Do you charge setup fee from your customers?

Many web hosting companies charge a small or a premium setup fee from their customers at the time of signing up for new hosting accounts or sometimes even for server upgardes etc. On the other hand, there are those hosting companies that do not charge a dime from their customers.

Why a hosting company charges setup fee from customers?

• Recover call charges – Some hosting companies manually call the customers to verify their existence before they process their orders. A small setup fee is levied to recover the call charges.
• Recover software charges - Web hosting companies use various softwares such as one to identify fraudalent order, which could be expensive. Setup feee can help the hosting company recover the software charges over a period of time.
• Marketing gimmicks – Few hosting companies have been charging a large amount towards setup fee and very small amount on monthly charges. The customers finds it attractive to pay lower monthly rentals and altogethers ignores the amount that he pays as the setup fee. Also, hosting companies make the setup fee non-refundable, leaving customers with no options but to stay with them, to avoid losing the large setup fee if they were to go away. And some hosting companies waive off the setup fee if a customer chooses to make yearly payment in advance.

Why hosting companies do not charge setup fee from customers?

• Included in package – The setup fee is already included in the hosting package charges and cost of the services and software will be reovered from the monthly rental.
• Automated process – Most of the hosting companies have a fully automatic account creation process to setup a hosting account and send emails to the customers. Such companies passes the benefit to the end customers and does not charge setup fee from them.

Should you or not charge setup fee from your customers?

That is entirely upto you and how you look at it. I recommend that if you incur any charges to setup resources for your customers and if that’s not very small, you should charge it from your customers and let them know why you are charging it. But if it’s like $1 or $2 worth of expense, don’t even think about it.