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There’s an old adage which states that “You get what you pay for”.

In most areas of life, and business, this holds true. Not necessarily so, however, in the webhosting industry. Often, you pay too much, and don’t get what you pay for.

Several weeks ago I got a call from a web designer friend of mine.

“Jim,” He said “You won’t believe this”.

He went on to tell me about a Plastic Surgeon he was redesigning a website for. This client was paying $600.00 per month for his webhosting account.

“The incredible thing is” He related, “I can’t get the current host to return my phone calls or emails”.

After looking at this clients needs, I was shocked to find that there was nothing special about his site that justified his being on anything other than a basic shared webhosting plan. We quoted him a monthly rate of under five dollars.

In this case, the client was being abused by an unscrupulous host who was not only overcharging him, but not even providing the basic support he needed.

This is an extreme example, no doubt, but it all to often characterizes the poor deal which most website owners fall into.

Several years ago, there was no such thing as a webhosting industry. Nearly all websites were hosted by local ISP’s. The average monthly cost for hosting a website was $20.00 per month. Often, if you called the ISP with a technical question, they would tell you to buy a book or take a class.

Around 1996, we saw the emergence of a few “webhosting” companies. These were companies which were strictly committed to hosting websites. Using the economy of scale, they were able to offer incredibly useful webhosting packages for around $10.00 per month. What’s more, some of these companies provided useful tech support which was geared towards meeting a website owners needs.

Fast forward to 2005, we saw the emergence of a new type of web host – the cheap webhosting provider. These are companies which offer hosting for less than $5.00 per month.

Generally, cheap webhosting providers are newer companies. There’s a reason for this. It’s extremely difficult for the older companies to lower their prices when they already have a large customer base which pays higher prices. They’d be slashing their gross, and most companies just can’t afford that.

So how do cheap webhosting providers offer such a low price to begin with?

Part of it is that servers, hard drive space and bandwidth are much, much less expensive than they were several years ago. Cheap webhosting providers capitalize on this.

Another part is that cheap hosting providers use a different business model than the older providers. Webhosting is a very competitive business. Until recently, web hosts attempted to compete by providing the most tools and features. The problem with this model is that not everyone needs everything. Most web hosts provide free backup services to all of their clients. Backups are costly, and not everyone needs or wants them, but everyone pays for them because they’re built into the cost of the package.

A cheap webhosting provider, on the other hand, might give you the basic features that everyone uses, but offer weekly backups as an available add on feature, putting the cost of backing up websites on only those customers who want that service.

This all sounds great, I know, but what about service? Will I get competent and fast customer support from a company which charges me $4.00 per month?

The answer, surprisingly, is usually yes.

Obviously, not all cheap webhosting providers will give you great service. But not all expensive webhosting providers will give good service either. Our Plastic Surgeon friend couldn’t get his $600.00 host to return his emails.

But, with a cheaper provider, the key for the providers success is customer retention. A savvy web host will endeavor to please his existing clients by providing the best support possible.