What is a sustainable minimum for a low end yearly service?
As Black Friday approaches, I know that many of us are deal hunting, watching for things to get discounted, and hoping to score some amazing services at cheap prices. But especially in the low end arena, we've all experienced those times when a provider raises the prices ridiculously on renewal, alters the deal pray that I don't alter it further by changing TOS/AUP in shitty ways, shrugs off complaints/support tickets because a service was stupid cheap, goes out of business because they offered too many unsustainable prices, or just straight up deadpools. Nobody enjoys that part, not the providers nor the customers.
So, at the end of 2024, what is a minimum reasonable price for a yearly service that you would normally expect to renew at the same price, potentially for many years? Obviously hardware prices, electricity rates, colocation costs for leased equipment, etc. shift all the time, but what is the point at which you go "that's gonna be a no from me, dawg" when you see a deal because it's unrealistically low? I'm talking for the low end, minimal services, with minimal ram, low-ish bandwidth for the location, just enough storage to run a few services, and an IPv4 address (since that has a cost outside the direct control of the provider). Like, nobody is out there offering $2/year for 1GB ram/2TB bandwidth/IPv4/50GB ssd. But for $25/year, there are tons and tons of options for those same specs (or better).
For you, what is the point of suspiciously-cheap? Would love to hear providers and client perspectives on this.
Comments
First of all, bf deals (also known as bfd’s) are part of provider marketing campaign. For this reason new providers try to invest as much as they can. Throwing 5 - 10 nodes for mere IP price only. So expect insane discounts.
Now for red lights:
) new providers (younger than 1 year in business);
) providers with rented ip space, no personal asn, rented hardware;
) certain countries which loves to scam gulible persons: romania, turkey, india;
) your gut feeling says “noooo”. Listen to it;
In general, plan your budget, pre-target some premium, well known providers. And only as a desert go for unknown, probably super shady deals. Just a few of them… maybe three or at best 7 dealz…
Adding to what Legendary said above:
Also to answer your question, for myself my logical sustainable minimum is about $2.50 / month on a low power high density node.
Broken down to:
Larger scales, different levels of over provision, etc etc could get that cost pretty low. You'll note there's no line item for "money that goes to me" - and that's why my plan on the site is $3, but your question was minimal sustainable non-bankrupt so that's my answer.
$7/year
$7/year
$6/year, but requires chess or USA PROMOTION ONLY
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How many push-ups are needed for $5/yr?
4~6 USD/Year for global link.
30~50USD/year for optimize link.
IPv6-only => $1/month
Add:
Total: $2/month
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If it's under $1/1GB RAM, like $0.50/GB, and you're on newer hardware like Ryzen, the provider is just selling it to break even as marketing material. IP cost, bandwidth cost, upfront hardware cost ($$$), transaction fees, software licensing fees, all of these add up.
If you're getting a VPS for $12/y, we all know how most of those end up after a year or two. At least at $24/y providers can break even.
ExtraVM
We are feeling risky: only one server is deemed sustainable with your formula.
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Those are larger plans, I was mostly talking about like 1-2 GB RAM servers that you usualy see going for like $10/y. Selling larger plans like 8GB RAM is much less risky, plus some of those guys use 512GB-1TB RAM systems. I'm just talking about stuff like Ryzen really or lower density / higher performance. Selling many less bigger plans is better than tons of small plans.
The GreenCloud and other plans that are $0.25-0.35/GB are probably on dense servers. I'm sure they're breaking even since they're larger plans.
The Advin plan is clearly a huge loss, even he would admit that. I think I remember talking about your plan on LET in the past and it was extremely limited and only given to a couple people, probably more predominant ones.
Edit: Please report to the pushup authority for confirmation
ExtraVM
I've still got the HostHatch "YOLO" bundles from their Black Friday 2020 flash sales which were effectively $7/year/VPS. One of the bundles was 10 locations for $70/year. 1GB RAM, 10GB NVMe, 1 vcore E5-2680, IPv4 and IPv6. HostHatch has moved towards larger VPSes in the past year or two but they're still honoring these old 2020 prices at renewal (I just paid for another year).
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Hard to say, IP cost can variate a lot, especially if you own a bunch of subnets.
Too many factors at this point to say what VPS in which location would be sustainable.
Some providers said their IP cost would be 0.25$/m, others charge you 4€/m per IP.
Maybe even less.
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ITS WEDNESDAY MY DUDES
Our vps1, recently sold to @Wonder_Woman , is 1920 MB for $8.88/year by VirmAche, on Ryzen processor.
It's been renewed for multiple years.
Not deadpooled, but no support whatsoever.
They are E5v4 or EPYC, as dense as a chunk of metal!
Advin $6/year is sold to 20 customers only.
We are not "predominant people", but simply won the chess game.
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I don't think "simply won the chess game" is entirely accurate
Honestly, anything below 10/yr, I assume is going to be disposable and a loss to the provider. At that price, it's just a matter of time before it's untenable.
In the 10-50/yr, I expect it'll likely stay as long as I keep paying attention to payments.
Going over 50/yr, I start moving it to my bigger dedicated servers, usually spinning off a proxmox instance.
And then 35+/month is where I expect reliable services to begin. This is where I start looking for dedicated servers, and making sure the data stays local (as we do some medical XR, education, etc).
For the service, I keep an eye on providers. Folks I've seen running servers on LET/LES for 4+ years is getting quite safe for side projects and development services. From there you start getting vendors you prefer. Reviews on here, how they treat people, and google reviews is all stuff to check on sporadically.
At some point over the year, I'll favour one provider, and start migrating services over time to them. Purely from a "I don't want to track this anymore" perspective, it can be super beneficial to have more services with less hosts.
I assume that the BF deals fit into three main categories: oversold services trying to keep afloat, providers selling low cost services at a loss for the marketing, and new providers just trying to get user counts up. In otherwords rising businesses, falling businesses and those getting stable. And the risk there is a factor.
As a side note, on my personal company, I try and aim for 2.5x base cost. That gives me enough room for some R&D, matching marketing/business folks to our technical team, and a bit of breathing room. Early in your business, you have few clients & lots of time - and are eager for opportunities (even low value ones). Later that will invert, you'll have no time, too many clients, and need to start weighing your opportunities.
Anyway, not sure if any of that matters much- but there are certainly providers I prefer. Sometimes I do need a service (I.e. right now I'd love a 6TB storage for backups that'd mostly sit idle) but none of my "regulars" have a deal that's fitting. So it warms me up to starting to find other providers. Finally, sometimes I have a great experience with a provider, and try and get a few services from them at a non-deal. I usually don't use the service, but more as a thank you. But my vps/dedi combined services are now down to only maybe $200/m (being smarter about costs). Not a lot in the grand scheme of things.
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If you were to just go and start from scratch, something like this (rough, repeatable prices--not the best/worst):
Whatever you sell, you need to recoup $102/m per chassis. You'd likely want to pay yourself for the headache you're about to encounter. It's doable, but you probably don't want to cram too many VMs (no matter the specs) on a single physical node simply because there are intangibles like max disk IO, memory bandwidth, NIC that are fixed. You are probably looking at ~$20/yr to break even (regardless of specs, and it is cheaper to scale specs up because adding RAM/disk is economical/scales well) for your average startup host. Those numbers change based upon other factors i.e.: owning IP space, gear already idle/unused on hand, having spare rack space that doesn't fit primary gear, etc.
Hardware density can play a large role, too. A lot of ours were on dense node systems (already existing, paid for, no other standard product stack lineup for them) and using owned IP space originally. Cost to operate those can get pretty low, especially tucking it in the last spare 2U on a GPU rack that's all 4U chassis or something. That being said, you can't discount the admin/support factor which has a real cost over time. 50? 100? units not really noticeable.
TLDR: Under $12/yr (and not a onesie/twosie deal) get the low end detectives to dig a bit more, find out their plan. Under $7/yr it's definitely loss-leader/marketing. I know for us, even leveraging everything possible (long-ago costed/written off hardware, owned IP space, dead rackspace around the DC that we can only stick 200w here or there) under ~$5.5/yr is costing money flat out without accounting for replacement hardware/support/any room for hiccup.
That's interesting, in a completely unrelated field I used to dabble in they'd always quote basically 3x knowing that usually after a few issues/small customer changes that you don't want to nickel and dime over you end up about 2.5x.
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Thanks for the comments -- especially the situation in which you start to consider new or previously untried providers, that really gives a lot of useful insight!
Honestly, those numbers are a bit surprising, and definitely nice to hear from a provider perspective. I say they're surprising because a lot of the deals I see must cut close to the line of being unprofitable (granted everyone's numbers are slightly different, but ballpark). I know that marketing/extra hardware/etc. can mitigate some of that as you pointed out, but damn...chasing slim profit margins must be rough at times, especially for newer providers!