to bring up the benefits of this new service. Server response times and speed are more important then ever, but i have the feeling that most people are rushing to the cheapest hosting service they can get without thinking about the consequences..

Regards
Patrick