No, 'cheap' is not necessarily a bad thing (well, not always), but when it comes to a services industry as competitive and with as thin margins as the web hosting industry, customers better watch out. Hosts offering 'low-cost' services tend to offer the world for Rs. 900 per year but, usually fail to deliver even the most basic of services. Surprised? I'm not. Let me explain some basics for the benefit of the vast majority who would still be unsure as to what I'm rambling about.

A "web host" is a company (well, most like to think of themselves as such but that's a whole new article) that is in the business of procuring bandwidth (internet connectivity) and servers (glorified computers) with the intent to re-sell the same, in smaller bits, to people who need storage space for their e-mails and websites. This is usually (read always) accomplished by renting out dedicated servers with a decent hard drive and bandwidth quota and then using a hosting automation suite (control panel) to divide the server resources up into smaller chunks called 'hosting plans'. The goal is to price these plans in a way that they remain affordable for the client while helping the host maximize profit from the resources it has.

Now comes the fun part.

Since there are almost no barriers to entry in this particular industry, new web hosts keep popping up every day. This helps keep the price for hosting services sane and should also mean better service for the customers since there are many hosts competing for their business. What really happens is that one Johnny-come-lately decides that the only way he can grab some market-share is by offering the lowest prices. Once customers start quoting his price to the host struggling for their business, the host decides to match it. Before you know it, everyone has slashed their prices by half! This, in Pakistan, can be seen every 10 – 12 months.

"Good", you say? Read on.

What does this mean for the web host? Suddenly, all their existing clients are paying them half of what they used to. This means that in the coming year, they would have to generate twice as much new business just to make the same amount as last year! Is this considered growth? I think not!

Sadly, the number of clients does not magically increase with every price shave. So, the web hosts are left with little choice other than to cut costs just to make ends meet. Where there were 3 support people, they decide to make do with just one. Where there were 2 servers earlier, they decide that they can load all of the clients onto just one server resulting in lower operating costs. These measures, needless to say, do have a positive impact on the host's bottom-line but deteriorate the services resulting in un-answered support queries and long periods of downtime (website/email inaccessibility) or extremely slow server response due to excessive loads on the server.

Now, if the host were to put their existing clients first, they would price their service fairly so that every client not only feels good in his wallet, but can also rely on the service being offered. I guess, all it boils down to is; whether a web host is in this business to provide a top-notch service with a long-term business goal or is just there to make a quick while competing with all the fly-by-night hosts who happen to come along.

Recently, I have come across at least three such hosting companies that are now in financial peril because they could not resist the urge to slash prices in order to try and capture some new business. Sadly enough, these are not people who are 'new' to the industry. Such an impact on the market is magnified 10 fold when an older host decides they would be better off by just slashing prices rather than improving on service. As a result, the younger companies follow suit and create a mess for themselves and more importantly their clients. The ultimate outcome is that frustrated clients decide to switch to foreign web hosts that provide a better service at a saner price.

From experience, I have learnt that providing a good service is what really matters. The rest falls into place when clients realise that they can only run their online business if the service they get is of good quality. After all, you get what you pay for. What good is a cheap service when you will eventually stop getting any?

About the author:
Zahid N. Sindhu is currently working at Inspedium Corp (http://www.inspediumcorp.com). Inspedium provides software development (http://www.inspediumsoft.com) and quality webhosting services (http://www.inspediumhosting.com). The latest venture undertaken by Inspedium is Article Street (http://www.ArticleStreet.com), the place for quality content for your site and ezines.