1) Find out what you really need/want your website to do and write it down.
Do you want to host a WordPress blog or an ecommerce website? A personal website to put photos on or something to promote a business? Most webhosts offer different plans to suit different website types. Be clear on this as it will enable you to focus on the hosting plans that are relevant to you.
2) What features do I really need?
Most webhosts offer free email addresses or free site builders which are great, if it suits what you need, but do you really need 100 email addresses or 999 page website? If you are not technically minded a site builder such as website tonight from GoDaddy could be really what you are looking for.
3) Look for good uptime statistics.
It could be great that you bought cheap web hosting, but if your site suffers a lot of downtime then you could lose customers if you are a business. 99% uptime sounds quite good but it isn't really good enough. For example
99% - Downtime is 3 days, 15 hours, 36 minutes
99.9% - Downtime is 8 hours, 45 minutes, 36 seconds
99.99% - Downtime is 52 minutes, 33 seconds
99.999% - Downtime is 5 minutes, 15 seconds
4) How much space and bandwidth do I need?
How long is a piece of string. It depends what you want to do. If you want users to be able to download products or even just your website and you are expect a lot of traffic (visitors) then the more bandwidth you can get, the better or faster your site will load or transfer data. If you are hosting a personal website for family and friends a basic package should suit your needs. 1GB should be more than enough. Remember paying for more than you need is just wasting money, but don't underestimate as you could be charged additional fees if you go over your bandwidth limit.
5) Get one product at a time.
It's easy to get carried away when you are starting your website. The webhost company will probably bombard you with upgrades, free products if you buy more etc. Just stick to what you decided at the outset.
6) Look for a host you can grow with.
Check your web host allows you to upgrade you plan as your website or business grows. It could be a lot of hassle if you have spent weeks developing a site on some free sitebuilding software, but the host doesn't offer the ability to upgrade your hosting requirements. You would then be left in the situation of starting again and have to find another host for a website that would better meet your needs.
7) How good is the support?
Never accept anything less than 24/7 support by email and phone. This is critical, if your site goes down or something isn't working as it should, you may need help and you will want that problem resolved quickly.
8 ) Keep your contracts short.
You don't want to be tied in for 5 years or more unless you really trust your web host. You may want to move or the web host could go bust. If this is the case you could lose a lot of money. Keep your contracts as short as possible and don't pay too far in advance.