TL;DR - As of January 1, 2014, the new price for the bloggers I host will be $20 per 25,000 hits, calculated quarterly. This changes from the current $10 a month, charged yearly. If you've pre-paid for the year, it will be used as credit.
In the beginning
When I first started my hosting platform in its current incarnation, I was already hosting a dozen sites for friends. For years I had tried to get everyone I know blogging, but I realized that folks won't go through the motions unless they are motivated personally. When I set up the current network, everyone initially set up were the folks that had that motivation, and I started charging them to increase the value of their site, and to offset the amount of time it took me to maintain everything.
Ten dollars a month seemed reasonable, but I made a mistake out of laziness; I only charged them once a year. I hate doing busy work, and that is how invoicing feels, and charging someone $10 isn't a big deal to me, so I wanted to avoid that if possible. I don't charge late fees on principle, so right from the beginning I told folks that I would invoice them once a year, and they had the year to pay me.
Then I got busy. Really, really busy. I am looking forward to the 2013 write-up, but needless to say it was the best year of my career. And I was really focused on the clients that are also companies, building a bunch of neat sites and being paid well. I love invoicing my clients, because I do a good job and get to support my family. And it isn't a bother: I either invoice once or twice for a project (small amounts are paid upfront, large budgets are paid half on completion), and then we switch to quarterly for hosting and smaller tasks that build up over a few months. This is easy for me, it is easy for them, and my network is growing at a rate that I can handle.
Those who blog
I was so busy, I forgot to remind most of my blogger-friends to pay me, and when I finally realized I was about to invoice them again, at the end of December, most of them hadn't paid me yet. This was my fault, because I had kept it informal, but I had all these unpaid invoices out, and I didn't want to track it separately. In fact, I'd like to host more bloggers (that is, folks' personal sites, less about a company, and more about individuals or causes).
Bloggers are great, because they are low maintenance after the first month, which is when they find out how awesome my platform is and how they get all the best practices and don't have to worry about anything anymore. They acclimate to having me as a hosting partner, the one that compulsively uses all the plugins and can make reasonable recommendations, and will stay up all night (or day) if there is a problem. Once the honeymoon is over, they just do their thing, and if they do have a question, 90% of the time I've answered it a dozen times already, so no sweat. That means that I can support one of my ultimate goals of making the web better, by hosting for folks that are actively motivated to self-publish on the web.
While there is a commonality to the bloggers I know, there is also a lovely and diverse spectrum. Their publishing patterns and income levels are the things that I care about from a business perspective. I host some sites for folks that are unemployed, some that could retire at any time, others that post once a year or less, and also those that tend to generate huge spikes of traffic. My one size fits all approach to keep the bloggers out of my paperwork doesn't really work.
Consistent and efficient (I hope)
I mulled over it for a few days after I suggested some folks leave my network. They didn't use their site, and because they were my friends I felt weird asking them for money so I could host their husk of a blog. I like to provide value, and this feels like rent, which is not something I am seeking. I want to make a living wage hosting for a lot of people, in a clever way so it is worth all our time. But when I suggested they move their site to WordPress.com, I had this cognitive dissonance: I think WordPress.com is fine, but it will never be as valuable as my platform, and it is a weird moment when I turn folks away, not because they are doing something to threaten my network or are assholes (and I normally charge them more before booting them), but only because they weren't using their site.
Fortunately, this coincided with a spike in traffic for a blogger that was substantial enough that if it continued I would be paying for them to host with me, which is not part of my business plan. Taken together, I realized I could tweak the formula.
Outline of how I makes my monies
I charge everyone $20/25,000 hits. Companies are calculated monthly, which means that if a company gets 0-25,000 hits, they pay me $20. Bloggers are calculated quarterly, so it changes how much they pay, and tends to be lower than a company, but is in accordance with the amount of attention I have to pay to them, hence how I value my time.
Companies also pay me a monthly fee aside from traffic, depending on various factors (business goals, amount of time they need each month, budget). Basically, whatever I feel like charging. This is currently between $25 - $100. Bloggers don't pay a hosting fee besides traffic, but it also means that their non-emergency requests get checked last. I try to keep inbox zero, and most days I succeed. Bloggers normally get replies from me around 4AM, local time. I am never going to talk to a blogger on the phone about their website (unless it is me berating them for a color scheme or typography decision!).
The bulk of my income comes from "projects", which is at the low end $300 for a basic WordPress-to-WordPress migration, up to five digits to perform miracles in six weeks (it was a fun year!). Most of my projects are between $400-$750, and $3,000-$5,000. I'll write a separate post about how I juggle these, and the lessons I learned this year. I should really document all this stuff, so I don't have to explain it to each new client. Almost there.
The benefits to me for this new pricing scheme is that I now do all my hosting invoices four times a year (the first of Feb., May, Aug. and Nov.; it is so I invoice just before and after the holiday season, when people start acting crazy with their money). Also, the bloggers start paying for the resources they are using, which scales better for me.
The benefits to bloggers is that poor folks will only pay $80 a year for the best WordPress hosting possible, bloggers with a lot of traffic will get all the benefits of my expertise without paying the same cost as a company, and everyone will have shorter cycles for being charged, making it easier to remember and pay.