How Do Cheap Hosting Co. Make Money

I can't figure it out. Some of these $70 per year hosting outfits pay out affiliate commissions higher than their yearly hosting fee. How do they make money?

Maybe they're upselling related products (like domains) or using the customer info in another way?

There's typically only a small amount of bandwidth available--then when that person starts to get a typical amount of hits/pageviews on the site they have to upgrade to an over-priced supposedly more feature-rich account.

There's actually a lifetime value for each web hosting customer, and I don't recall exactly what the actual $ figure is right now--but the premise is that once you get them signed up for an account they typically stay for a certain period of time, which is typically a few years at least. So, there's actual value there once you get the person signed up with a web hosting account.

I had thought about those angles, the upsell, the lifetime value, and the customer info selling. I bet it's a combination of all of that and more. It just seems like a competitive space. I almost feel bad for my host b/c they are basically paying me to host my sites with them. I was wondering if there was some scheme that I was not aware of in which they actually made money when they lost money. I was think some sort of depreciation scheme or something.

I guess I should just be glad and stop thinking so much.

Well, your host might be almost paying you for your site but think of the dozens if not thousands that they probably host which costs them next to nothing. You know, like the 4 or 5 page personal or small company sites with very little traffic. Even the cheap packages are $5-$10. Its just like a wholesale concept, a couple nickels of a couple thousand people is a big chunk of change. I think its a volume proposition as much as anything else.