Being a pioneer in the Nigerian web hosting industry has been one interesting adventure. Back in 2003, when my company stepped up to the plate, the big guns at the game were charging exhorbitant prices for web hosting services. For example, one Lagos-based giant charged as much as N100,000 for a 10MB hosting account!
Then we stepped in and initiated a regime of affordable web hosting. A 10MB account could now be purchased for as low as N7,000. Very soon, the nigerian webhosting landscape blossomed. Webhosting became even more affordable over time.
But, a couple of years ago, the thin line between affordable pricing and unsustainable pricing began to be crossed. The industry was hitting hard times.
I was a participant at Strategic Bloggers Conference held yesterday at the Sheraton, Lagos. It was an interesting event at which issues pertaining to the blogging industry were explored.
In the course of the meeting, we had cause to talk about price wars and I commented that it would be detrimental to the industry at large if allowed to happen. I made reference to the web hosting industry and the ongoing price wars that started a few years back. As far as I can see, no Nigerian webhost can run profitably at the price points that many of them are currently offering their services. I monitor the industry like a hawk and I have watched some of these hosts collapse.
Indeed, it is natural that people flock to service providers offering those lower price points, but those prices do not seem sustainable, in my opinion.
My company, Alireta has refused to join the price war, focusing instead on delivering value via superior services. As such, our clients are sure that we will be here tomorrow, and the day after, though they pay a little more.
I am keeping my eyes on developments in the industry. We will see more webhosts shut down. We will also probably see some mergers and acquisitions over time. The excitement has only just begun.
One thing is sure, in any business operation, it is important to price your services within the reach of your target market. But be careful to ensure that your prices stay sustainable otherwise your business operation will soon be dead.
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