Is it normal for web hosts to charge $150 for data recovery of a terminated account?

Unfortunately, the economics of high-churn, low-end recurring revenue products sort of favor these tactics.

Products that sell semi-commodities to very small businesses tend to experience monthly churn on the 4-6% rate, sometimes even higher.  These customers can  be gone forever, in just a few months.

Assuming you can acquire the customers efficiently, and your reputation is only of partial importance, it makes “sense” to:

  • Make it hard to see where to cancel.  Or e.g., make you call someone to do it.
  • Charge termination fees that may make you think twice about cancelling.
  • Try to upsell you to stuff you almost didn’t even know you purchased.
  • Don’t send you invoices unless you ask.  Getting an invoice for a product you are paying for but don’t need anymore -> cancellations.
  • Etc.

It’s yucky.  But it makes sense on a spreadsheet where churn is super high.  Just adding a few months of close to 100% margin revenue at the end of the customer lifetime can make a huge impact.

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Published on March 3, 2016

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