Upselling hosting to your buyers
  • Ok, this is something I've been trying to make up my mind about for ages and started wondering what are your thoughts on this.

    Simply put - many site flippers always offer hosting along with the sites they sell. Basically they just ask their customers whether they have their own server they want to transfer the site to, or if they want to keep it where it currently is for, say, $10 a month. Since most buyers are a bit afraid of the transfer process, the majority will opt for the hosting plan.

    Sounds like a great deal, but yet I haven't started doing it, simply because the money isn't motivating enough. Sure, over time I'll have 50 or perhaps 100 hosting customers, bringing me in $500 - $1,000 a month basically for doing nothing, but an important thing to consider is that 50 customers will most definitely have a problem/question or two at one stage and all in all they require a significant amount of customer service - something that I don't feel like spending my time on. Now, if I were to hire a CS agent, I would pay them $400-$500 a month leaving me with a measly $100/mo profit which obviously isn't worth the effort.

    In conclusion, what makes me puzzled is that it's essentially free money that I refuse to take - but on the other hand there are areas that might actually turn the 'free money' into a sizeable loss.

    Very keen on hearing your thoughts on this ...

    Bryan
    Post edited by Unknown User at 2010-05-03 12:50:05
  • Interesting question.

    Personally, I always offer hosting to my buyers (free) for a year after purchase. The variable cost to me is very low so it makes sense to offer it. As I don't sell startup sites very often a lot of my buyers of higher end sites keep the sites on my VPS until they are ready to move across to their own. I like to see it as an incentive for them to reach my BIN price - and have no hidden costs after sale. If you pump out a ton of startup sites I would say upselling hosting is essential to boost your bottom line. If you sell sites in the $XXXX range regularly, the $10 per month isn't always worth the hassle as you mentioned.

    I do have an ebay business model which I shall go over at a later stage which involves reseller hosting and this works very well - but involves volume so you acquire nearer 100 clients a month and soon have a very profitable revenue stream.

    Of course, the easy option is to refer them to a hosting affiliate such as Hostgator and earn up to $125 per signup and then transfer the site for them.
  • In my experience , its worth it.

    Yes, It is hassle. You will have to outsource "customer service" to someone else or take someone on. This is of course if you have other things to do with your time. If you do not, then you can answer all the questions yourself.

    The reason why I have gone down that route is because it will cause them to remember you as " guy from whom I bought a great site"

    Who is more likely to buy from you again? The person who bought a site from you and has no contact with you again what so ever, or, a person who bought a site from you and is monthly reminded of that?(this invoice he gets every month is like a note saying:" Hei, remember me! You bought a site from me. If you ever wish to buy something again , just let me know)
    Basically what I am trying to say, is that you will not become a distant memory in their minds. And at times, they will even refer other people to you, who want to "give you money" .
  • Valid point, enrikole.

    And I completely agree that it's crucial to keep contact with your clients and remind them of your existence every now and then. I personally employ other tactics (such as emailing them every now and then -- bigger customers get personalized emails, others get list emails), but fully agree that hosting can be an effective way of achieving this, especially when dealing with 100s of customers at which point sending personalized emails would take an excessive amount of time.