It's a lot more complicated than that. My friend ran a reselling company back during the CPanel days and he broke down his pricing structure. For hosting, profi

It's a lot more complicated than that. My friend ran a reselling company back during the CPanel days and he broke down his pricing structure. For hosting, profit is almost always a direct function of the level of plan if they're priced without specials and you assume the transfer was used to capacity(which was the largest expenditure during that era, by far -- hardware and 1.5 amps to each unit was negligible). Things were different since this was before the advent of bittorrent, dropbox, and ones ability to get 100mb fibre drops to the home from Verizon, but I think he mentioned ~80% of his COGS was bandwidth and unpredicted expenditures (i.e., server maintenance by a tech-- this was when KVM-over-IP units were like $200/mo). His customers fell into a variety of groups though. Some people wanted to host their own domain/mail (again, this was before Gmail), so their consumption was negligble and despite being on the lowest tier, his margins were huge. Then you'd have people who'd take the middle-tier deal where the margins were bigger, but people (like my friends and I in high school) would host-jump and max out or bandwidth every month until they TOS'ed us (unfairly, might I add). I'd speculate there might be quite a few people who buy the lowest deal because it's the cheapest, never log in, and fail to cancel it out of lethargy as it's like 4 dollars a month (i.e., the "Godaddy upsell"). Who knows though.