Why do hosting companies charge so much just for RAM?
Because;
- Very often you're buying a virtual server,
- These companies want as many virtual servers per physical server a possible,
- While VMWare/Xen/whatever can easily time-slice all those low-CPU virtual servers even VMWare's memory overcommitment isn't as good as its vCPU equivalent,
- So virtual server providers need to stuff their servers with memory,
- Servers that take a lot of memory aren't cheap,
- Bigger, more reliable, memory chips cost more than small, consumer memory - MUCH more.
and the most important reason - people will pay their rates for it, so why should they stop?
Chopper3's answer is good considering virtual servers. For dedicated servers:
It's probably because they don't make their big money on the server box itself. That is, they lease you a dedicated "server" for $99 per month, on which they're certainly making some money. However, when you ask them to add another 1GB of RAM and they charge you $20 per month for it, then they're really making out. Think about how fast they must recoup on that stick of memory!
The reason that nobody just breaks even on "accessories" is that they'd have to charge considerably more for their servers. As reasonable as it may sound to do so, it's simply not going to sell.
Since I took the time to reply to another question on this matter, but it got closed as the repeat of this one, I thought I'd put my piece here also...
It's for a few reasons. But it's about mainly about value not cost.
Hosting companies are operating a business, as do most of their clients. The extra resources a client has the more gains they can achieve i.e. busier site -> extra visitors -> more customers -> more revenue. As such extra RAM isn't costed by it's pure physical price, it's costed by the extra value the RAM brings the client. (See: value added)
Also along the similar lines other people have mentioned (it more applies to VM/cloud servers but can be for dedicated too), that extra 16GB of RAM you want could otherwise be split into 8 other 2GB servers instead, which each bring in more revenue than your single box, even with extra RAM. That 2GB of RAM in a standard server will be far more cost-effective to the hosting provider than as extra RAM for you.
There is also the whole "customization" question - if you want something extra, but also expect it to be fixed when it goes wrong, the cost to the hosting provider is base cost x2 (i.e. keeping spares!). But having 16GB RAM sitting around "just in case" doesn't make them money - so they have to charge you for the privilege.
Basically I understand your question - it's one I've come across a few times when dealing with individuals (as opposed to companies) - but in the end, it's business.
As previously stated, quality server's and ram are not cheap, but unless it's some rare form/spec, the prices are not that extreme. There are other costs though that are considered by companies when setting their pricing. Employees' salaries, electricity, air conditioning, rent, etc.
But I do agree, when you see 2G DDR3 for $60(CDN) and then your hosting company wants to charge you $10/mo for 1G DDR2, it seems a rip off.
You said it yourself though, they are there to make money.
It's part of the overall price of the server and the costs associated with running it. We have to keep spares, pay for physical storage, pay someone to keep it all asset managed and pay staff to troubleshoot RAM issues. We won't ask you for a cent if it goes bad and needs replacing (unlimited amount of times.)
For VPS, the host servers aren't cheap to run or buy. When our customers exhaust the memory on a host server, we need to buy another. Again, the cost of the memory contributes to many other costs. Our intention is not to rip you off (ours, anyway.)