December 14, 2010

Cheap Is Expensive When Hiring Internet Services

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When hiring cheap Internet services, your business risks losses to be much higher than the cost savings.

These ten years of operation within the Internet industry have allowed us to know both sides of the coin. We have seen some projects have been success stories, but also, sad to say, we have learned many, many horror stories.

When hiring any service, you know, you should take into consideration various factors, not just the price. That is, the cheapest option may not always be the most profitable. In the case of the Internet, the procurement of services covers the following six categories:

1. Internet connection
2. Hosting and domain registration
3. Email
4. Web Design
5. Search engine positioning
6. Search engine promotion

For example, to hire a shared hosting (shared hosting) for your website, if you had to decide between, say, an economic package of $50 per year or a professional service of $175 per year, which of the two would you choose?

At first glance, the best alternative would be the first option, since we are talking about little more than a 70% savings in the cost of service. This is what many users think and conclude, but unfortunately the bills do not always turn out that way. This apparent saving of $125, to your surprise, can be reversed and become an expense far greater than that amount.

You get what you paid for

In practice, an economic web hosting often results in a service, support and operation also economic. To better understand what I mean, just imagine what the cost would represent your company fall into any of the following scenarios:

a) Stay one or two times a year without email for a couple of days.

b) Not being able to communicate by email with specific customers (apart from not being aware that this problem exists in your company).

c) Your customers and prospects can not access your website one of every ten times they try to do it (although the server vendor promises a 99.99% working time).

d) Your website has been hacked and will remain out of operation, at best, one to three days.

e) The vendor support is limited to basic functions, so that your business does not have a contingency support to meet various everyday problems.

If you hire an economic hosting plan, chances are that your business is found sooner or later in any of these five situations or, worse yet, a combination of them. So if the quantum of damages is $100, $1.000 or $10.000 because your website was not in operation at the precise moment when your company was preparing to close a deal, the $125 of apparent savings actually mean nothing compared to the cost of such losses.

Web design savings assumptions

Similarly, although in this case the economic damage can be much greater because it is the promotion of your business, cheap web design packages can be a real problem for your business. Then see how, why and in what cases it can happen.

Depending on the size and characteristics, the development of an economic website costs on average $500 to $2.000 (a price lower than this range is virtually the purchase of a template with a few pages) and a professional website for $3.000 to $5.000. If we purchase an economic site, standard, of $1.500 instead of a $4.000 professional website, this will represent an average reduction of $2.500 in the project cost, equivalent to a 62.5% savings on website design.

However, in practice, an economic website usually results in an ineffective tool to service customers and promote business. To better understand this, imagine what the cost would represent if your company falls into any of the following scenarios:

a) You assume that the site is being visited by customers and prospects, but in fact your website is not promoting your products and services (the website can not be located through search engines).

b) The website is so slow that your customers, at best, try to use other means to obtain information about the products or services your company offers, with the risk of them acquiring your competitors products instead of yours at the end.

c) Your website does not contain the information that customers require, either in quantity or in the required detail.

d) Your website has an attractive graphic design, but lacks a business strategy that goes hand in hand with the overall strategy of your business.

e) Content management, needed to update the portfolio of products and services, has become a bottleneck.

Entering any of these situations can cost your company from a few thousand dollars to large losses for low market penetration. This being the result of the apparent saving of $2.500 in web site design. What many entrepreneurs are unaware of is that the difference in price between a conventional and a professional website is the fact the the latter includes the search engine positioning/optimization service.

A server still does not understand how businessmen come to believe that with a thousand dollars they can promote a business to a national and even a global level. Just take a look at the costs of traditional media campaigns in print, radio and television, investment fairs and exhibitions or the cost of yellow pages advertising, to understand that what many web design agencies offer through their economic packages that include hosting, web design and supposedly promotion are just plain absurd.

To know the truth of things and make better decisions, its required to only do some addition and subtraction (to quantify the costs and benefits). As in any other industry, investing in Internet, cheap can be very expensive. If don’t believe me, ask all those companies which have been through horror stories for hiring services of a quality lower than required.

About the Blog Author: Timpa has the mission of providing all entrepreneurs, whether experiencied or not in online business strategies, with the right information to help them manage their businesses online in the best, most time-effective and cost-effective, smarter way.