The guarantees in the hosting business
There are mainly two types of guarantees used by the web hosting companies:
1. the money back guarantee and
2. the uptime guarantee
The reason they offer them is simple. It’s a very wise and effective marketing technique. Meaning what? Meaning that the ultimate reason for the existence of these guarantees is that they will bring them more clients and thus more money. Don’t take me wrong, I have nothing against that. It’s just that we have to know the reason to understand the behavior.
Take the money-back guarantee for example. It’s definitely not a promise made by web hosting companies alone. Most services/products come with a guarantee of some kind. Almost every time the guarantee is there to make you say: I’ll buy this! After all, it’s guaranteed to work/make me happy/get the results I expect!
This whole technique is known as "risk reversal". Way back when no one (or very few companies) guaranteed anything about their products, marketers realized that there was something that stopped clients from buying freely (especially impulse buyers). It was the risk involved in any purchase that was made! When you buy anything you make a deal. With no guarantee, you risk everything in case the service/product doesn’t make you happy. The seller on the other hand, has nothing to lose.
A money back guarantee shifts the whole risk, or a part of it, back to the selling company. The most generous kind of guarantee is the "no questions asked" money back guarantee. Nothing beats that except a "no questions asked" money back guarantee + a free gift. But that’s not something you will see in the web hosting business… Now, if you think about the fact that they would have provided the service for free if they give you a refund, you can consider that you do receive a gift.
I do recommend you to look for money-back guarantees when shopping for hosting. There is a problem associated with them though: the guarantee has a value only if the word of that particular company has a value. If that company treats its customers right, then you have reasons to believe that the money back guarantee is worth believing. To find out if the company treats the customers fairly, you have to look for company reviews.
Now there are money back guarantees and money back guarantees… Some are "no questions asked", some are "for any reason" and some are "for the following reasons". The "for the following reasons" guarantees tend to be tricky. Not necessarily because the hosting company wants to trick you, but because the company tries to minimize "unfair" risks. A "no questions asked" guarantee leaves the hosting company exposed to a very real risk of being robbed by unscrupulous individuals who might take advantage of this complete risk reversal.
However, a guarantee that is not "no questions asked" opens you to a whole new set of risks, which depend on the exact conditions of applicability. The negative thing about conditioned guarantees is that they can be easily overstretched by the hosting company to its advantage, meaning that whatever the reason they usually can argue that your reason is invalid.
So I’d prefer to go with either no guarantee, and decide based on customer reviews, and/or to go with a company offering a "no questions asked" guarantee. A conditioned guarantee is too difficult to weigh when you’re buying, especially when you’re not very sure if the company is reliable (based on what former or current customers have said about it).
What I mean is that between a company with no guarantee but a spotless behavior towards its customers, and a company with a conditioned type of money back guarantee, I’d go with the one with the spotless record. Not because the risk would necessarily be lower, but because it would be easier to assess that risk.
It’s a weird choice I guess, but I have another reason for it. Most of the good web hosting companies would issue a refund if real problems would emerge with respect to their service, even if they don’t actually have a money back guarantee.
Money back guarantees differ not only with respect to conditions, but they also differ in length. Basically there are two types of guarantees according to length: 15 days and 30 days. Of course, 30 days is better and considering the fact that most web hosting companies offer a 30 days money back guarantee, I recommend you to try and find a company that offers this. The advantage is clear and very important, especially if your website uses scripts, databases etc. because 30 days give you enough time to set things up and see if everything runs smoothly.
About the second type of guarantee, I discuss in a special article dedicated to the uptime guarantee.