How do Web Hosting Company make money if they give $100 commission to affiliates for selling $5, $7 or $10 web hosting? Hostgator give $100 web.com give $120 How do these company make money?
because they count on the sales getting renewed every year, ad are paying you for a customer they hope to keep that customer long enough to make back the 100 they gave you
and the 5,10, etc web hosting is per month, you make 100 only when they prepay for a year, in most companies, i think hostgator does give you the 100 even when they do monthly though, not sure anymore
that does sound a fairly high commission, unless they are paying upfront, usually most companies work on a 10-20% commission, so if they select the cheap $5/month hosting you might be getting just $0.50-1.00/month. If they get domains, webdesign, some seo/sem services and higher priced hosting and pay upfront for the year, that is the only way i can see they could make money. Otherwise if they are having to pay $20 for a adword bid and may have very low conversion rates, it maybe cheaper to pay more for guaranteed sales.
I always think webhosting companies get more money on the renewals and on the upgrading that customers do to get more....
Most (if not all) hosting providers on CJ require yearly agreements & offer value-added services, which is how they're able to offer such high commissions.
Its very simple they gives you 100$.. and from customer they were getting around 10$ per month..they are getting much more..
Well, Let's say comission = $100 And the plan cost $6.95 x 12 = $83.4 . That means they will be $66,8 in plus when customer renew for another year. And for third, fourth... It's a pure profit. They allmost have no expenses for hosting these sites, since they put 300-400 accounts per server. And the other thing is rural marketing. When user likes the service he will probably bring friends (free referalls!) which will make more money to host.
They make it back over time, the companies you mentioned are large names. They know how long the average stays with them, what the average is per new customer, etc. So if HostGator have a average $300 (pure speculation), and they are paying $1oo to affiliate and "x" amount to affiliate network to capture that customer, roi (return on investment) must be good enough to make it worth it. Companies have formulas for calculating their return. This is the way it is with most big business works, cell phones, cable companies, subscription based services, etc they pay a HUGE amount to capture a new customer knowing that eventually they will regain their initial investment. Customers add things like step ups in plans, add domains, and other products and services. LEts take me as a example, i have 4 hosting plans (dont ask me why ), and over the period that i have been with just one of my hosts i have had over 200 domains, kind of a extrme case, but this all balances out and they come up with a spending average, this may be in addition from affiliate revenue they generate from pushing sites like Fotolio, or other adverts/programs they have on their site.
Big companies like Hostgator, Justhost etc know the importance of the "Lifetime Value" of a customer. It's a win win situation - affiliates get paid $100 per sale, customers gets unlimited hosting and the hosting company may not make money straight away BUT the "Lifetime Value" of the customer means they will make hundreds from years to come, assuming that the customer sticks around. You will find that when people take up hosting, it would be for 1 year or more. So, hosting companies give up short time profits for long term gain. In my view that is a sound long term business model.
Yeah, it's not practically what everyone is saying. HostGator doesn't pay you on only yearly signups. They make money ask others said, they know what customers do. Infact, they don't really loose money, they make it. HostGator is a huge company they would not lose money very much .!
People who have dealt with a bad host can tell you how difficult and annoying it is to have to jump ships. As people are saying, once you are with a good host you are more than likely to stick with them. If you have a multiple sites they obviously can recoup the initial commission quite quickly.
Hostgator pays you on monthly sign ups also with a 60 day delay.. they are the best hosting company to deal with as their no-scrub feature on most signups is excellent.. Also most hosting companies give away free Google + Yahoo + MSN/Bing vouchers.. Google pays hosting companies around $250 per new customer thast signs up through their aff link and uses their coupon.. add in the Yahoo + Bing backend commissions they make and its very profitable. and most hosts now days also have their own backend sales etc which is mostly profit.
maybe sometimes they not paying to affiliate, I sold several plans for some hosting company and after a week money disappeared from CJ balance, maybe client resign or ...........