Hosting payouts

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elime

elime

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Oct 19, 2007
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Ok, this is probably a stupid question, but here goes.

So hosting companies like hostgator, hostrocket, lunarpages etc. all payout around $100 a pop through their affiliate programs / commission junction.

When someone is signing up for a $5-10 shared hosting account, how can the companies payout such a significantly larger amount? The fact that they usually retain customers, domain registrations, upselling? I mean...quite a few signups might not even last 10 months, which is the amount of time it seems it would take for them to start turning a profit.

I'm sure the answer is pretty simple but I'm missing it.
 


I'm also wondering which of the big hosting companies are reliable in their tracking and payouts.. I've seen so many people complain of getting screwed by hostgator, it's put me off promoting them
 
Bofu2U said:
Most of the time they only payout 100 when the client prepays like 2 years @ 300..
Click to expand...

I've had payouts that high when I know for a fact that the person only bought a shared hosting account...although your explanation does seem more reasonable. hmm.

Anyone else have comments on this?
 
I am guessing that most people who register a site, whether it be an individual or a business, usually keep that site for at least a year.

I helped alot of individuals build their own personal and business type sites, and none of them canceled after a few months. They usually waited the full year or more. Some forgot to cancel and were just rebilled.
 
It's the same business model used by life insurance companies. When an agent sells a life policy their commission is typically the first whole year's premiums. If the customer pays $30/mo, the agent usually gets about $360.
The companies don't even make any money on a policy like this for a year but they know their retention numbers and base their business plans on those averages.
 
You have to remember that you aren't the average user.

I do web design for a guy. He prepaid is domain for like 6 years with godaddy and I was just recently able to convince him to switch to namecheap with me when it came up for renewal. He paid his old webmaster twice a year. Most people don't want the hassle of paying for webhosting every month. So they just prepay a year or more, and thats how the hosting companies are able to offer those payouts.
 
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