

The Hosting Provider Time Machine: Paying 2006 prices in 2009 - RobbieStats
http://statsheet.com/blog/the-hosting-provider-time-machine-paying-2006-prices-in-2009

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mdasen
There are providers offering better pricing.

ChunkHost has 2GB instances for $66/mo. You can get a 512MB instance to try
for free during their beta.

Prgmr (which is very, very basic and much harder to use) offers 2GB instances
for $36. However, their service isn't so automated.

The issue is that Slicehost now operates on a premium level - they're a big
name. And you're paying for that name. Linode offers slightly more competitive
pricing, but again name.

People are willing to pay up a little in order to get something they think
will have better uptime. But this is one of the reasons that I left Slicehost.
When they started, you could get a 512MB dedicated server for around $70-100
with no RAID and crappy reliability. The cost thing is starting to swing back
toward dedicated hardware as for $160 a place like Softlayer will give you a
4GB dedicated box or an 8GB server for $210 (both coming with 2,000GB of
bandwidth). It's still hard to match on the low-end because when you're
dealing with dedicated hardware you have electricity and rackspace which,
well, a server has to take up physical space. But Slicehost and other VPS
providers haven't cut prices and adjusted as things changed which has made
dedicated boxes a lot more attractive.

 _If you have 7 2GB slices, you might want to look at a dedicated box._ Buy a
box with 16GB of RAM, 4 processing cores, and get your VMs running on it all
for around $460. That compares favorably to the $910 Slicehost would charge.
Gets even better at 32GB for $660 vs. $1820.

Just remember that VPSs aren't the be all and end all. They're a tool. If the
pricing of other options is working out better for you, look into that.

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tptacek
The idea that you should price things based on what they cost you to acquire
is the reason engineers are rarely trusted with pricing in established
companies. Slicehost can charge whatever it wants for storage, because you
can't get storage with a Slicehost wrapper around it anywhere else. This is
just an optimization problem.

Something to like about this situation: most startups price too low out of the
gate, and should be _raising_ prices regularly. Here Slicehost gets a (small)
shadow price increase over time, as its costs for storage and compute
decrease.

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RobbieStats
You make it sound like this is a highly differentiated market. We are talking
about hosting hardware. Sure Slicehost (and others) throw some software in to
the mix, but the main thing everyone buys is access to hardware (and not
specialized hardware at that). So yeah, price does matter. I think it makes
them vulnerable to new entrants into the market that can base their prices on
today's hardware.

Also, I don't think this is a "small" shadow price increase. Hardware gets
cheaper by 50% year-over-year. Even if you cut that in half, a 25% yearly
decrease in hardware costs is pretty good for them.

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tptacek
Yup. That sounds good. I'm still not moving to Linode. Slicehost fucking kicks
ass. Everything it claims to do just works, with zero messing around. I have
zero time to dick around with Linux kernel builds and drivers and ISOs and
who-the-hell-knows. They could charge significantly more and it'd still be
worth it to me.

Other people value their time and effort differently. Slicehost might not get
them. I think they've factored that in. =)

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RobbieStats
Unfortunately I have to agree with you ;-) My experience has been so good with
them that my default option is to shell out more money and keep using them.

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acangiano
I think he has a very valid point, and Slicehost should take notice. However,
I also think that he has outgrown the VPS space. I would contact SoftLayer if
were him.

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petercooper
A big "seconded" for SoftLayer here. I've trusted a lot of stuff to them in
the last few years and never had a problem.

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RobbieStats
I looked at Linode and their offering is pretty competitive with Slicehost
(slightly higher price but more storage).

Any positive/negative experience with them?

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decklin
I'm quite happy with them. Since I signed up in 2008, they've increased the
base storage once:

<http://blog.linode.com/2009/04/23/33-additional-disk-space/>

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smakz
Have you looked into EC2 at all?

While they have precanned "instance types" as well, they also offer a separate
Elastic Block Storage service where you can ask for as much storage as you
want, and it acts like a virtual hard disk on your partition.

<http://aws.amazon.com/ebs/>

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patio11
I'm also on Slicehost, and have been for a few years now. My spending on
hosting goes up every year, my spending on hosting as a percentage of sales
keeps going down. This is principally because I spend most of my time figuring
out more ways to charge more customers more money (they certainly don't pay
2006 prices any more) and less of my time worrying about servers or trying to
shave money off my hosting bill.

Now, if you want to treat hard drive space as a commodity, there are many
service providers out there who are happy to meet your needs. You'll have to
put up with some of the pain associated with dealing with a commodity service.
Slicehost (sensibly) has no particular desire to commoditize their offering or
price like they have done so.

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dlsspy
Linode allows you to upgrade disk or RAM independently. Sounds like it's
closer to what he wanted.

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calambrac
Their customers pay it, their competitors don't undercut it, and they get an
increasing profit margin out of it. Sounds like they've found the magic number
to me...

I'm also curious how you know that their numbers would actually let them drop
the price yet. You really think they pay for all their hardware and software
with a few month's worth of fees? That after paying
personnel/electricity/marketing/rent each month they're going to wipe out the
long-term investment numbers each month? I'm willing to bet they have some
kind of spreadsheet somewhere and understand where they stand on their pricing
requirements much better than you do.

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Andys
I run a small VPS hosting company.

You are right; the hardware cost is only a small part of the total outgoings
for this type of business.

In that regard, the pricing model tends towards how big a slice of the 'pie'
each customer gets to buy. The 'pie' is the total amount of hardware available
for customer use.

So if you want to buy more disk space only, that would reduce the size of the
pie for everyone else who wants disk space, so you'd need to reduce the
allowed disk space on all plans to leave some 'spare' in case someone wants to
expand their disk.

Slicehost instead have maximized the amount of disk space per customer and
that hasn't left any spare, so you are (in theory) already getting a good
deal.

Perhaps there's room for a small startup company to arbitrate buying and
selling of extra disk space amongst Slicehost customers :-)

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kragen
_So if you want to buy more disk space only, that would reduce the size of the
pie for everyone else who wants disk space, so you'd need to reduce the
allowed disk space on all plans to leave some 'spare' in case someone wants to
expand their disk._

Or maybe Slicehost could use some of the money to buy some more disk space and
hook it up.

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Andys
You missed my point: If they give you some more disk space then they have to
decrease everyone else's space.

What you're suggesting means buying a new "pie", because they've sliced up the
existing pie and allocated all of it, completely. This would mean buying more
datacenter space, more servers, more networking equipment. When you want to
offer disk space to customers as a product, it has to scale, you can't just
plug in a USB HDD every time someone emails to ask for more space.

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kragen
I didn't miss your point. I disagreed directly with your point, because I
think you're wrong — probably for Slicehost, and certainly for a sensibly-run
company that does what they do.

Aren't they already using a SAN? Aren't they continuously expanding their
"pie" as they get more customers and replace superannuated servers? So not USB
but SATA: populating the new servers with 500GB disks instead of 250GB, or
three disks instead of two. Maybe you know more about how Slicehost operates
than I do, and I'm wrong about the above? If so, I'd love to have details.

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reedlaw
_[F]or hosting providers that do not a) increase their hardware configurations
or b) decrease their price on at least a bi-yearly basis, their profit margins
are actually increasing over time._

Not necessarily. What about inflation? It's remarkable that technology
continues to become cheaper while our currency is decreasing in value. It just
makes me wonder what we'd be paying if we used hard money instead.

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lsb
1) They're only charging that because people are paying it.

2) What do you need on your Slicehost VPS that you couldn't just dump onto
your home storage device?

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RobbieStats
1) I understand, but unless people raise this issue publicly maybe they won't
ever change ;-)

2) I can dump it on my home drive just like i could dump it on S3, but I do a
lot of parsing on the files and copying them back and forth when needed is a
headache I'd rather avoid. And then there is my front-end server that caches
large portions of the website dynamically which I can't move to my home drive

