I wouldn't call it a dedicated server if you don't get root :P Are you sure it isn't a VDS? I won't comment on those prices.. hey, maybe I'm charging too little!

The way I do it with my company is -- if clients want to run someone custom, go ahead and install it yourself, but we would prefer installing it for them because it makes it that much easier for the other users that might want it. We never charge to install software for clients, since it diversifies our offerings, and strengthens the brand.

I'm fairly certain it's not VDS. I think this plan is more targetted toward people who are running CGI processes which require a lot of the CPU's attention, not necessarally people who are familiar with UNIX and want to pimp out their account.

(And, I think they just don't want to worry about fixing things up the user plays with and breaks. Take Chris for example. Every few months he asks me if he can move or delete all the dotfiles in our home directory to "clean things up". In that respect, I am happy we do not have root.)