Hosting contracts are sweet deals — for the vendor.

Since just about everything in technology gets cheaper every year (except labor costs), multi-year hosting contracts allow vendors to lock in long term revenue without having to remain competitive. Labor based service contracts can be a good deal for the customer, but hosting and any other software and technology will certainly get cheaper every year. Why sign a contract to guarantee today’s higher price?

Some vendors offer discounts for annual prepayment, which can be a good deal if you have the spare cash. But beware of contracts for more than one year.