WA response to pricing reductions

[Necuno]

rpm says we are going to have cheezeburgz in march.... that be good because i want 2x of them for my b-day

 

[Abe]

And when it's R40 cheaper? That's a lot more of those R1's. I wouldn't abandon any ISP for a R1 difference in price because it's just not worth the extra hassle. When I save R40 per GB per month it's an entirely different matter. I only speak for myself here but I wouldn't be surprised if other feel the same.

I saw a lot of posts by people jumping from one ISP to another for R5 per GB, if not less. There are a lot of people that are looking strictly at the cheapest price. You don't want those people on your books. I have suspended my 10GB account because the price difference is too much (+-R2500 per year) and I would expect people to move when it is that high.

 

[burn]

I certainly welcome the new kids on the block with their cut-throat pricing, but they have to prove themselves still. But this is the beauty of competition: If they mess up, someone else will be glad to take over their customers

As Afrihost has clearly done to WebAfrica, well at least in informed circles like MyBB. The ignorant masses are still being milked

 

[JustinB]

How is it disingenuous? It is exactly the reality of the situation.



Analogies are pointless. I think it is fair to say we both understand the situation.

My position is merely that they are selling something that have no intention or capacity to provide.

I understand the reasons behind it, I just don't agree with it.



I understand all that, like I have mentioned, I just don't agree with it.



Actually, it allows for cheaper cost / GB for those who generally do use their allocation - subsidized by those who don't.

It is a common business practice but that doesn't endear it to me.

Edit: anyway, I think I am derailing this discussion which is unfair to WA so I'll leave it at that.

I get what you're saying, but i think its 2 issues, the first is issue for me isn't that some people only use <half, the issue would be if everybody tried to use their allocation 100% resulting in people not being able to get their 100% as everything would slow down.

The 2nd around the roll-over of unused bandwidth. An analogy is SAA - they oversell their seats - then when you try check in you find out you've been bumped off. Or, if you happen to miss the 30 min check-in time, you're also bumped off. Overselling seats for SAA was acceptable when the customer could go and change his ticket for another - nowadays you got told to go away and buy another ticket, resulting in the customer getting screwed over.

I think rollover should be allowed - even if only for like 10 days into the next month.

 

[JustinB]

I saw a lot of posts by people jumping from one ISP to another for R5 per GB, if not less. There are a lot of people that are looking strictly at the cheapest price. You don't want those people on your books. I have suspended my 10GB account because the price difference is too much (+-R2500 per year) and I would expect people to move when it is that high.

Its all relative. If you can make 50 cents per GB on a super high volume base, then those 50 cents add up quickly. More so if it gets you economies of scale that result in higher profit margins on a lower volume segment.

 

[Wag]

After the whole WA price-debacle, I still want/need to know how can a ISP sell at R 14.50 a gig (no frills and no after 6 and before 12 and only on Saturday before 7 am and only....) still be in business and still going strong. Surely if they loose money on R29.00 per gig they must braindead to sell at R14.50 and that is exactly what they keep on doing. Why can they offer bandwith @ this price and other ISP's have 20 reasons why it is not viable? Just asking

 

[drukkie]

As Afrihost has clearly done to WebAfrica, well at least in informed circles like MyBB. The ignorant masses are still being milked

Slowly turning , I moved a company from an uncapped(R 2500) with thresholds to afrihost, they never do more than 80Gb and at current prices not even uncapped can beat that.
I also don't see how this post explains anything? Last week people were grilling them now this week they are praising them? hahaha LOL
Yes Afrihost still needs to prove themselves but so far they are doing great!

 

[Grep]

After the whole WA price-debacle, I still want/need to know how can a ISP sell at R 14.50 a gig (no frills and no after 6 and before 12 and only on Saturday before 7 am and only....) still be in business and still going strong. Surely if they loose money on R29.00 per gig they must braindead to sell at R14.50 and that is exactly what they keep on doing. Why can they offer bandwith @ this price and other ISP's have 20 reasons why it is not viable? Just asking

Absolutely love to know myself!

 

[Zyzzyva]

i got shot down in a thread the other day by somebody who did the maths and told me that afrihost initially ran at a loss until they had enough demand to purchase greater wholesale bw, which is why they can now offer the super special R14.50 offer from time to time (ie they are no longer running at a loss). he even called afrihost deceptive for continuing to tell this to consumers when it was no longer true.

i'm a bit confused. could somebody please definitively tell me which side of the story is true. either the forumite did the maths wrong or somebody else is. wish i could find that post...

With axxess launching their R28.50 resellers product, i think we can safely assume its possible to get bandwidth wholesale at below that price. At this point afrihost must be getting bandwidth at below R29, i mean they could go buy it from axxess if they wanted for R28.50.

Remember afrihost at this point must be getting fairly sizable bulk discounts.

 

[martin]

I saw a lot of posts by people jumping from one ISP to another for R5 per GB, if not less. There are a lot of people that are looking strictly at the cheapest price. You don't want those people on your books. I have suspended my 10GB account because the price difference is too much (+-R2500 per year) and I would expect people to move when it is that high.

Yes, I think we can both agree on people jumping ship for R1 - R5 per GB saving - those customers will always be on the lookout for the next big thing and as you rightly point out you don't plan a business based on them.

That's not the point of my original reply though because I was referring to another kind of customer. The kind of customer that does not fit the 'fair-weather fan' description. The kind that moved over to Afrihost because Afrihost's billing systems, client interface, latency and service is more or less comparable to WebAfrica's and they get to save R40 per GB. I'm one of those - I was very loyal to WA and 'spread the gospel' to a number of people over the years. I was probably very close to the type of client on which WA could base their business. Now granted, WA is probably slightly superior to Afrihost in most of the departments I listed above but I still can't justify staying on for that big a difference in price. Perhaps if I just used a single GB a month but the savings add up quickly even when buying only 2 - 3 GBs a month.

 

[Zyzzyva]

Absolutely love to know myself!

They are gaining clients, and these clients are very likely to use their other hosting products.

Long term though, afrihost is probably trying to build a client base which they can make money from later. In two years time bandwidth is going to be dirt cheap, so having a lot of clients could be quite useful.

 

[DVD007]

I think what most ISP's miss is the fact that when its cheaper people use more. Afrihost had the guts to test the theory and its working for them. That is why they are entising people with their 2 for 1 offer. The more they sell the better the numbers become. This applies to me as well. when I got my connection a while back, I used 3-5GB during the day/per month (when axxess express uncapped is not viable). That usage has now grown to between 15-20GB per month for almost the same price. Economies of scale can make many things viable, its just important to remind everybody now and again to keep using, thus the nice specials.

Web africa has a point, but Afrihost has the B***s to push and only time will show if it works in the long run. My opinion is it will work, because input cost are coming down slowly and by the time some of the larger ISP's wake up the market will be cornered by the big A.

 

[milomak]

But we need the types of consumer that will jump for R1 and the kind of companies like afrihost that are willing to undercut the rest. Even if afrihost lasts 18 months, it will help to pull prices down; forcing the likes of WA who target a different customer to stubbornly follow down the path of price cuts.

 

[martin]

They are gaining clients, and these clients are very likely to use their other hosting products.

Long term though, afrihost is probably trying to build a client base which they can make money from later. In two years time bandwidth is going to be dirt cheap, so having a lot of clients could be quite useful.

Agreed and MyBB is a great place for any ISP to start building that client base.

I think some people (looking at you WA) tend to underestimate the influence of the MyBB forumites when it comes to word of mouth. We're 'only' 80000 odd members but a lot of us are the geeks that family members, friends and colleagues are likely to come to when seeking advice on technological decisions. Add to that the fact that our opinions also tend to pop up on the first page of a lot of Google searches.

 

[martin]

But we need the types of consumer that will jump for R1 and the kind of companies like afrihost that are willing to undercut the rest. Even if afrihost lasts 18 months, it will help to pull prices down; forcing the likes of WA who target a different customer to stubbornly follow down the path of price cuts.

Absolutely! Of course we do but as Abe correctly pointed out these are not the type of customers that ISP's traditionally base their business plans on.

 

[DVD007]

Add to that the fact that our opinions also tend to pop up on the first page of a lot of Google searches.

I've started to notice that as well!

 

[who.is.michael]

It is a common business practice but that doesn't endear it to me.

+ 1 agreed

In my opinion the cause is an apathetic SA consumer - like in so many service providers will surely attest to.

You are required to spoon-feed and educate them on a constant basis. It seems - sadly, this culture has yet to change.

 

[DefecteD]

Agreed and MyBB is a great place for any ISP to start building that client base.

I think some people (looking at you WA) tend to underestimate the influence of the MyBB forumites when it comes to word of mouth. We're 'only' 80000 odd members but a lot of us are the geeks that family members, friends and colleagues are likely to come to when seeking advice on technological decisions. Add to that the fact that our opinions also tend to pop up on the first page of a lot of Google searches.

+1

 

[DefecteD]

I can not say more at this stage, but March is likely to be a good month for MyBroadband members And with all the low-cost ADSL bandwidth a few users may download some AV content, and we thought it may be a good idea to give away a Mede8er in March in a competition.

It is however not unlikely that there will be a good ADSL offer or two from ISPs made available exclusively to MyBroadband users

Well lets wait and see !good idea for the mede8er! great product

 

[SaiyanZ]

Just one comment: WebAfrica keeps referring to Afrihosts R29/GB as a special. Maybe it is, but then there are so many other "specials" out there. With all these "specials" who needs to pay more with some other ISP? A few that I can name off the top of my head are:

- Gconnect R22/GB (R14/GB with larger accounts)
- Afrihost (R19/GB with those 100GB accounts, R9.50/GB for first 3 months)
- MyISP R20/GB
- SAOL R9.** to R29.50 per GB