I am now busy switching servers for some of our sites,including this blog.

I was forced to ‘evacuate’ or ‘upgrade’ my webhost as the website has generated more traffic, and commanded more resources and that they felt I should now move up a higher plan….

I don’t blame them.  Web hosting is a very competitive field, and with the rise of visitors, I guess I was getting more than the usual, though it was still far less the resources that was advertised. Maybe they saw that I was just not worth the few dollars I was paying them per month.

When I got the ‘evacuation’ notice, I looked all around, and indeed I see a lot of examples of websites who were essentially asked to ‘move’ as they got more traffic.

This is not a gripe, but it does conjure up a business thought, which is essentially a rethink of the ‘all you can use’ or ‘all you can eat’ plans.

Nowadays these are popular, whether you are taking on broadband, or webhosting, or long distance services, or even when you go eating.

I guess even if they say they are giving you 5 mbps bandwidth, that really means you are supposed to use no more than a small fraction of it consistently.  If they say unlimited call plans, it means that they do expect you to call in moderation.  Web hosting is the same.  They can advertise giving you gigaloads of disk or bandwidth, but I guess the majority hardly even use even one percent of it.

I may be overgeneralizing, but in these ‘unlimited’ plans, you will attract probably a lot of customers who are there, because unlimited plans allows them less hassle in projecting costs, as well as more predictability in usage.  However, depending on the services or products that you are selling, you will encounter probably 5 or 10 percent of the top usage customers who are getting much more than their share and therefore if you have to serve them alone, you will become unprofitable.

These are people who get DSL plans but download and upload huge files regularly.  These are people who pay buffet but get more than 4 servings of food.  These are people who use what you offer to the ‘fullest’.  These top 10 percent therefore contributes to 10 percent of your revenues, but actually may eat up anywhere from 30 to 70 percent of your resources.

Studies have shown that the clear way to profitability is to get rid of these top 10 percent of the customers who use much much more than what the average use, and therefore is making your plan skewed.

I have always thought that the road to better business was to try to maintain your customers and make as many as happy as possible.  But there are customers that may not be worth keeping — some customers demand too much or just cost too much to keep.

Maybe one way to win over the competition is to give up your ‘unprofitable’ and ‘problematic’ customers and give it to your competitors?

What do you think?