1. Hosting Support: This is perhaps the single most important factor that determines price. Hosting Companies that provide responsive technical support and are quick in fixing problems have a higher-ratio of "well trained employees" TO "customers". Due to the costs incurred in maintaining a larger number of efficient support personnel, they usually charge more from their customers. "10 satisfied customers will automatically become a 100 in 5 years time". Many web hosting providers who do not believe this axiom offer throw-away web hosting prices and generally their businesses do not last long. Support is of key importance when choosing the right web hosting provider!
2. Web Hosts' Network: Most web hosting companies put their servers in different datacenters across the world. For a high quality network (with redundant fast connections and reliable back up power) a web host has to pay more to an advanced datacenter. In turn they charge you more for their hosting packages to maintain reasonable profit margins.
3. Web Server power: Another factor is the speed of the machine your website resides on. A Dual Xeon can serve pages and handle applications faster than a P-IV. Web hosts who spend less on fast reliable servers charge less from their customers.
4. Loss Selling: Sometimes hosting companies sell at loss to expand their client base and hope to sell other products at a later date to the same customers. For example, some hosts price hosting packages at lower than base cost and hope to sell services like web design, ecommerce solutions, search engine optimization etc. While there are benefits to attracting customers with unbeatable web hosting prices, it is still a gamble. If the gamble backfires they may not be able to maintain quality of service in the long run.
5. Over Selling: The supreme gift of a good artist is to know when to stop ". Hosts that follow this principle usually restrict the number of domains-per-server to a decent number. This ensures that they can maintain 'Quality of Service' for their clients by offering sufficient server resources to each. It also means that this host will have to charge more to recover the amount they pay to their datacenter. Then again, there are providers who sell 400 accounts of 1 GB each on a hard disk of 80 GB !!! (You can smile at this point of our study) These companies hope that most customers will never use their full allocation of resources. What if the customers actually start using full resources allocated to them?
6. Web Hosting Features: Windows, Linux and other server operating systems have different base prices. Features like database support, JSP, scripting languages, SSL support vary from package to package. A web hosting provider who offers more features (in a similar hosting plan) is likely to have a higher web hosting price.
Points to remember: The adage "You get what you pay for" is generally true. Please be aware that leaving aside the scamsters, there do exist genuine factors that affect web hosting prices. The highest price may not give proper ROI (return on investment) and the lowest may not help your online business grow. Prioritize your needs, ask the right questions, avoid unscrupulous web hosts and choose wisely.