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sticky conflict-of-interest questions
local webhost contracts design to me but i host as well
Emma McCreary

10+ Year Member



 
Msg#: 664 posted 10:52 am on Jan 27, 2003 (gmt 0)

I live in a smallish town. I have been doing web design contract work for a local ISP/webhost - they do higher end design stuff but they wanted me to to "small fry" sites for people who buy their hosting but have limited budgets.

Now, they are the Big Boys in town and have a lot of hosting clients. I am very small and happy for the business. But I run a small design/hosting business of my own, and my clients are mostly small businesses, nonprofits, etc that can't afford the hosting fees of Big Boys, and I like being able to offer them hosting (through a reseller plan) because a) its steadier money than design, b) it's easier to administer a site when I administer the hosting and c) cause its a crime how much local prices are inflated.

So basically, Big Boys want to mitigate the contact that their clients have with my actual business because I'm a competitor. Which I understand, and I'm not trying to steal their business. But I want to come to an agreement which is fair to both of us. And what do I do if one of the clients they have me work with finds out about my business, or just asks if I can recommend another host or if I do hosting myself. What do I say?

I haven't signed any contracts with them so far, it's only been a few jobs, but it's getting to the point where we're going to have to hammer this out. And I'm not sure what is reasonable and what is not for them to ask of me.

And I don't want to be sleazy about this and steal their clients or anything, it'd just be shooting myself in the foot anyway. But I don't want to end up stuck in a bad contract either. Any ideas? Thanks!

 

Brett_Tabke

WebmasterWorld Administrator brett_tabke us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 664 posted 5:26 pm on Jan 27, 2003 (gmt 0)

Hi Emma. First, I'd draw the line at who generates what business. If you generate the lead and the client, then get that hosting at some other unrelated site - keep those apart from the isp generated business.

>cause its a crime how much local prices are inflated.

Don't be affraid to keep raising your rates as you get busier. They'll come to count on you and your services. If they are charging premium prices, then you should charge appropriatly the same. Having someone local that they know and can count on, is worth a great deal.

I can certainly understand them wanting to keep your seperate from their clients. If you work in "stealth" mode as an employee of the the host - then make sure to charge more than if the clients know you.

You have to have some advertising opportunities local that would put you in contact with these people any way. If they have a meeting or isp sponsored get-together, then go and meet people. Put an ad in the local paper weekly. Let them know you are not going away and that their customers are going to run into you one way or another. Sure, they can send you alot of business, but if you have the means to get in touch with those people any way - go for it.

If things don't work out, always remember that your isp can read your email and watch your web actions. and yes, those guys will do that in a heart beat. When you work with your own isp, always assume that big brother is setting over your shoulder watching every click you make (this is the voice of experience talking ;)

homegirl

10+ Year Member



 
Msg#: 664 posted 6:14 pm on Jan 27, 2003 (gmt 0)

Hi Emma! I have worked (and do work) in similar situations where the SEO services I provide- are sometimes to bigger marketing firms and I work in "stealth" mode (as Brett puts it). Some of the things the ISP will probably want you to "sign away" in their NDA (non-disclosure agreement) is the right to contact any of their clients that you've done work for, the work you've done (which is owned now by the ISP), and you most likely won't be able to list publicly either the ISP or any of their clients- as your own clients that you've done work for.

I agree it's hard to turn away business- so don't unless the contract they want you to sign is truly onerous and unfair. However, *do* charge them higher rates than you would your own clients (especially because it's costing you not to be able to list or publicly reference them). And, possibly, you may want to consider putting up a page on your site that lays out the arguments for why your service is a better deal for most small businesses, non-profits, etc. And heavily publicize that.

If you are contacted by the ISP's clients to host (and you don't currently have an NDA in place), you should probably explain to them the conflict of interest and why you're limited in your ability to discuss, recommend, etc. However, if they contact you separately for your design services (and again, you don't have a contract in place that prohibits you from taking them on as a client without the intermediary), I'd probably take them on (but not publicize it a great deal).

Also, trust your instincts (contract-wise). But consult a lawyer if the language starts getting too deep. There are time limits on everything (usually anywhere from 1-5 years). If the ISP becomes too much of a control freak, weigh the loss of income against your potential freedom (long-term) to win over clients both on price-point and quality of service (assuming you can feed your self-promotion/marketing budget a bit). Good-luck!

jimbeetle

WebmasterWorld Senior Member jimbeetle us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 664 posted 6:20 pm on Jan 27, 2003 (gmt 0)

Hi Emma,

As Brett states don't directly compete with your ISP for their hosting clients, that would only ruin a good thing. However, if any of your ISP's current clients contact you through other means it's probably open season. If in certain situations you find a line that you're not sure about crossing, well, then it's best not to cross it -- you'll know when it's there.

I would not become and ad hoc employee of the ISP by signing a long-term agreement. It's normal in the freelance world to work on a 'per-job' basis. I would agree not to initiate contact would any of their clients, would agree not to denigrate the ISP's service, would agree not to refer to or use any sites designed for them in my portfolio.

I think that something along those lines and promoting your services as Brett says, along with being ethical in your dealings should resolve things on your end. As for your ISP...

Jim

pleeker

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 664 posted 12:24 am on Jan 28, 2003 (gmt 0)

Hi Emma, welcome to Webmaster World. I come from the other side of this equation. I work full-time for the #1 ISP in our "smallish community", but I work on the web side of the company -- web hosting, web development, database/custom programming, SEO, etc. -- not the Internet access side.

So basically, Big Boys want to mitigate the contact that their clients have with my actual business because I'm a competitor. Which I understand, and I'm not trying to steal their business.

When you talk to them, be sure to explain that. But be sure to add that, if they're allowing you to have direct contact with their client, it's inevitable that their client may get curious about what all you can offer them.

But I want to come to an agreement which is fair to both of us. And what do I do if one of the clients they have me work with finds out about my business, or just asks if I can recommend another host or if I do hosting myself. What do I say?

That should be ironed out with the ISP in advance. It's kinda surprising it hasn't happened already, unless you've only been freelancing like this for a short while.

I haven't signed any contracts with them so far, it's only been a few jobs, but it's getting to the point where we're going to have to hammer this out. And I'm not sure what is reasonable and what is not for them to ask of me.

What's reasonable and what's not is really up to you, and how much you are willing to do to continue this relationship with the ISP. If you really need the extra cash, you'll probably be more willing to consider their demands as reasonable. As your own business grows, you may change your mind about what's reasonable or not. With that in mind, I'd suggest keeping any agreement with the ISP short and agreeing to review it with them regularly.

I do agree 100% with Brett -- local service is (and should be) worth a premium price. Compared to server farms, our web hosting is expensive. But I can't think of a single customer over the years who has needed our support who has ever complained about what they pay for hosting.

As for Brett's other comment:

If things don't work out, always remember that your isp can read your email and watch your web actions. and yes, those guys will do that in a heart beat. When you work with your own isp, always assume that big brother is setting over your shoulder watching every click you make.

Now hold on, Mr. Admin. :)

Yes, that is physically and technically possible. But you can't lump every ISP into a single pile of unethical Big Brothers. There are some ISPs out there, my employer is one (thankfully), that proceed with the utmost respect for privacy and operate with the highest standards of conduct. (Just like there are some good SEO firms, and some not so good.)

If we were Emma's ISP, there is no circumstance under which I (or anyone else) would ever pry into her private email or watch what she's doing online. No way.

tbear

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 664 posted 12:42 am on Jan 28, 2003 (gmt 0)

Hi Emma,
welcome to WebmasterWorld (I'm sure I'm not the first to welcome you).

A similar situation is occuring with my situation, which I won't go into, and what I intend to do is to offer the same restrictions and limitations to both of us. What's good for the goose.... and all that.

We can always renegotiate at a later date if we feel it to be advantageous. ;)
Good luck either way. Partnering or sharing in business is always sticky and you should both try to be clear about where you stand.

Emma McCreary

10+ Year Member



 
Msg#: 664 posted 1:47 am on Jan 28, 2003 (gmt 0)

Hi everyone, thanks for the replies. This gives me an idea of what kinds of things might be in the contract we will probably eventually sign.

I should clarify, they're not *my* ISP, so there's no way for them to read my email. I don't use their services because they're so expensive.

Also, even though local service is important there are those who simply cannot afford expensive fees, and that is who I want to serve. So even though I could potentially charge more, I will try as hard as possible not to.

OK, so it seems like I should just keep my business with them and my business with the general public as separate as possible, and if one of the clients they bring me in to work with asks me about hosting, then I should say that basically I can't discuss it.

you don't have a contract in place that prohibits you from taking them on as a client without the intermediary

Is this a common stipulation? So if one of their clients comes directly to me I would have to go through them, or also say that I can't discuss hosting with them?

jimbeetle

WebmasterWorld Senior Member jimbeetle us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 664 posted 2:53 am on Jan 28, 2003 (gmt 0)

>>you don't have a contract in place that prohibits you from taking them on as a client without the intermediary

>>Is this a common stipulation? So if one of their clients comes directly to me I would have to go through them, or also say that I can't discuss hosting with them?

This is one of the sticky points that you're going to have to deal with. Your agreement with the company can be that you will not in any way do any business with any of their clients. This is very, very limiting as you could not take on folks that were clients of the company and found your services on their own (assuming that all of the work that you did for the company was totally sub rosa).

And basically it does turn on

>>if one of the clients they bring me in to work with asks me about hosting, then I should say that basically I can't discuss it

Yep. If you're talking to the client as a representative of the company or during your work for the company then that would be a no-no.

On the other hand, if the potential client had a site designed by "the company," not knowing you, your name or that you were at all involved and then responded to a newspaper ad...well, that's when you probably have to spell it out. How about an anti-compete clause for a period of six months or so? Or whatever length the company imposes on its clients (we'll give you a web site design if you sign up for one year's service).

Just some thoughts,

Jim

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