By Olga Elizarova (c), ©Copyright B10WH.com 2006

For those who don't remember what it actually is, I’ll remind that:

Sales promotion is such promotional strategy, which doesn't imply personal touch with clients. There are several ways to promote the sales usually used by web hosting providers:

• Providing coupons and discounts
• Carrying out contests
• Presenting different kind of gifts(from a shirt with a company logo to the round-the-world voyage) and incentive items
• Offering free month/year/ of services, etc.
• Temporary reduction of the service's or good's price

The majority of web hosts use some of the mentioned methods or even all of them taken together, in order to increase sales and they do achieve good results. Providing coupons becomes nowadays a common way of web hosting marketing as well as providing discounts. Offering free hosting time is also very popular.

From time to time, some hosts seem even to go too far in their desire to get new clients using this method. I'll explain what I mean. Looking for a web host, whose services will fit our demands, we come across a great number of "Free months" offers every time. One, Two, three, twelve – who more? Sometimes, it seems to me that soon hosts will offer something like "pay for one month and get free lifetime hosting". But this is a topic for the other article.

I'd like to examine closer the loss-leading phenomenon. Loss leading is a process, when products are sold below their cost in effort to stimulate a customer to buy other goods at full price. The coupons, discounts and different actions offering free hosting time belong to loss leading's varieties. This method of sales promotion was invented in the early 1880s by Thomas Edison.

Web hosts often suggest free domains or registering domain at almost-no-price. This really attracts customers and isn't very risky. But I can't tell the same about tries to appoint as a loss leader hosting itself. The tendency of some web hosts' leading business is that they set loss prices for the defined period, for example, a first year, hoping that they could make their customers pay more for the next period.

At the first view, the logic is clear and success is almost guaranteed. But is it really so? Loss leading may course damage to the web host. Clients are not also as loyal as we'd like to consider them. Sudden downtime or support's failure to solve the problem as quickly as it was expected may lead to the client's disavowal and to your money's loss.

There is also a category of customers, who is always seeking the lowest prices. Attracted with low prices of yours, they will more probably leave you as soon as the discounted hosting will come to an end, in order to find another host, where they could save their money.

Yes, the popularity of the hosts that provide big discounts for their hosting services increases greatly, but it impedes them to develop in the most successful way. They pay for the reputation too much. Only big web hosting companies may afford carrying out the strategy of loss leading without hurting their business. They have enough funds to play this game. Big hosts, but not small ones!

It's up to you whether to use loss leading strategy with web hosting in a key role or not. But, anyway, you should offer only as much as you can afford, especially if you are not a monster of web hosting business.