In a never-ending battle to generate more leads and find more customers, web hosting companies have attempted pretty much every marketing strategy under the sun, from coupon campaigns to affiliate marketing. If even the powerhouses like HostGator, Domain.com, GoDaddy and Bluehost have to promote their hosting plans on affiliate networks such as Commision Junction, you know things are getting serious. These days, most referrals that result in a customer purchasing a web hosting plan are worth a hefty $100 commission.
The Dangers of Rock-Bottom Prices
As of now, a basic shared hosting package shouldn’t set you back more than $5 per month. GoDaddy’s Economy plan is only $3.99/month, and you can use the coupons to slash off another 30% off the price.
HostGator has a Hatchling plan ($3.95/month) and an array of promotional codes that allow you to grab an additional 60% discount.
Bluehost doesn’t offer any coupons, but their shared hosting plan can now be purchased at just $2.95/month.
Domain.com’s basic shared hosting is slightly more expensive ($3.75/month), but some of their coupon codes promise 20% off or more on annual fees.
Most of these hosting packages come with bonus features such as unlimited disk space and bandwidth, free domain names and more.
Nowadays, web hosting companies sell their shared hosting plans for less than $60/year. Once you account for the discount coupons and affiliate commissions, you’ll realize that these companies lose $40-$70 on the first year of hosting. Some hosting plans require the customer to stick with the same provider for three years before the provider can break even.
All these price slashes and coupon incentives have led to a phenomenon known as the negative acquisition cost. Simply out, most bit players in the web hosting market simply can’t afford charging low prices while also offering coupons and affiliate incentives. For example, eHost used to offer sharing hosting plans at less than $4/month, with an additional $110 reward to any affiliates. Recently, they were forced to close up shop and move their customers to Bluehost.
The Importance of Discount Coupons in Webhosting
When it comes down to it, promo coupons might not be such a big factor in the web hosting world. Indeed, it’s not unreasonable to think that webmasters are mainly interested in the actual benefits of the hosting plans. Recent studies have shown that US and UK-based IT professionals are annoyed with the ongoing web hosting price war. A lot of them opted to stick with their existing providers based on fears over customer service and overall security.
Furthermore, a survey run by Peer 1 Hosting made it clear that approximately 80% of IT professionals weren’t willing to take advantage of lower prices if that meant compromising on security. More than 90% of them weren’t ready to sacrifice customer service in order to save some money. This is not a surprising trend. As cyber threats grow in scale and numbers, secure hosting becomes all the more important. Though cheap hosting options do hold some appeal, it’s clear that most webmasters put a premium on safety, speed and service.
Alex Papaconstantinou, founder of Webhostingology, has recently ran a survey in which he asked the site’s customers whether a good coupon code would get them thinking about changing hosting providers. Unsurprisingly, most replies were in the vein of “unlikely” and “extremely unlikely.” As it turns out, most bloggers and small businesses believe that coupons and cheap hosting plans don’t hold a candle to proper security and customer service.