Article: Finding a webhoster avoiding pitfalls
Price and cost structures in the webhosting and domain registration industry can be very confusing
for beginners. This article shows how prices and costs may be calculated, how to benefit from structural
inconsistencies and how to avoid pitfalls
Technics needed for a webhosting service
Simplified, to offer webhosting services, it's needed a computer, someone who administrates it
and an internet connection. Looking a bit more in detail, it is desirable that the computer
is located in a secured data center and fits the customers' needs, that the technician is qualified
and that the internet connection is of good quality.
Cost and price fators in wholesale markets
Following this rough structure of technical demand for webhosting, the pricing in the wholesale market
can be seen. The data center as a location for the computer will cost a fixed amount, which can be broken
down to rack space. The computer prices are almost the same as on the retail market for the components.
The price for work force can be devided in workforce price for on location work like it is neccessary
for exchanging components or change plugging and in work force price for online administration, which can
be located anywhere in the world, so this can be done in an offshore process. The most important factor in
costs for webspace is connectivity. Carriers build physical links, which defines the data transport
capacity for the data center. This is defined as bandwidth in meaning of bit/second.
Price example:
Telcombrokers (US) - DS3 line: 2000USD/45Mbit ~ 0.13 USD/GB .
Impossibility to reflect cost structures in retail market
Almost none of the cost can be assigned directly to a user. As the machine's price and setup price is
rather low against bandwidth price, the method used for splitting bandwidth prices to users is the most
important factor. Just splitting the bandwidth physically to the users is not helpful, because in average
each user will need only rather few traffic, but this traffic delivered with high speed.
So the next logical split would be payment on a traffic usage basis. In opposite to switched connections
there are rather few price modells in effect, which splits the traffic prices depending on the time, when
the traffic was used, more common is to market low priority traffic for lower prices.
For dedicated machines pricing by traffic or setting traffic limits is rather common. Price example:
1und1 (DE) - Dedicated server: 69EUR/100GB ~ 0.83 USD/GB
or Strato (DE) - dedicated server: 39EUR/100GB ~ 0.47 USD/GB.
Offering endless traffic just might cause the provider to loose a lot of money
when customers really using the links' full capacity. Reference:
Serverbeach FAQ.
Some offer large amounts of traffic for unrealistic low prices. Example:
Serverbeach (US) - Dedicated server: 99USD/2000GB ~ 0.05 USD/GB.
They are just hoping that customers will not use the bandwidth they bought or have even the intention
to quit a contract, as soon as a customer will really use the bandwidth.
Others offer higher but more realistic prices for unmetered 10 MBit or 100 MBit network usage. Examples:
Nocster (US) - Dedicated Server: 350USD/10MBit ~ 0.11USD/GB
or
Superb (US) - Dedicated Server: 2,645USD/100MBit ~ 0.09 USD/GB.
These are probably the better choice for customers than having a
provider trying to quit the contract when the customer uses what he bought.
All this is for the end customer market for shared machines very unpracticable, the problem is the
traffic measuring. The IP packets can only be assigned to IP addresses and possibly also to ports,
but can't be assigned to users on shared computers. To go around this, the traffic is measured for
some popular protocols like http and ftp inside the service responding to incoming requests. The
efforts of assigning traffic properly to users is just higher then the benefit.
Price structure in retail market
Pricing just along the cost structures with a price for each Gigabyte used or booked is rather uncommon.
Especially in the shared machine webspace market price structures are dominated by fantasy. Each webspace
provider invents some artificially built price structures. Some offer webspace services only bundled
with domain registration and name service provisioning services, but
below wholesale prices.
Example:
Strato (DE) - 0.19EUR incl. Domain
(domain is offered below wholesale price, but can be used only with Strato).
Some offer even unlimited bandwidth. Example:
Hostway (US) - Virtual Hosting: 8.95USD/Unlimited
(note that on dedicated machines at the same provider traffic costs are much higher. See Hostway (US) - Dedicated Server: 175USD/125 GB ~ 1.43 USD/GB).
Services may be restricted artificially to make
customers buy more expensive products. Example:
1und1 (DE) - Virtual hosting: php is disabled .
And some seem trying to make money only with traffic over the prebooked amount, which offensive high prices
are only printed small in the fine text.
Possibility for webhosting end customers to profit from this situation
Customers can benefit from the providers products split by fantasy or for promotional purposes in
various ways. There exist web packages offering domains and unlimited email traffic included. Email
traffic on shared webhosting machines can oftenly not be calculated, because many popular server software
doesn't allow assignment of email traffic to customers.
So customers who know their bandwidth and service needs might get their needs cheaper fulfilled
then the wholesale price would be. People with
high traffic needs but who need few features might use large providers offering lot's of traffic included.
More difficult to find are webspace providers offering many features in a traffic metered
plan for very small money and very small bandwidth needs. For this reason MZL & Novatech
MZL & Novatech opened the TrafficStatistic server for customers with need for many features, but low bandwidth needs.
Customers, who are unsure about feature and traffic demand can host their sites and domains
with TrafficStatistic for a few cent per month. New webmasters oftenly overestimate their bandwidth needs,
but if a customer really remarks, that for his needs another provider would be a better choice,
a change to any other provider can be done simply. TrafficStatistic allows customers to host
their own domains registered with any registrar with nameservers controlled by the customer,
so MZL & Novatech does not have any technical possibility to put any stones in a way when leaving.
Regarding the quality,
you can see,
how well this server is connected and what uptime it has at netcraft,
so far from the beginning in december the trafficstatistic.com server had 100% uptime and no reboot at all.
TrafficStatistic benefits from this not only by sharing costs for the
server, but also by gaining more experience with realistic test scenarios for testing traffic
statistics and bandwidth measurement software.
How to avoid nags and pitfalls
Though customers are expected to hold their part of the contract, a provider has lot's of possibilities
to break it's webspace contract with a customer, when he remarks, that a customer costs more money
then he brings in - see how it is done at Unlimband - organization to educate customers on the
pitfalls of unlimited bandwidth offers.
Dedicated servers with unrealistic unlimited or unmetered bandwidth promise seem to have vanished
due to initiatives like
Unlimband.
On the other hand, webspace combined with domains is sold with the promise of unmetered traffic for less then 10 USD monthly.
If such a hoster shuts down a site, is also the domain provider and rejects to transfer the domain to
another provider, the customer has a real problem. The domain might be down for weeks or months.
The only good to say about offers with unlimband is, that in unlimited bandwidth mode the provider can't
charge any fees for overtraffic while for limited bandwidth contracts many providers charge much too high fees
for overtraffic. Overtraffic might be a problem, since any anonymous person like a nasty competitor, an attacker or
the webhoster himself trying to make money with expensive overtraffic can start a DDOS attack causing very high traffic.
A good provider would give the customer the choice what to do in such a case - and of course, would use his
routers to fight against attacks instead of just taking the clients machine down after beeing attacked for a
random time. Hosters providing shell accounts for eggheads for irc scripting seem to have some experience
with this.
The key to be able to save money is knowing what features, bandwidth and traffic you need.
That's where traffic statistics are for.
Date: July, 4th 2004 (last changed November, 15th 2004)
Author: Marcel Bartels, http://www.trafficstatistic.com
Editing and/or reproduction of this article is permitted under the condition that
a reference to this original article at http://www.trafficstatistic.com/pages/article_webhosting_industry.html is given.
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