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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

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... 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.

Andys 17y ago
I run a small VPS hosting company. You are right; the hardware cost is only a small part of the total outgoings for this type of business. In that regard, the pricing model tends towards how big a slice of the 'pie' each customer gets to buy. The 'pie' is the total amount of hardware available for customer use. So if you want to buy more disk space only, that would reduce the size of the pie for everyone else who wants disk space, so you'd need to reduce the allowed disk space on all plans to leave some 'spare' in case someone wants to expand their disk. Slicehost instead have maximized the amount of disk space per customer and that hasn't left any spare, so you are (in theory) already getting a good deal. Perhaps there's room for a small startup company to arbitrate buying and selling of extra disk space amongst Slicehost customers :-)
- kragen 17y ago
  So if you want to buy more disk space only, that would reduce the size of the pie for everyone else who wants disk space, so you'd need to reduce the allowed disk space on all plans to leave some 'spare' in case someone wants to expand their disk. Or maybe Slicehost could use some of the money to buy some more disk space and hook it up.
  - Andys 17y ago
    You missed my point: If they give you some more disk space then they have to decrease everyone else's space. What you're suggesting means buying a new "pie", because they've sliced up the existing pie and allocated all of it, completely. This would mean buying more datacenter space, more servers, more networking equipment. When you want to offer disk space to customers as a product, it has to scale, you can't just plug in a USB HDD every time someone emails to ask for more space.
    - kragen 17y ago
      I didn't miss your point. I disagreed directly with your point, because I think you're wrong — probably for Slicehost, and certainly for a sensibly-run company that does what they do. Aren't they already using a SAN? Aren't they continuously expanding their "pie" as they get more customers and replace superannuated servers? So not USB but SATA: populating the new servers with 500GB disks instead of 250GB, or three disks instead of two. Maybe you know more about how Slicehost operates than I do, and I'm wrong about the above? If so, I'd love to have details.

Andys 17y ago

I run a small VPS hosting company. You are right; the hardware cost is only a small part of the total outgoings for this type of business. In that regard, the pricing model tends towards how big a slice of the 'pie' each customer gets to buy. The 'pie' is the total amount of hardware available for customer use. So if you want to buy more disk space only, that would reduce the size of the pie for everyone else who wants disk space, so you'd need to reduce the allowed disk space on all plans to leave some 'spare' in case someone wants to expand their disk. Slicehost instead have maximized the amount of disk space per customer and that hasn't left any spare, so you are (in theory) already getting a good deal. Perhaps there's room for a small startup company to arbitrate buying and selling of extra disk space amongst Slicehost customers :-)

kragen 17y ago
So if you want to buy more disk space only, that would reduce the size of the pie for everyone else who wants disk space, so you'd need to reduce the allowed disk space on all plans to leave some 'spare' in case someone wants to expand their disk. Or maybe Slicehost could use some of the money to buy some more disk space and hook it up.
- Andys 17y ago
  You missed my point: If they give you some more disk space then they have to decrease everyone else's space. What you're suggesting means buying a new "pie", because they've sliced up the existing pie and allocated all of it, completely. This would mean buying more datacenter space, more servers, more networking equipment. When you want to offer disk space to customers as a product, it has to scale, you can't just plug in a USB HDD every time someone emails to ask for more space.
  - kragen 17y ago
    I didn't miss your point. I disagreed directly with your point, because I think you're wrong — probably for Slicehost, and certainly for a sensibly-run company that does what they do. Aren't they already using a SAN? Aren't they continuously expanding their "pie" as they get more customers and replace superannuated servers? So not USB but SATA: populating the new servers with 500GB disks instead of 250GB, or three disks instead of two. Maybe you know more about how Slicehost operates than I do, and I'm wrong about the above? If so, I'd love to have details.