If you prefer to start your own web hosting company rather than pay for its services to your web host, it could offer you an additional income source as well as save you the hosting costs of your own sites.
There are basically 2 ways to start a web hosting company.
- The first way involves leasing business space, buying equipment, setting up servers, leasing T1 or T3 lines to connect to the Internet, finding clients, and hiring staff to provide 24-hour support. This requires a fair amount of technical knowledge and can seem quite complicated to a novice.
- The second available option is to become a reseller for a reliable web host. Reselling is often anonymous. A certain amount of disk space and bandwidth is allotted to the reseller and you have the freedom to fix your own rates and brands. However, a reseller is entitled to pay a monthly fee. While all the technicalities remain the sole responsibility of the web host company, the functionary needs to sign up customers and just watch the paychecks become heftier.
We would recommend becoming a reseller of a quality web hosting company.
Firstly, it is important to note that this area is highly competitive as there thousands of web host companies and making yourself noticeable can be a daunting task. Many customers do an in-depth research before choosing their web host. So it is vital that you at least make your website noticeable and advertising is the only way to make that happen. Advertising can, however, prove to be expensive, especially in a rivalrous market.
It is important to choose a reliable hosting company as you will be dependant on them for most of the technical support.
There are many types of reseller packages to choose from.
Some companies would want you to launch a web company under their brand name while others may be a bit easy on this and give you the freedom to assign it under your own business name.
Take note of the billing aspects involved in the reseller package. Some packages may require you to set up a billing gateway while others have the entire package ready to get started with.
Reseller Hosting Guide – Becoming a reseller
In today’s hosting market, there seem to be more hosts than people who want hosting. If you are asking yourself why there are so many, it is because many hosts are actually resellers of a parent company. A reseller is a person who buys space and bandwidth from a parent host and then resells that space and bandwidth to others at a higher rate in an attempt to turn a profit. With the cheap reseller packages that many companies are offering, many people see this as a grand opportunity to make some quick money. However, before you dive into reselling, there are some important things you should know.
I. Space and Bandwidth offerings
First off, reselling web hosting is usually not that profitable as some may first think it is. The main reason is that all web hosting packages today are fairly similar in terms of features, all offer PHP/MYSQL and lots of space and bandwidth. You may be tempted to lure customers to you by offering them large amounts of space and bandwidth but that will hardly ever work because of players in the market such as Bluehost, Dreamhost, and Hostgator who offer gigabytes of space and terabytes of bandwidth all for under $10 a month. No matter how much you oversell, you will never really be able to compete with their packages in terms of space and bandwidth. The price of web hosting is also very cheap today and attempting to undersell the competition is a flawed plan. For a regular reseller plan, you will be hard pressed to make any kind of substantial profit over the cost of your reseller package unless you provide some kind of special service beyond what the big players can offer.
II. Technical support and customer service
Since price, space and bandwidth are not the areas where you will differentiate yourself from the competition, it is in customer service and technical support where you will really get known if you excel. This, unfortunately, is also the major weakness of most resellers. Many resellers are today are teenage kids or people with no experience in the business who are just trying to make a quick buck and therefore offer little to no technical support. These are also the hosts that spring up overnight with no backing or business plan and shut down a few days later once they find out that making money is not that easy. To really stand out in the areas of technical support and customer service, you will need an experienced and skilled support staff with at least one active staff that can handle tickets 24 hours a day, 7 days a week. You should also have a good support ticket system and a support phone number for emergencies. The support staff should be knowledgeable in areas such as Linux server administration, Windows Server Administration, Apache configuration, Windows IIS, PHP/MYSQL setup, ASP setup, server load balance, advanced server troubleshooting, and have a rudimentary knowledge of server security. Of course, such a staff costs money to maintain, so before you buy a reseller plan and start selling to end users, make a business plan and study the finances carefully so you charge enough for the plans you offer while still making a profit margin.
If you are not good at technical support or do not have the money to hire adequate support staff, then you might consider going with a reseller plan where the parent company provides the technical support to the end users. Such a plan usually costs a bit more but is well worth it if you do not have the time or do not want to put that much effort into customer support. However, choosing this route does not mean that you will not have to provide any customer support at all. You will still at many times be the middle-man between your end customer and the parent company. Since the parent company usually has many of its own customers, they will sometimes give their own customers priority over their resellers’ customers, resulting in bad technical service for the resellers. If you see this happening, you as the reseller, need to talk to your parent company about providing prompt technical support for your customers, since you are ultimately responsible for your customers. Another minus of choosing this route is that your customers are in direct communication with the parent company much of the time and there have been cases where the parent company will “steal” customers away from its reseller by offering a lower price on the same package hosting deal. Although this is unethical, there are some hosting companies that will do this to their resellers. Even if it is their company policy not to do this, if your customers are talking directly to the parent hosting company for technical support, it will be inevitable that a few of them will ask the parent company about their hosting plans. Therefore when it comes to technical support, it is still the best in my opinion to handle this area of hosting yourself. By doing so you will build one-on-one relationships with your customer and gain their trust. This way even if you decide to move parent hosts or buy your own servers and truly start your full-fledged company in the future, your customers will follow you because of the loyalty you have developed with them throughout the years.
III. Picking out a good parent hosting company
Another major area that gets benchmarked in the hosting business is uptime and server stability. Unfortunately, this is one area that a reseller cannot control. Resellers generally do not have root server access. A reseller plan is generally just like a regular shared plan except a reseller has the ability to create many users and packages under his/her account and can offer them out to different people. Because of this, if the server goes down, there is little that a reseller can do except talk to the parent host. If the parent host has a prolonged period of blackout, you will lose many customers because you will be unable to do anything to bring your client’s websites back up. For this reason, some resellers have opted to have many reseller plans with different companies so if one company has a blackout, they can move those accounts to another server and get them back up quickly. Resellers should also keep nightly backups of their client’s files and database data in case something like a blackout occurs. Unfortunately, most resellers simply do not have the foresight or do not have the funding to take these precautionary steps to protect their clients’ data.
Because so much of a reseller’s business depends on the parent host, it is very important for resellers to pick a solid parent hosting company with steady servers and good tech support. It is also important that your parent company does not require any of their branding on your main business page. Picking out a good parent company to resell under is hard but there are a few things that you should look for.
1. Quick response to pre-sales questions – If you send the hosting company a pre-sales question and they take longer than 12 hours to respond, you should look elsewhere. Companies usually answer pre-sales questions faster than technical support questions and if they take more than 12 hours to answer pre-sales, they could take days to answer technical support questions. Try to pick a host that has a pre-sales response time of less than an hour if possible.
2. Customer reviews – Check out online customer reviews and what current customers say about the host’s service. Do not go by the testimonials on the host’s site, they are always good. Post in forums and go to review sites to get a good grip on the host’s reputation.
3. Watch out for oversellers – A parent host that enormously oversells its shared hosting plans is probably not a good bet for a reseller. If they cram regularly shared servers, then their reseller servers are probably crammed as well. Check to see if a parent company lets their resellers oversell. It is highly advisable to not go with a parent company that allows this. If all resellers are allowed to oversell, you will probably end up on a server that is way too crowded and oversold to perform at an acceptable level.
4. Available Upgrade path – Try to pick a host that has options to expand your business. Many hosting companies offer upgrades from reseller plans to semi-dedicated, VPS, or fully dedicated hosting plans. Going with one of these assures you that you will not outgrow your parent host anytime soon.
5. Longevity – Do not go with a parent host that just sprung up a few days ago just because they have low prices. Those hosts tend to be short-lived. Instead, go with a more costly but established company for stability. Find one with a good track record and seems interested in taking care of you and helping you grow. As a rule of the thumb, go with a company that is at least 1-2 years old and has a decent number of clients hosting with them.
IV. Other reasons to go reseller
Besides the reason of making some money, there are other reasons/perks for someone to get into reselling. If you offer a web development or web design service, getting a reseller plan is probably a good idea as many of your clients probably want you to take care of the hosting aspect of their business as well. In fact, this is where the most profitable reselling occurs. Customers are willing to pay more for a hosting package if you are providing development and design services as well. In this case, hosting is just one small aspect of your business that compliments the rest of your business.
Now that we have looked at several aspects of reselling, you should have enough knowledge to start up a reseller. Be sure to do parent company research, ask technical questions before jumping on board, and have a solid business plan and technical support staff before you start your company. Try to add additional value-added services to sell along with web hosting. If you take all these factors into account and carefully plan out your hosting company strategy, you will soon be running a successful web hosting business.