Exploring DreamHost’s Promo/Discount Code

If you search for “dreamhost promo code” on Google, Yahoo or MSN, you’ll be surprised to see pages after pages of result flowing through. Not only has many people wrote a few web pages about it (like this one), many have even setup websites especially for promoting the DreamHost promo codes. Not only there are keyword filled domains that eagerly try to save you a few bucks, they even advertised on AdWords and Overture to make sure you don’t pay full price by using their coupon codes.

Google SERP on DreamHost Promo Code

Important Update 12 December 2007

The content of this article is no longer current. See the blog post Last Chance Getting $97 Off New DreamHost Accounts.

DreamHost has now capped the maximum discount on promo codes to $50 (down from $97) effective since 11 December 2007, and therefore all the “save $97″ user-generated coupon code populated on the net can only give you $50 discount, including my own coupon code HOSTINGFU.

It is however possible to create coupon code that gives $50 discount plus extra resources like bandwidth, storage space, unique IP address and domain names. Use the coupon code HOSTINGFU2 to get

  • $50 off
  • 3 extra domain names

And I get $2 in my pocket 🙂

What is going on here?

So Many Promo Codes!

Two possible explanations.

  1. DreamHost is really too good to be true. Massive storage and bandwidth allowance. Great performance. Developer-friendly. All these at a very affordable price, and those zealots just want you to have it even cheaper!
  2. There are some other benefits over advertising DreamHost’s promo code, likely commercial gains.

Well. I think it is a bit of both. DreamHost is not perfect, but they do provide a great service over a very affordable price. However, there are lavish gain over promoting DreamHost services, especially when you becomes the “lead”. People are so willing to “sell” their promotion code to a point that they are willing to pay advertisement for it. Search “dreamhost promo code” on Google again and count the number of advertisers on the right hand column. Do the same with other popular hosting like Site5 or HostGator, and you know what I mean.

To explore DreamHost’s promo code system, we need to look at how its affiliation reward works.

DreamHost Rewards

DreamHost Rewards work like this.

  1. Alice joins up and becomes a DreamHost affiliates.
  2. Alice puts up affiliation links on his website, forums and email signatures.
  3. Betty is interested to sign up shared hosting with DreamHost, and clicked on one of Alice‘s links to sign up..
  4. Betty paid by credit card, and 97 days later Alice gets rewarded for referring Betty.
  5. Now Betty does exactly what Alice did in step 1-2, and Carrie signed up via Betty‘s link. Both Betty and Alice get rewarded.

Earning $97 per referral from DreamHost What is the amount of reward? In the case of step 5 above, USD$97 for Betty the tier-1 referral, and USD$5 for Alice the tier-2 referral. There is no reward for tier-3, and you can also choose an alternate 10% recurring for tier-1 and 5% recurring for tier-2 referrals.

$97 reward is a lot — more than many other commissions and affiliations per lead can earn over the net. No wonder many have worked hard to promote DreamHost. If you have visited any of those ad-populated web hosting review sites, you’ll find most DreamHost reviews are very positive — with affiliation link attached.

Moreover, once you have directly referred more than 5 people, the 97 days wait in step 4 then no longer applies, as you are considered a “Platinum Affiliates” in DreamHost’s jargon. Reward is credited to affiliated account straight away.

Promo Code/Coupons

You can use DreamHost promo code during the last sign up stage, where the field says “Optional Promo Code”. Well, it is NOT optional — actually it is compulsory and no one should sign up without a promo code. We will get to that later. You can obtain promo codes that save you various amount, and usually at least $50. Nice huh?

However IMHO, DreamHost promo code is nothing but stirring up competitions between affiliates in the effect to bring in more customers for DreamHost.

First of all, how does promo code works?

Unlike many companies where only the person in authority (be that their marketing manager or CEO) can decide how much discount can be given through creating promotion/discount codes, DreamHost allows everyone who signs up their affiliation program to create their own customised promo code. In fact you do not even need to be a DreamHost customer to refer them customers. Creation of promo code includes the code itself, a description for this promotion, and the discount for each shared hosting plan DreamHost offers.

The maximum discount, however, has a celling — I cannot create a promo code that gives me 5 trillion dollars discount. It cannot be more than the referral payout from DreamHost, i.e. $97. There are other restrictions on monthly plans as they don’t pay for more than $97 up-front.

Creating new promo code in DreamHost

Here’s a screenshot of promo-code creation page. I am creating a new promo code “HOSTINGFU” which gives maximum discount on all monthly and yearly plans.

Referral payout in this case will be the maximum payout minus the amount of discount. Therefore, if Carrie in the example above signed up with a promo code created by Betty with $50 off yearly hosting plans, Betty will then receive $97 – $50 = $47 from. What about Alice? Second tier payout is not affected, and she is still getting her $5 from DreamHost.

Heated Referral Competitions

The task for affiliates is — getting more customers to sign up with DreamHost. How do you do it? Write a good article to give them praises, and provide a link with your referral ID in there — maybe that is why you rarely see negative comments on those unbiased hosting review sites. Oh wait, there is more. Now you can actually write a good article and provide a discount coupon to further encourage your prospects to sign up with DreamHost. Everyone loves discounts. This gotta work.

Unless the Internet is flooded with DreamHost promo codes.

You see. The consumers ain’t stupid. Before signing up a shared hosting plan, they will most likely do some research. Speed, stability, feature set, price, etc. Your comprehensive DreamHost appraisal will bring absolutely no referral if you cannot provide a better price than Joe next door who only wrote “DreamHost rocks” but offers a discount code $5 cheaper. (Sorry it was exaggerating as some consumers are either stupid, honest or both). The way to compete in the game is — give new customers discount that can save them more. After all, those who are interested in DreamHost are those who want maximum performance with minimum pay (I myself included).

So there we go. Affiliates start to increase their discount to attract more customers. There used to be an unspoken rule in the DreamHost forum that the maximum discount you can put in your signature is $50 (price fixing anyone?), until new affiliates came along with $70, $80 and even $97 discount codes. People complained (as their referral income took a dive), but what can they do in this free market? There are threads debated over this issue again and again, but now everyone just accept the fact that you can easily obtain a $97 DreamHost promo code.

What about DreamHost? I don’t think they have any problem with it at all. They are paying (or getting less) $97 per customer, regardless it is through direct referral or through promo code system — it is the price they are willing to pay. Because of the promo code, 20Gb storage + 1Tb bandwidth is as cheap as $1.87 per month for the first year (assuming you are using a $97 promo code), and lots of people have indeed signed up DreamHost. It will be payback time for them in 2-3 year time, if these customers stick to their services.

What’s the Point of $97 Discount Code?

Many sites on the net are giving out maximum discount $97, and some of them even paid AdWords to make sure their coupon code appears first in SERP. Why do affiliates give out $97 promo code, when they don’t get paid at all from DreamHost?

Well, two possible reasons that I can think of.

  1. They are really nice people. They enjoyed the service and cheap price they received when they first signed up with someone else’s promo code. Now it is the time to give discount back to the “community”.
  2. They are hoping to reap some tier-2 referral fees. If Betty happens to be a marketing genius and have referred hundreds other people, then Alice makes $5 for each customer Betty has acquired for DreamHost.

Again I guess it is a bit of both. I have seen people who just don’t bother to use this opportunity to make money, and would love to share the benefit to all. Then those who have advertised on AdWords are usually the 2nd kind.

So, Where is the Promo Code?

After reading through all these, and you are still seeking a promo code to sign up a new DreamHost shared hosting account, here are some suggestions.

  1. Try the “Special” promo code.

    Applying 777 Promo Code to save Pay only $9.95 first year

    Every now and then DreamHost would release some “special” promo code that gives out more discount than those created by affiliates. For example “777” and “888” were released in their 7th and 8th birthday. Actually, the 888 gives 80% discount which is only good for high-priced plans or 2-year plans. 777 on the other hand, makes the L1 1-year plan only $9.24 — that’s $110.16 discount and equivalent to $0.77 per month.

    I have heard reports saying that the promo code 777 still works every now and then. It is always a good idea to try this code first.

    Update 4 Oct 2006: DreamHost has its 9th birthday special promo code: 9999 that is only supposed to be valid for one day. Judging by the longevity of other special codes, do expect this to pop up every now and then.

  2. Don’t use any code that gives less than $97 discount.

    Applying Maximum Promo Code to save $97

    Unless you love your referrer so much that you want to give money to him/her (which I guess is also reasonable). However if you are cheap and want to maximise your savings, then go for a promo code that can save you the most. You probably will not find one that saves you more than $97, but don’t go for something that saves you less.

    There are plenty on the Internet. Google for it. Otherwise, excuse my shameful plug, but you can try my promo code “HOSTINGFU” to also receive maximum discount on all plans.

    Update 12 Dec 2007: You actually won’t be able to get a coupon code that gives you more than $50 discount anymore due to a chance to DremaHost’s coupon code system. Use my new code “HOSTINGFU2” to get $50 off + 3 extra domains.

Currently I am still recommending DreamHost’s service. I have around 10 websites their Crazy Domain Insane plan, and they all run pretty okay. Not fast — DreamHost’s servers are vastly oversold I think. However they are feature rich and very developer friendly (gcc available on shared hosts, for example). I might not host high traffic dynamic database driven sites on it, but will definitely let it handles my media files, taking advantage of their generous bandwidth allowance.

Can I still Make Money from Affiliation?

Despite competition, I think the answer is still yes. In fact, over 6 months hosting with them, I have already earned myself enough rewards to give me 3 more years of free hosting. Maybe people are honest and appreciate your articles about DreamHost, or maybe people are stupid and will use any code they find on the net. I am not sure.

However as the competition generates more heat, I think it is more feasible to provide promo code with maximum discount and wait for the 2nd tier referrals to come (provided your 1st tiers are active marketers). Or team up with someone so you can have a profit-sharing plan with your referrer while you are actively marketing your maximum discounted promo code ($2.50 each for example).

Conclusion

Web hosting is a hostile industry, and DreamHost is offering lucrative incentive to lure customers to bring in more customers. It is all good — but it pays to do a bit of research to bring down your cost.

Hopefully this article is helpful.

Updates

15 November 2006

Josh and Dallas of DreamHost interviewed in ISPCON about their affiliation/promo code program.

12 December 2007

The maximum discount has now been capped at $50 instead of $97, but promo code creators can still add values by bundling with extra bandwidth, disk space, domain or IP address.