The Hosting Provider Time Machine: Paying 2006 prices in 2009

There are providers offering better pricing.<p>ChunkHost has 2GB instances for $66/mo. You can get a 512MB instance to try for free during their beta.<p>Prgmr (which is very, very basic and much harder to use) offers 2GB instances for $36. However, their service isn't so automated.<p>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.<p>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.<p><i>If you have 7 2GB slices, you might want to look at a dedicated box.</i> 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.<p>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.

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

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.

I looked at Linode and their offering is pretty competitive with Slicehost (slightly higher price but more storage).<p>Any positive/negative experience with them?

Have you looked into EC2 at all?<p>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.<p><a href="http://aws.amazon.com/ebs/" rel="nofollow">http://aws.amazon.com/ebs/</a>

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.<p>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.

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

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...<p>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.

<i>[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.</i><p>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.

1) They're only charging that because people are paying it.<p>2) What do you need on your Slicehost VPS that you couldn't just dump onto your home storage device?