The cheap hosting business model

There are three fundamental cost factors that come with operating a website: Bandwidth, storage, and processor utilization. Whether you buy hosting from a web hosting provider or set up a website in your closet, someone has to pay for the pipe that brings visitors to your site.
If you have few visitors and not so much traffic (or, more accurately, few bytes to transmit), bandwidth costs can remain low. If you have few pages on your site with a relatively minimal number of pictures, storage costs can remain low. If there’s relatively little processing in terms of scripts, programs, and database accesses, processor usage can remain low. The cheapest hosting providers count on this. Many gyms sell yearly memberships to far more patrons than they could actually fit into their facilities if everyone were to show up at once. But the business model of the typical gym is that a measurable percentage of customers will never or only rarely use the equipment. This allows gym operators to spread their costs across all their customers, yet still make a profit. The same is true of hosting providers. Super-cheap hosting providers are counting on most customers getting only a few visitors here and there, with just a few pages to provide, and very little processing overhead. Sure, there is a baseline of bot and spider traffic all websites incur, but hosting providers who sell ultra-low-cost plans expect that, and then pile as many customers onto one machine or cloud server as is possible, spreading the cost across everyone. Still, it’s possible to shop around and find reasonable deals on web hosting. Ed Bott covers the terrain of inexpensive and reputable web hosting services in his excellent buying guide, The best cheap web hosting services.

How using free web hosting can go terribly wrong

Each approach has its benefits for hosting providers, but all you need to really take away is that providing hosting services has considerable costs. That’s why there are so few absolutely free hosting providers: It’s expensive to offer and something (often something sleazy or criminal) has to cover the expenses. What could possibly go wrong? The whole service could vanish: As we’ve seen, web hosting is expensive to provide. If the free hosting provider hasn’t found a good way to cover the costs, they could run out of money very quickly. Overnight, your site (and all your files if you didn’t back up) could be gone. Remember GeoCities? That was one of the top 10 sites on the internet in the 90s, but Yahoo killed it off in 2009. Rather than continue to incur hosting and internet feed costs, Yahoo deleted all the sites hosted on GeoCities. Ads, even reprehensible ads: One way for free hosting providers to make money is by plastering ads all over your web pages. Those ads are not only unlikely to be related to your site, but they may well also be antithetical to any message you’re putting out, make political statements you don’t agree with, or even push porn or gambling. Cheesy web address: It’s unlikely that a free hosting service will let you use your own domain name. So you’re likely to wind up with a corporate web address something like 4seasonslandscaping.cheapandcrappyhosting.com. Sudden hosting charges: Almost every EULA (End User License Agreement) allows the vendor to change terms at any time. If a free hosting provider can no longer make money with free sites, it might very well give you 30 days to upgrade to a paid program or lose your data. How much will that upgrade cost? Consult the Magic 8 Ball and cross your fingers. No idea. Nickel-and-dime charges: The pages you host might be free. But do you want to upload an image? Pay $2 for FTP access. Want to use your own domain name? Pay $10 to resolve custom domains. Want to have backups? Pay $4 for backups. Remember, the money has to be recouped somewhere. God-awful slow web pages: You don’t think free hosting providers are going to put your free site on quality servers, do you? You and thousands of others are going to share very limited resources. Expect download speeds to be similarly god-awful (and, yes, that is a real dictionary word). Limited scalability: Even if you’re okay with the limitations of a free site, you might want to grow. Many sites offer very limited storage, so the only way you’re going to be able to grow is to move to a new provider. Spammy-spam-spam: Some operators make money by selling link farms to spammers, or to sites hyping gambling or drugs, or to online scammers, or worse. Your site could inadvertently wind up being a front for criminal activity. Malware hosting and distribution: Free site operators don’t care whether your site gets hacked, and they’re certainly not going to invest in protecting your site. Worse yet, more nefarious operators may use your site to push drive-by downloads of malware. It could get really ugly if any of your customers discover they got infected by visiting your site. That’s a very bad day waiting to happen. I could go on, but you get the idea. Free hosting: Bad.

Hidden costs of buying cheap hosting

You stand a much better chance of having a working website if you pay something for the hosting. There is a wide range of very cheap hosting providers that, while usually meh, stand head and shoulders above free hosting providers in terms of quality and safety. Cheap hosting is not necessarily a bad idea, but before you choose, there’s something else you need to consider. We’re not done talking about costs. So far, we’ve discussed the costs hosting providers incur to provide hosting to you. But there are costs to you as well. Cheap hosting is not actually sold by the month: My first caution relates to what most folks think of when buying hosting: The cost of the hosting itself. Cheap hosting is often marketed with by-the-month prices but is paid for with full-year payments. In other words, a hosting provider might advertise a price of $1.99 per month, but that could be for three years – and you’d have to pay for the whole three years, $71.64, at the time you sign up. Cheap hosting becomes very expensive after the initial offer period: Another thing to consider is that once your initial purchase period is complete, most cheap hosting providers charge a draconianly nasty renewal fee, often two- to 10-times the initial price. So, while you might have paid $71.64 for your first three years, your next three years might cost you $286.56. If you want to go back to paying that elusive $1.99 a month, you’d actually have to move your website. Moving a website is far from a simple task: If you only have a few pages, you can simply recreate your site on a new provider. But if you have more than three or four pages, starting from scratch can get painful and costly. Worse, many providers make it easy to create a website by using their in-house web page builder. The problem? That’s usually a proprietary tool that won’t be compatible anywhere else. Even if you host using an open-source tool like WordPress, you’ll have to backup all your files and databases, move them to your new hosting provider, set up your site and theme, and make sure your configuration is correct. All this creates lock-in, which is why surge pricing is so profitable for hosting providers. Additionally, if you don’t design your site yourself, you’ll be incurring the cost of someone to develop, design, and deploy your site. One expense that’s not too bad is domain name registration. That runs about $5 to $50 per year, depending on which top-level domain (i.e., .com vs. .tv) you choose to use. Also, keep in mind that cheap hosting is usually shared hosting. Your site will undoubtedly feed pages to visitors. But don’t expect it to be super fast or able to run a particularly complex set of web apps without wheezing.

Let’s take a quick look at five cheap hosting providers at under $2/month. The prices I’m quoting are very likely to change, but the general scope of offering should remain the same. Hostinger: Hostinger has an $0.99 per month plan. You have to buy four years of the plan, but paying $48 for four years of hosting from a pretty decent hosting provider isn’t the worst thing you could do. In four years, you’ll have to plunk down $143.52 to renew for another four years. Hostinger is the only ultra cheap hosting provider that Ed Bott recommends. WebHostingPad: WebHostingPad is priced at double what Hostinger is offering for substantially the same service. But if you want to pay for a $1.99 per month plan, you can plunk down your $95.52 for four years. After four years, that more than doubles: Expect to spend $239.52 for your next four years. Not something I’d recommend given Hostinger’s better deal. MochaHost: MochaHost offers a pretty good long-term deal. If you buy the $1.95 per month plan, you only have to buy three years. That means your buy-in is $70.20. What’s even better is when you renew, they’re not jumping the price. The next three years are also $70.20. Make sure you double-check this when you place your order and screenshot the page that promises the renewal price protections. Offers almost always change, so you’ll want proof of what you signed up to.   Ionos:Here’s one that shows the games hosting providers play. Ionos will give you a full year of hosting for just a buck. But… in 12 months it’ll sock your credit card with a $120 charge for the next 12 months. Four years will cost you $361, so unless you plan to move your site in 11 months (which might violate their terms of service), I’d give this a pass.
iPage: iPage delivers a whopping multiplier. Pay at the $1.99 per month rate by paying $71.64 for the first three years. But unless you move to a new host (with all the hassle and effort that implies), you’re going to pay $297.64 for your next three years. That’s quadrupling the price. Ouch! WordPress.com: WordPress.com (which is related, but different from the open-source WordPress content management system) provides free sites and is an exception to all the rules I mentioned earlier. Yes, it runs ads, and yes, it’s rife with upsells. But this free site service is provided by a legitimate, respected company, and has an upgrade path with less lock-in. If you want a free site, this is my safest recommendation.

Recommendations

Your choice of hosting provider really needs to be a function of what you need. For example, for my main site, hosted on Pagely, I pay considerably more for a month of hosting than Hostinger’s bottom-of-the-barrel plan charges for four years. But I have a very complex site with e-commerce and thousands of registered users. Plus, I count on the high-quality managed hosting and hands-on support. I also pay $5 per month for bare-metal cloud services on AWS and Digital Ocean for development. And I pay for a plan from another provider that allows for unlimited sites to be spun up for $36 per year. I’m not recommending this host because it’s dog slow for more than one user at a time, but for my relatively edge case code testing use, it’s a perfect fit. You need to decide what you’re going to need. If you expect to scale, consider the migration costs or at least make sure your provider can upgrade your service if you need it. And please, with the exception of WordPress.com, stay away from the free hosting providers. If you can’t yet afford $50 for your primary business marketing presence, you should probably hold off on setting up a website until you can afford safe hosting. Consider WordPress.com or something like a free Facebook business page, or post regularly on Twitter and Instagram in the meantime. What are you doing about hosting? Which hosting providers do you like and why? What lessons did you learn that you wish you knew before you started? Any tips and advice you’d like to share with those getting started with their first websites? Please let us know in the comments below. You can follow my day-to-day project updates on social media. Be sure to follow me on Twitter at @DavidGewirtz, on Facebook at Facebook.com/DavidGewirtz, on Instagram at Instagram.com/DavidGewirtz, and on YouTube at YouTube.com/DavidGewirtzTV.