An Adelaide-based Web hosting company, SmartyHost -- which offers its service to small-to-medium enterprises (SMEs) at monthly rates up to 75 percent cheaper than market leaders -- is keen to expose the emergence in recent years of what it has described as "rip-off" hosting services.
SmartyHost adds its voice to a growing group of smaller entrants to Web hosting market that have criticised the pricing practices of industry pace-setters such as WebCentral and Telstra.
Early last month Michael Farrell, managing director of Hostway, politely questioned the value of Telstra's SME Web hosting packages shortly after they were launched early last month.
"It's at the high end of the market for what they offer," said Farrell at the time.
SmartyHost managing director Anoosh Manzoori took the criticism further, accusing the industry's top-tier players of exploiting the small business community's inexperience with technology to turn their Web hosting services into a cash cow.
"Most firms are overcharging, charging mark-up management and service fees where they needn't exist. These are quite often 'hidden' and reside only in the small print of marketing material," said Manzoori.
Manzoori took the criticism to the front door of recognised providers such as WebCentral and Telstra, accusing them of misleading the market with their pricing guidelines.
"[SMEs] are guided by the pricing structures put forward by these providers".
Manzoori reserved particular criticism for Web hosting providers who charge for what he described as "non-services". Most Web hosting providers offer domain name registration services for a fee that covers the cost of licensing the name with Australia's naming authority AusRegistry. AusRegistry's service links the domain name with numerical Internet addresses of servers maintained by the host.
While the license fee covers the domain name for two years, some Web hosting providers bundle in additional charges to cover the ongoing "management" of the domain name. Manzoori claims that the cost is unjustifiable, as no further management takes place after the name is registered.
Manzoori also said that set-up fees and monthly charges were unjustifiably high.
Telstra and WebCentral charge a one-off set-up fee of AU$105 and AU$84 per month for an account that includes 40 mail boxes, 150 MB of storage and a 1GB of traffic allowance. SmartyHost's comparable plan offers the same storage, an additional 120 mail boxes and 20GB traffic allowance for AU$15 per month with no set-up fee.
And while Telstra and WebCentral charge AU$135 for domain name registration, Manzoori said SmartyHost is taking a healthy profit margin when charging AU$79 for the same service.
Manzoori claims that Telstra and WebCentral's pricing structure is based on "perceived value," which exploits the customer's ignorance of technology.
"If I was to manually set up an account for a client it would take me around 5 to 10 minutes. If I was to automate the system -- as we have and I'm sure Telstra does -- it would take 2 minutes, so even if [Telstra] was to charge AU$100 per hour it would cost much less than that," he said.
Manzoori added that while many Web hosting providers will differentiate pricing for their plans on the basis of features, providing the services was often no more than a matter of "clicking boxes".
"The more features they have in their package, the more they'll charge you in terms of set-up...now the fact is the servers have got all the features are already installed on the server -- it's just a matter of clicking the ones that you want active for a client," he said.
Telstra was yesterday unable to supply a detailed comment on the issue but a spokesperson defended the carrier's service offerings saying its prices were comparable with the industry's standards.
hmmm I think this guys a bit inexperienced. What about backing up the web site/servers, disaster recovery, data centre costs, physical security?
What about licensed Windows server software? What about pre-processores like cold fusion and ASP.
All of these things cost substantial amounts of money when you purchase them.
I dont think much thought has gone into the actual costs of providing these types of services.