Executive Corner

The 5 Worst Sales In Webhosting – Part 1 of 2

We’ve already told you about the 5 worst products in webhosting, here is part 1 of a 2 part series on the 5 worst sales in webhosting.

Everybody loves a sale. The other day I was shopping for birdseed at Lowe’s, a home improvement and hardware store here in the states. As I perused the store, I noticed a sale that just blew me away.

Brace yourself for it — it’s a big one.

WOW! A whole penny off!

In the few minutes I spent marveling (snickering, really) at this “special offer,” a couple of people immediately gravitated toward the “sale” birdseed and snatched them up without even stopping to see what kind of sale it was.

The sale, of course, was a trick – a sleight of hand designed to grab people in a hurry. I started thinking about other types of sales, what these sales communicated about the products and the companies who sell them – and how many of the worst sales tactics out there are used commonly in the webhosting industry.

The Lowe’s ‘birdseed sale’ picture above is a prime example of one of these tactics.

Over the course of the last couple of days I took a few other photographs around town that I think tell you about other common kinds of sales promotions. Most sales are smokescreens, and if you step back you can see through the haze. Let’s go into a few of the most common offenders, starting with:

Sale Type #1: The Fake Bargain

My sale is designed to sell you what I want you to buy, not what you need.

Did you know that in many cases the aisle caps at supermarkets don’t feature actual sales?

When you or I see a stack of sodas, cereal, or other neatly stacked products with a big red pricing sign, we’d usually assume we’re getting a discount. But more often than not, those prices aren’t any lower than normal. Instead, in many cases, what you’re seeing is the work of a product manufacturer who’s struck a deal with the retail chain to prominently display whatever product the manufacturer wants or needs to sell that week.

This tactic relies heavily on research that’s shown that many shoppers buy on the presumption of value. Shoppers inherently “trust” the placement of products to show them what is preferred within a given product category, big manufacturers treat this “store detailing” as another form of advertising.  The bottom line is: you move to purchase a great deal, but usually you’re actually paying regular price.

So what does this have to do with hosting?

Sadly, a lot more than you might think.  Many hosting companies employ similar tactics, “featuring” old, unpopular hosting products with vague descriptions and using the illusion of a sale to do it. There are countless companies that ‘feature’ VPS products at discount rates, but with no spec list in sight, when you peek behind the hyperbole there’s not much left.

Here’s what we say: Price your product accordingly from the get go. If consumers think it’s worth it, you’ll do well; if not, then you won’t. When ServInt has a sale, we mean it.

As for me, I went and bought my birdseed at a local nursery.

Sale Type #2: But WAIT, there’s MORE!!!

My product doesn’t have much value, and probably isn’t very good.

Everyone wants cheap explosives!

Infomercials are built on the premise of taking something that’s mostly useless and convincing people to buy it so they don’t miss out on a ‘great deal’.

Look at the picture to the left (or above if you’re on a phone) and think about what it is, exactly, that you would consider purchasing were you in the market for small, celebratory explosives.

Would you pay full price for one item knowing they think so little of their product they’d throw two more in for free? As a smart consumer, and as an explosion-loving American, I’m looking at the one thing they *won’t* give away:  the “Assortments.”

If fireworks and the internet have anything in common, it’s that when somebody is trying to give you something for “free,”  they’re either giving you something they don’t want, or they’ve jacked up the price on the thing you have to buy to get the free thing (I realize that was a mouthful, but I’m sticking with it).

They’re still making money, which is fine, but you’re being lied to, which is not fine.

Of course, that doesn’t hold true in every case, but by and large the infomercial technique is a common, and surprisingly effective, sleazy sales tactic.

Here’s what we say: if your hosting company gives away something with a product that is having its prices slashed, ask yourself why. Think about who paid full price for it, and imagine whether they feel ripped off. Ask yourself whether you’ll feel ripped off if they slash prices again.

If it’s something important – like hosting – on which you run your business – ask what else they’re slashing along with their prices. Are they sacrificing customer service in order to send new signups a free toaster? Are they updating their infrastructure as quickly as they update their goodie bags?

A cheap product, including a lot of hosting, is cheap for a reason. When the crux of a marketing strategy is giving away stuff to help justify the cost, well, buyer beware. Big sales like this should lead to big questions, because when somebody is devaluing their product line there’s usually a reason and it’s usually not good.

Sale Type #3: The ‘Facade’ Discount

Jacking up the ‘normal’ retail price only to create the illusion of a big discount later.

They starch their prices, too!

Dry cleaners and Rug stores, to name just two, are pretty notorious for this famous discount scam.

The idea is simple, advertise huge discounts on previously inflated prices.

Nevermind that nobody has ever payed ‘full price’ on these things; the ‘full price’ itself is often arbitrary and unreasonable.

With that being said, advertising a large percentage off of a borderline fictitious top price is still, somehow, compelling.

We see this kind of scheme in hosting all the time – it’s most often associated with hosts trying to sell old products that are losing relevance. Old dedicated servers are often put on sale at deep monthly discounts, because they’re not as powerful, or redundant, or frankly useful as their modern equivalents.

That’s a perfectly acceptable thing to do, after all there are plenty of uses for legacy hardware if you have a relatively static site, but the issue is with the disingenuousness of the discount itself.

When these products are advertised at “X% off” they don’t explain that they’re discounting from a price that hasn’t been relevant since 2006!

Here’s What We Say: There’s nothing wrong with discounting older solutions, especially if they’re compelling products in their own right. But passing off something as brand new and cutting edge is just bad business, and it’s far more pervasive in our industry than it should be.


Don’t forget, check back here later for Part 2 of the 5 worst products in webhosting.

Do you have an example of a discount scam? Let us know in the comments, on Facebook, or on Twitter!

Follow Christian on Twitter.

Photo by Jakerome

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Comments
  1. Worst ever sales tactic? Unlimited Data on Cell Phones then in the small print unlimited actually has a hard cap of say 500mb per month, after this you pay per mb. Seriously, is there any way in which this could be viewed as unlimited. If I sold an unlimited hour wedding session and left after 3 hours or charged extra for saying I would be in court and I would lose. Why they cannot grow a pair and just offer a fixed amount. The closest I came to seeing it done properly is one company who slowed down your access when you passed X GB a month. You still had access, you didnt get charged extra and those that hammered the system were limited. Last I heard that company hadn't gone bankrupt. At least servint isn't tempted to go down the unlimited bandwidth for 9.99 a month route!
  2. Two thoughts: My wife and I signed up for a 'Free checks for life*' checking account...only to find out a couple years later, when we went to order our first reorder that the program had ended. We should have read the * next to the words 'for life'. Blew my mind.... Second, I thing your tag 'Don't forget...' references the wrong series. nbd, just noticed it and thought I'd throw it out there. Can't wait for Part 2!
  3. Funny you should mention that. In part two I will address that exact subject and talk about why we changed the SOLO4LIFE coupon. Stay tuned!
    Christian Dawson /
  4. Sale Type #4: Fake "Limited" Offers Use the SOLO4LIFE coupon to get $20 off the Solo Express product range... FOR LIFE! Limited time promotion only! Too bad everyone else also gets the discount 2 weeks later!
    Anthony Tan /
  5. Richard, thanks for the awesome comments and notes on your own experiences! I completely, completely understand where you are coming from. My frustration with these sale techniques is that more often than not it feels like everybody is 'spinning' and nobody is talking straight with people about value, and since people are used to that the deceptions and low quality alternatives often win out. Even if you're only talking about birdseed.
    Christian Dawson /
  6. Discounts and peoples perception that a non discounted item is going to be a rip off is the bane of my life. As a wedding photographer and coordinator we work on tight margins. People think that a photographer is making a fortune at several hundred per hour, but dont factor in the heavy capex requirements or hours spent in post process. The wedding coordination side combines time spent arranging a wedding (which can vary from a few hours to weeks of 'man hours') and reselling vendors. Nobody here drives a Jaguar! I have to think long and hard about any serious purchase and plan my buys up to 24 months ahead (based on camera product cycles and guesses about when lenses will be updated) and I do respect a good deal. However, I am loyal to certain companies and assuming they are in the right ballpark on price I will stick to them. However it has to be specific to the market, not all markets can offer deep discounts. When you are reselling vendors taking 5% off the gross might be 20-50% off the net so it can be tough to offer anything serious (without over inflating the rack price which we decided from the start wasn't how we wanted to work). We currently have two offers, one for morning ceremonies (we managed to negotiate discounts as vendors can turn two weddings that day) and one early bird discount for those booking >4 months in advance for slow months. Having those allows us to predict demand and scale appropriately. It's not really the consumers issue or fault, the market place players have created this 200% off buy now and Ill include an extra one points back on a loyalty card environment. Personally I know sticking to a simple honest pricing structure will lose us some business but win us other business. It has been tough at times explaining to someone that we cannot discount a price for them as they simply accept it as something that will happen (like buying a car, who pays list??) but not all markets are the same. Try getting an Aston dealer to drop the price! Absolutely love he lowes offer! Right time to get back to writing reviews on wedding venues :)
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