With so many web hosting companies in the marketplace, it is not surprising that the competition has been rife. Some of the strategies being used to gain the upper hand in lead generation and customer acquisition include multi-tier affiliate marketing and aggressive coupon marketing.
Well known hosting companies and domain name registrars such Domain.com, Bluehost, HostGator, and GoDaddy – have turned to Commission Junction (CJ) to promote their services. Since this affiliate network commissions for webhosting range around the $100 mark, it is not surprising that many wonder how the hosts are making profit from low cost hosting plans.
The price of shared hosting and discount coupons
For basic shared hosting, bloggers can expect to part with anything around $5. While GoDaddy has a $3.99 monthly Economy plan, using its coupons could save you $30 off the original charge.
For HostGator, there’s a Hatchling plan starting at a monthly charge of $3.95. However, with a Hostgator promotional code you can get 60% off.
Domain.com, on the other hand, provides basic shared hosting at $3.75. This price can come down by as much as 18% with the right coupon.
The only webhosting company, from the aforementioned, that doesn’t use coupon codes is Blue Host – preferring to reduce its shared hosting fee from a monthly charge of $7.99 down to $2.95.
Looking long term to break even
Most hosting services sell their annual shared hosting plans for well below $60. Additionally, they reduce these fees by offering discount codes. As such, if the host pays affiliate commissions to CJ for a sale, they have already lost anything between $40 and $70. As a result, users need to stay with one hosting provider for a minimum of two years for the host to break even.
The negative acquisition costs common in the webhosting industry show that hosting competitors have been slashing prices and offering discount codes to a point where they are buying their customers.
Why Webmasters are not lured by low prices and coupon codes
Recently, researchers have discovered that bloggers and website professionals across the globe are not lured by low prices and coupons. As a result, most prefer remaining with their current providers because they are worried about the impact a migration will have on service and security.
A Pier 1 Hosting survey showed that 80% of the interviewed webmasters were willing to pay more to ensure the safety of their websites and blogs, instead of jumping ship to a cheaper plan/host. More than 90% also agreed that they wouldn’t move if it meant sacrificing customer service.
In fact, webmasters and website owners, as well as bloggers agree that secure hosting makes more sense in comparison to lower prices. This is mostly due to the increase in cyber threats.
Although cheap hosting plans are attractive to some, most bloggers seem to prioritize security, service, and speed. This has been to such an extent that Webhostinglogy, a New York based webhosting publisher, reported that few were willing to change their hosting provider due to a coupon code.
Over and above everything else, it is clear that avid bloggers and small businesses alike are of the opinion that coupon codes and cheap webhosting plans do not mean reliable hosting. Instead, they prefer a web hosting company where they know they will get customer service and security.
