What do you guys think of the "reseller" hosting business model?
11 comments
The problem with reseller hosting is that you have absolutely no technical control. You sell hosting to a bunch of people, and then if the server(s) crap out, you start fielding a ton of angry phone calls. There's absolutely nothing you can do to get things back online except wait on the (sometimes shoddy) hosting technical support.
It's a commodity business-- very low margins.
It's a marketing driven business... How good are you at lead generation?
It's support intensive. You're essentially losing money every time you talk to your customers.
It's a utility business. You will never hear from your customers unless something is broken, and they'll be enraged that their site isn't up 24x7. If they botch their HTML, they'll blame you. If the have an old version of WordPress and it gets exploited, they'll blame you.
It's LOUSY hours. Stuff breaks at weird times. All upgrades have to happen at weird times.
(I ran a hosting biz for a while as part of my consulting biz. We bought a hosting company, ran it for 2 years, and then sold it-- for a tidy profit. But I would never touch that business again).
It's a marketing driven business... How good are you at lead generation?
It's support intensive. You're essentially losing money every time you talk to your customers.
It's a utility business. You will never hear from your customers unless something is broken, and they'll be enraged that their site isn't up 24x7. If they botch their HTML, they'll blame you. If the have an old version of WordPress and it gets exploited, they'll blame you.
It's LOUSY hours. Stuff breaks at weird times. All upgrades have to happen at weird times.
(I ran a hosting biz for a while as part of my consulting biz. We bought a hosting company, ran it for 2 years, and then sold it-- for a tidy profit. But I would never touch that business again).
As everyone has pointed out, hosting is an extremely competitive space. We (Virtualmin) build tools for the industry, and the majority of our customers are providing hosting services in one form or another (though not all could be called "hosting providers"--many are web developers that host their clients sites as a value-add, and for their own convenience, since they can always install the software they need when they need it).
I would recommend you do a bit more research before building a basic hosting service. You'll be competing with people who charge a couple of bucks per month for service. It takes an awful lot of customers to make a living out of $2/month agreements (many of whom will disappear after the first month or two, so customer acquisition will be a constant struggle).
I would almost certainly recommend you aim for the high end of the market rather than the low. You can't do it with a cPanel plan from Hostgator, however. You'll need one or more dedicated servers with a good method of backing it up (either to S3 or to a file share at your hosting provider). From there, pick a niche that you love (Ruby on Rails, Python/Django, PHP with some framework or application, etc.) and build a really nice service based on providing the best possible user experience for deploying that kind of application. Or, focus on your local market, and build relationships with small businesses in your area. In either case, you can charge a premium for good service, and because you're offering a very focused set of features (either support for a complex set of tools, or a local personal touch, or something else) you won't be competing with every hosting provider in the world (of which there are thousands or tens of thousands depending on your definition of hosting provider).
I would recommend you do a bit more research before building a basic hosting service. You'll be competing with people who charge a couple of bucks per month for service. It takes an awful lot of customers to make a living out of $2/month agreements (many of whom will disappear after the first month or two, so customer acquisition will be a constant struggle).
I would almost certainly recommend you aim for the high end of the market rather than the low. You can't do it with a cPanel plan from Hostgator, however. You'll need one or more dedicated servers with a good method of backing it up (either to S3 or to a file share at your hosting provider). From there, pick a niche that you love (Ruby on Rails, Python/Django, PHP with some framework or application, etc.) and build a really nice service based on providing the best possible user experience for deploying that kind of application. Or, focus on your local market, and build relationships with small businesses in your area. In either case, you can charge a premium for good service, and because you're offering a very focused set of features (either support for a complex set of tools, or a local personal touch, or something else) you won't be competing with every hosting provider in the world (of which there are thousands or tens of thousands depending on your definition of hosting provider).
The market is in an ongoing race to the bottom. With google pages & app engine, charging for basic hosting is becoming a losing proposition. The only place you can make money with hosting this days is by selling to power users; unfortunately you can't really do that without a large investment in hardware and connectivity.
Last I checked, hostgator's own host is The Planet. Go directly to them, if you're going to go that route.
There's no sense in having your customers have to wait through a chain of three companies (counting yours) before their support tickets get resolved.
There's no sense in having your customers have to wait through a chain of three companies (counting yours) before their support tickets get resolved.
The poster is referencing hostgator.com as an example I believe. But agreed, three levels of people would be ridiculous.
[deleted]
It can be worthwhile, but there are a couple of different types of hosting resale that you could consider, apart from web hosting. It may be more economical for you to rent a low-end dedicated server (Celeron etc) and a control panel license, and then resell service from there. However, Hostgator might provide an all-in-one solution for you to use (billing, automatic setup, etc), which may simplify the process.
I personally won't allow any money to ride on a machine to which I do not have root. :)
I personally won't allow any money to ride on a machine to which I do not have root. :)
As everyone points out, web hosting in general is very crowded. That being said I've seen plenty of hosts thrive in the reseller market.
One suggestion is don't compete on price. You'll never win. Find something else like quality or customer service.
I personally use a reseller account because I like not having to worry about server security. Plus I can host multiple websites and friends/family at little to no cost.
One suggestion is don't compete on price. You'll never win. Find something else like quality or customer service.
I personally use a reseller account because I like not having to worry about server security. Plus I can host multiple websites and friends/family at little to no cost.
I don't see the point. It seems as worthwhile as selling Mary Kay products, only with more maintenance.
Hosting reselling is an old form of marketing. Welcome to the Internet!
As for is it worthwhile? Well, how many friends do you know? If you have a big social network and can convince them then yeah, you can make some money off of it. A buddy of mine started reselling hosting packages from a tier 2 service provider and slowly graduated into buying his own racks and providing better products. It's enough to get him a house and a comfortable living but it also took him 5 years of hustling and bustling and a friends and moderators of a tech-oriented web forum to continuously market for him.
If you scour the forums, it's typical that you'll find ads for them as well. And as for the guy that said you'll be fielding the tech questions: that's really true. Some service providers will be doing that for you, it depends on who you pick to partner with.
Should you get into it? Only if you do a bit more research than just pitching a question on Hacker News.
Suggestions on where to start:
http://www.webhostingsearch.com/reseller-web-hosting.php
http://www.devshed.com/reseller-web-hosting
http://www.thehostingnews.com/
As for is it worthwhile? Well, how many friends do you know? If you have a big social network and can convince them then yeah, you can make some money off of it. A buddy of mine started reselling hosting packages from a tier 2 service provider and slowly graduated into buying his own racks and providing better products. It's enough to get him a house and a comfortable living but it also took him 5 years of hustling and bustling and a friends and moderators of a tech-oriented web forum to continuously market for him.
If you scour the forums, it's typical that you'll find ads for them as well. And as for the guy that said you'll be fielding the tech questions: that's really true. Some service providers will be doing that for you, it depends on who you pick to partner with.
Should you get into it? Only if you do a bit more research than just pitching a question on Hacker News.
Suggestions on where to start:
http://www.webhostingsearch.com/reseller-web-hosting.php
http://www.devshed.com/reseller-web-hosting
http://www.thehostingnews.com/
Like in any crowded business, you have to have an edge to succeed. There are tens, if not hundreds, of thousands hosting providers out there, so competition is gonna be very though.
However, if you already have a big client list (say, as a freelance webdesigner) or add some value to your hosting packages (e.g. a new, supersexy blogging platform), you can have good business.
Competition on price is surreal, especially with a reseller package.
Is this a worthwhile pursuit? Or is the market simply too over-saturated for it to be worth a risk?