Choosing a host - pricing matters
Posted by: Carl Smith on Tuesday August 21, 2007
We recently chose Engine Yard to host a new web application we are releasing in September. Now anyone who knows us is well aware of our biz crush on Rackspace, but this is a Rails app so we needed a host who specialized in Rails. Chad Bearden, a trusted friend and Rails dude, recommended Engine Yard to us.
Throughout the process I got to know Lance Walley who is one of the founders and runs the business side of things. I would have never known Lance was a co-founder if I hadn’t Googled him. (Did he feel it? I did.) To me, he was just a guy at Engine Yard trying to help get us set up. Chad told us Engine Yard was down to earth and he was right.
After the business deal was done, Lance asked me a great question about pricing. They had recently enhanced their service and technology and wanted to know what I thought about their monthly price.
Here’s my response to his question, modified only to protect the innocent.
Hi Lance. Interesting question.
My thoughts on price are two-fold.
First, given our situation we looked at several rails hosts before we called Engine Yard. Pricing and pricing models ranged widely. We were not about to go with a low-cost provider, we’ve lived through the expense of being cheap. But, we didn’t want to be foolish either. Our main host is Rackspace, so that should define us as a customer in many ways. CityCal, and this first deployment ExperienceJax, are too important to us to let the cost of hosting impact their success.
Second, I get nervous when a host lowers their prices. This is the progression for a lot of hosts from what I can tell. A host gains popularity and everyone starts flocking to them. Their support and systems start to buckle as they lower costs to get more customers. Soon they are hiring people who don’t care about the company’s culture and don’t know what they’re doing.
The entire time this is going on their reputation is getting battered and good customers decide to move on. Sadly, they either don’t notice or don’t care. They just keep charging forward. Even while everything gets worse for users, they continue taking on more and more clients. Profits go up, but quality goes down.
Engine Yard, however, is offering new products and raising prices. That additional revenue allows you to offer superior customer service to superior customers. It may be an extra $100/month for us to be with you now versus before you raised your prices. But that’s a fraction of what we charge an hour. So if your service saves us one hour of headache a month then we’re ahead of the game.
And when Engine Yard had a backlog of new customers, they told prospects they would have to wait so they could give everyone the attention they needed. They didn’t just add people or overwork the ones they had. BRILLIANT! Why? Because they are building a customer base of dedicated professionals who are going to be long term customers.
Will I balk at the next price increase? Only if there isn’t value in it for nGen and our products and customers.
The cost of technology is always going down. The value of great support and service never will.
Filed under: Interweb
Loren Hale
08.21.07 at 7:14pm
Thank you Carl, for sharing this with others. We really appreciate it and are happy to have you on board.