A Time of Magic

Insurance is a peculiar product when you think about it.

Effectively the insurance company are betting that they can charge you more than you will cost them. Given that there are lots of insurance companies around in the various insurance markets, competitive forces act to keep them from charging you over the odds to take the “bet” ie your insurance premium but that conflict of interest between you and them still remains.

Many people take account of this conflict in interest and self-insure when the option is available to them. In the long term, it may be cheaper for you to do that (ie pay out for whatever claims might have arisen) especially when the government adds taxes to your insurance premiums and thereby loads the dice even more against you. Another very viable option is to increase the amount of “excess” that you’re prepared to pay before the insurance kicks in which is particularly popular with health insurance. For example, whilst a normal health insurance contract will pay out everything but the first $100 or so of a claim, some insurance companies let you increase your personal payment up to $5000 which means that you’ll pay for the small things yourself but they’ll end up picking up the tab for the biggies such as heart surgery and so on.

However, in a number of key areas self-insurance is illegal, notably in car insurance but also in some countries for health insurance too. Since it’s illegal not to insure in these areas, competitive forces are reduced and thereby you end up paying more or receiving less than you would do otherwise. However, whenever an accident occurs you’re immediately in conflict with your insurer as clearly you want the maximum payout whilst they want the minimum one. To counteract this, “independent” assesors to place a value on your car after an accident but that independence is limited in that the insurance company both selects them and pays their fees so clearly there are downward pressures on any estimate that they might come up with.

For example, take a car bought for $10,000 that’s written off two years later in an accident. Typically, a used car of similar age could be bought for around $5000 but the typical payout offered is more like $3000 after you take account of the deductible (ie the amount you pay before the insurance kicks in).

Perhaps the most ignored aspect of running a website is where it’s actually hosted.

For many people, that’ll be in America simply because most hosting sites that come up when you search are there. However, that’s not always the best place to host your site.

Surely it doesn’t matter? Most people think that but then they’re wrong. Google and other search engines take into account the location of your hosting when they serve up search results. So, for example, if your site is hosted in America and an identical site is hosted in the UK then the UK site will come up ahead of yours on searches performed in the UK or using google.co.uk .

As an example of how significant this effect is in terms of site traffic, we originally hosted our European targetted travel sites in America. On moving them to a European hosting service, the site traffic went up 10 fold within a few weeks even though the only change we made was to change the hosting service. We’ve since moved them to a UK based hosting service and the traffic is around three times that which we had on the European host ie in total moving from the US to the UK meant a 30 fold increase in traffic.

Although these days you can tell google where the major market is (via google’s webmaster tools) you can’t tell the other search engines therefore it’s still worthwhile to have your hosting in the country of your major target audience.

One of the great things about the Internet is that the software is usually scaleable ie you can run with 1000 visitors per day on your website just as easily as you can with 10.

Well, most of the time that’s true. What you’ll find though is that you start needing to upgrade your hosting package as the business grows. That’s not a problem though for reasonable growth and, for example, we expect to have to upgrade our own hosting package once a year usually. What we’d not allowed for was the effect of a few seemingly minor changes in our promotion efforts over the past year kicking in with a vengeance and lifting our site traffic around 20 fold within a few weeks.

Even that growth rate wasn’t a problem but it required us to upgrade our hosting package three times in three successive weeks to catch up with the growth in traffic on the sites. Now, that’s not a problem in that the software is scaleable but what it has done is to move us to the top option on shared hosting which means that after the next upgrade we’ll have to start looking at VPS hosting which is much more expensive. That extra expense is down to the much lower number of other users on the server: instead of hundreds, it’ll be about 4 or 5. Obviously, that’ll improve the speed of our sites somewhat and I suspect that may well mean that I’ll need to upgrade almost immediately afterwards.

So although you can usually cope with quite substantial growth in the traffic on your sites with no problem other than needing to upgrade the hosting now and again, it’s as well to look a few upgrades ahead in case you run off the end of potential upgrades on your existing path. Ultimately of course you can go to a dedicated server but you might want to consider hiring a professional to look after your sites by the time you get to that point.