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Payouts too high - Doesn't make a whole lot of sense

Discussion in 'Affiliate Programs' started by moronic_kaos, May 31, 2010.

  1. moronic_kaos

    moronic_kaos Regular Member

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    I've seen a lot of real popular and reputable web hosts brag about paying out $90 or even $115 per referral for customers paying like $3.50/month. How could that possibly be profitable to the hosting company?

    What's the catch here? I'm well aware of sites like 000webhost and etc screwing over top referrers, but those are kind of off-brand hosts if you will. I'm talking about the major competitors like HostGator and iPage, ya know, the places where it's real easy to get ahold of customer support people.
     
  2. C.S.A.

    C.S.A. Junior Member

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    In my experience, the reputable places take a damn long time to pay out. 8 or 10 months payout isn't unusual. The marginal cost to them per customer is nearly nothing, and if they don't pay you till they've been paid the bonus amount in monthly fees, then they have a customer (who is likely to stay around) that they acquired for almost no marginal cost.

    Shared hosting works based on the large number of customers who pay monthly and use almost no resources.
     
    Last edited: May 31, 2010
  3. wowhaxor

    wowhaxor Executive VIP Premium Member

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    Well for a host almost all of their fees are profit. Take on top of that the fact that most people stick with their host for years if not forever and do things such as:

    buy domains with yearly auto renewals (lots of places way overcharge for these)
    crazy bandwith overage charges
    sell silly tools and marketing packages
    push upgrades

    They make their money in the end.
     
  4. haverox

    haverox Regular Member

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    yep its all about the upsell and sheer volume of customers
    Posted via Mobile Device
     
  5. moronic_kaos

    moronic_kaos Regular Member

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    Yeah but spending say $115 for a customer paying $3.50 monthly (using iPage rates as an example), that would take 33 months before it would be profitable! That's almost 3 years! And that's not taking into account what resources the customer would be costing them. You're right, it's marginal. But it's not hard to make a dent in $3.50 per month.

    I guess they could make the money back selling domains and marketing B.S., but there's no guarantee that the customer will be paying all that. It's a heck of a risk. Plus the average customer will probably only buy like 1 or 2 domains. Gotta get out of the mindset that all people buy domains and make websites in the way it's presented on BHW. There's a lot of people out there that just want to manage some project they're working on, set up something for their local business, run a personal blog, and etc.
     
  6. Dayum

    Dayum BANNED BANNED

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    There's more to it then just getting them to sign up, they have to pay for there next month and if there late on payment they can take it away.

    In my opinion hosting is the worst thing you can promote, too much bullshit. I'd be more happy receiving a guaranteed $10 payment at the end of the month for getting someone to sign up then waiting months for $100 I may or may not see.
     
  7. BreakAllTheClocks

    BreakAllTheClocks Regular Member

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    Obviously they have been in business for enough years to estimate the exact lifetime value of each new customer down to the penny.
     
  8. goodguy333

    goodguy333 Junior Member

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    "If they are not in profit,they would not be in the business, in the first place".Period.
     
  9. regr8

    regr8 Newbie

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    Yup, taking customer's money from back selling tactics. That works a lot of time.
     
  10. Chronos

    Chronos Junior Member

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    Well, I'm not surprised that they do this. Just think if they had an e-mail address.

    They could sell it to 100 web-related companies at $1 each.

    If they had more, targeted information, who knows?