In recent years, you might have noticed a trend – web hosting costs are creeping upward with every renewal. What’s behind this shift in pricing increases, and how does it impact businesses and individuals alike? Let’s delve into the factors driving the surge in web hosting expenses.
Licencing & Software Costs
One of the largest elephants in the room which makes even the hardest Web Hosting Providers cry is the ever-increasing costs of licences, notably those of cPanel and billing platforms WHMCS.
The trigger of this was the acquisition of cPanel by venture capitalist firm Oakley Capital in late 2018, which was quickly followed by a major restructuring of licence fees from a per server unlimited usage licence to a usage-based pricing system where providers are charged for each individual cPanel account. This resulted in monthly licence cost increases in the hundreds and even thousands of per cent which led budget operators unable to afford the next months of operating costs and major price hikes for the remaining provider.
In the following years, annual price hikes for both cPanel, CloudLinux and the WHMCS billing platform resulting in higher and higher costs for customers. The latest of which was a 9% rise for 2024.
Many operators are exploring alternative platforms to migrate to, such as DirectAdmin however this is a long process.
Cost Of Energy
Running Web Servers is an energy-intensive operation with power costs making up a significant percentage of the running costs of keeping your site online. Tiny Haynes, senior director of research for Gartner discussed how Data centre operators could be looking at a 40% increase in costs due to the looming energy crisis in the September 2022 IT Pro Podcast.
While electricity spot prices appear to have stabilised to around £95 in late 2023 according to Trading Economics, the costs of electricity have doubled within the past 5 years with fears of Environmental Policy and global conflict pushing these prices up further.
The cost of living is increasing almost at the rate of Bitcoin, and so are staff wages!
To retain experienced staff, hosting providers and the industry as a whole are spending record amounts per employee than they were in the past.
Some providers have scaled back customer service to minimise staffing numbers or move the bulk of staff offshore to remain competitive. This can be seen by the removal of telephone support, increased wait times and overall reduction in service quality.
Inflation & Dollar Value
Putting it bluntly, your money just isn’t worth as much as it used to be a few years ago. Governments around the world have been printing currency at record levels and devaluing the purchasing power of the currency.
This is reflected in the M1 money supply graph where the bulk of all money in circulation was printed in the last few years post 2010 and a huge spike in 2020.
For providers not located in the United States, differences in currency strength can play a large factor in pricing due to a large number of Web Hosting components such as software licences, hardware costs a domain registrations all being charged in US dollars.
What should you do?
No one likes paying more than they should for web-hosting. To ensure your getting good value for money we recommend:
- Call up your provider and ask if you are on the best plan and that you are not overpaying for a plan larger than you need
- Cancel unnecessary add-ons such as paid SSL certificates and security scanning. These are often ‘up-sells’ and nothing more than snake oil.
- Shop around to see if another provider can offer you a better value
Hosting costs have risen in recent years due to a number of factors including Licencing costs, wages and inflation however it should not stop you shopping for a better deal.
Have increased hosting costs affected you, let us know in the comments below?