Do you know what your hosting is costing you for each sale?
When planning for hosting, merchants and developers are often left with a conundrum: how much hosting is enough? Do you buy hosting to meet those occasional flash sales and holiday surges? Or do you buy enough for the remainder of the year and hope-like-hell that you’ll survive the peaks?
The decision often boils down to one of “cost per sale.” With margins so tight, every penny you can save to complete each sale is a win. Therefore, the decision on how much hosting leads many to make a fateful decision to buy low and hold on tight during the high traffic peaks.
Fortunately, not all hosting requires that kind of grit-your-teeth-and-hope-for-the-best decision-making. At Webscale Stratus, we innovated hosting costs based on sessions rather than on a set, contracted price that locks you into a fixed level of hosting. In fact, we have many merchants who are just fine with our smaller Stratus Lite plans because when the surges occur (and they will happen), they know their Stratus server will automatically scale horizontally to aptly handle the increased traffic.
By charging a low base rate, plus a low per session cost for high traffic periods, Webscale Stratus merchants are able to not only save on hosting, their Hosting Cost Per Order (HCPO) is predictable. From the very beginning, our merchant clients can estimate their HCPO across a variety of traffic scenarios to zero in on the right, the best hosting plan that keeps HCPO at its lowest levels.
Let’s look at some examples to see how this works.
To calculate HCPO with a Webscale Stratus plan, we first need to know how our pricing plans work. We price our plans based on some level of capacity, including an initial number of sessions. Each plan also has pricing for sessions beyond the plan level.
To understand what constitutes a “session,” see our article on GA Sessions.
The formula for calculating HCPO, therefore, is:
(Plan Base + ((# of Sessions – Plan Included Sessions) * $/Session)) / (# of Sessions * Predicted Conversion Rate)
We’ll break this down by inserting actual values from our Stratus Lite plan:
|# of Sessions||the number of sessions you are predicting for your store traffic. Ideally, this should be a number equal to or greater than the Plan’s Included Sessions. To illustrate our formula, let’s assume that you’re checking on costs for the holiday season and that last year, your site hosted 30,000 sessions during November 2018. You’re now estimating that in November 2019, you’ll see 40,000 sessions (although your usual monthly sessions average around 25,000).|
|Plan Included Sessions||the sessions included in the plan-based price. In the example, 25,000|
|$/Session||equals the amount Webscale Stratus charges for sessions beyond the included sessions, or, in this example, 0.475¢/session. (Yes! That’s less than 1/2 a penny per session.)|
|Predicted Conversion Rate||the rate at which you believe you will be converting visitors into buyers. For our purposes, we’ll use 2% as an example.|
Conversion rate is calculated by dividing the number of completed sales by the total sessions. For example, if you have 100 sessions and complete 2 sales from those sessions, your conversion rate is 2/100 or 2%.
When we fill in our sample values, our formula looks like this:
HCPO = ($298 + ((40,000 – 25,000) * $0.00475)) / (40,000 * 2%)
HCPO = $369.25 / 800
HCPO = $0.4615625 or 46¢ per order!
That means that for your anticipated traffic surge during the holiday season, your hosting cost per order will only be 46¢ per order.
Note that the included sessions each plan provide for a very low cost/order. Only when your demand triggers scaling up do you incur additional per session charges. This means you’re not paying for capacity you don’t need, but have instant, automatic capacity increases as you need them.
Even Better News
We give you the ability to see exactly what your hosting costs will be on our Pricing page. By simply connecting to your current Google Analytics account, our pricing calculator can let you see what your costs would have been for the entire prior year! You can choose different plans and server locations (North America, Europe, Australia.) and compare the pricing to what you’re paying now.
This will give you the very best insights into hosting costs for true auto-scaling Magento hosting.