Many people don’t know this but one of the first Internet business I started was a web hosting company. The idea of running a hosting company really appealed to me because of its residual income potential (I love residual income). You only have to set up the client once and as long as he stays a customer, you collect a nice monthly income for no extra work, or so I thought. I build up my hosting service to about two dozen local clients. Eventually, I kicked out all the clients and quit because I got tire of getting phone calls in the middle of the night asking, “How come my email isn’t working?” That was almost nine years ago. It’s too bad that Reseller Hosting Guide (the subject of this ReviewMe review) wasn’t around back then because I could have really used their help and I may still be in the hosting business today.
What Is Reseller Hosting Guide
Reseller Hosting Guide was launched on June 18th of 2005. It was started by Ben and Joel (the same guys who run Web Hosting Unleashed) because there wasn’t enough resources out there for people wanting to start web hosting companies. Reseller Hosting Guide covers everything you need to know about reseller web hosting. From how to get started, to hiring, to setting up automatic account creation, to monitoring tools, to choosing a host, it’s all here. The site even offers 12 free hosting company templates. Reseller Hosting Guide is mostly read by web designers or entrepreneurs looking to start a hosting company or hosting company owners.
The amount of information on Reseller Hosting Guide is extremely impressive. The site is divided into five categories.
- Introduction to Reseller Hosting
- Choosing a Reseller Host
- Setting Up Your Reseller Account
- Getting Clients to Sign Up
- Running Your Hosting Business
Many people think it takes a lot of money to start a web hosting business but it’s a lot cheaper than you think. You don’t even need any equipment. The key is reseller hosting and Reseller Hosting Guide does a great job explaining what that is.
You buy a reseller web hosting package with 1,000 MB disk space and 1,000 MB bandwidth. You then break this into 10 separate accounts with 100 MB disk space and 100 MB bandwidth each and then you sell these smaller packages to your customers. So if you sell each of these packages for $10.00 dollars a month you would be making $100.00 and your only cost is the reseller web hosting package which cost $15.00 a month. So your total profit would be $85.00 a month.
When I started, I was using a reselling hosting package much like what was described above. However, my problem wasn’t finding a good reseller plan (Reseller Hosting Guide has a nice list of recommended resellers). My biggest headache was dealing with stupid customers. This is where the articles in the Running your Hosting Business section would have really came in handy. You’ll find information on client communication, fraud protection, legal, hiring and firing, providing tech support, etc.
Affiliate Marketing + Web Hosting = Big Money
One of my favorite articles in Reseller Hosting Guide is the one about using affiliate marketing to make money from web hosting. This can give you all the benefits of running a web hosting business without any of the customer service headaches.
If you are curious at what MidPhase is paying affiliates per month. 75% of 4,000 clients a month is 3,000 clients from affiliates. Their site says they pay $85 per client minimum, that means at the very least they are paying out $255,000 per month to affiliates. That means this next year at the very least they will be paying 3 million dollars in payments ($3,060,000)!
Whether you want to start your own web hosting business or wish to make money from it via affiliate marketing, Reseller Hosting Guide is a great resource. Ben and Joel has been in the industry for a long time and have a great deal of experience and are highly qualified to write on the topic.
I love Reseller Hosting Guide not just because it has great information on making money with web hosting but because it’s a big moneymaker as well. Web hosting is one of the highest paying keywords on the Net and web hosting companies pay big checks to affiliates who can refer new customers to them. I can only guess how much Ben and Joel are making off those recommended web hosts.
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(12 votes, average: 3.42 out of 5)
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i’ve the same exact business model john
and the clients are getting my nerves
, but i kept i professional thinking they’re my cash cows
i find some of their request are ridiculous & impossible. haha. when that happens, i’ve to explain to them is ‘baby’ talk. simple or they won’t get it
When that happens, I direct them to Tech Support, a friend who is a systems engineer
i do that at times, but some of my clients are my friend, so i think its better to handle them personally
also those high paying clients i give personal attention
I had a friend with the same business model and let me tell you he had his worst business experience. But if you manage to have a ‘team’ in your business will be less work but no one can start with a ‘team’. In my opinion webhosting niche is too big and competitive that if you are new and wants to get into this business the only way to succeed is with your friends.
I was doing this for a good few years but like John says the clients eventually get to you. On one hand you think it’s money for nothing, on the other hand somebody who is only paying you $6 a month is phoning at 3am consecutive nights because his website is slow or they’ve trashed it.
If you can keep it professional when that happens then you’re better than me!
Yea, definitely clients can get to you. That is why I don’t like using these conventional reseller packages. I use this service where all I have to do is refer a client to a website and when they sign up, I will get paid. All the supporting will be done by the hosting company and I really don’t have to bother with the clients at all. So if they want to call at 3am, they just call the hosting company. I set my own prices and no monthly fee. And this is not something that you get paid one time. You get paid again when the client renew. I get around $6.5 per month profit. I charge my clients $9.95/month. The only thing I have against the service is that you people who sign up has to sign up for the whole year. So I just use it for my web design clients and I have made around $2000 so far for this year for the 24 clients that I have. It definitely is not a lot. But I guess it’s ok because I don’t have to bother with support requests and sleep soundly.
this is common in this business……but it will be nice to have a guide for starters
There are more than enough money making opportunities out there. It’s all about figuring out the ones that actually work, and taking advantage of those opportunities. Good luck everyone!
You just have to have the patience to test test test. Having some monetary resources doesn’t hurt either.
It’s just another way to earn money online!
Thank you for sharing this with us
If you really want to make good money at reseller hosting, you have to pack your clients sites in like sardines and only give them as much space as they need. It’s kind of like managed overselling and takes more work and control than just letting clients manage the account themselves (in fact you don’t want them to, because then they’d know how much space you are really giving them). However, if you can get a lot of small sites, you can make some good money at this. It’s a good way to start out if you are making nothing online.
I know a few friends who make a lot of money doing this… they actually make a profit from having a reseller hosting account. I’m actually thinking of moving to a reseller hosting account since my blog host account is running slow.
I have a reseller account but it isn’t a huge money spinner. A lot of other competition out there, so hard to get peoples attention and still make a profit
RE-selling a hosting service has always seemed like a hard way to make coin. The numbers look great but from my experience when you start pulling near your maximum resources month after month you are considered a liability by many hosting companies (this one may be different) and they will most likely give you poor service so that you leave and they can replace you with a person who will use less resources.
Interesting review. Something to look into for sure. I always wondered how college kids could offer hosting packages that they appear to run themselves in DP forums.
and that’s is the main problem now. Many ‘kids’ wants to make money online and they choose a hosting reseller and start selling when they don’t know anything about Hosting.
When I first started out on the internet I got mixed up with a hosting company that was run by a 16 year old kid. Big mistake. Support tickets were almost non-existant. I learned my lesson. Research, research, research!
A problem? Would not think so, it is so easy to detect the KIDS and the ones that are serious into the hosting business. It just takes 5 mins of investigation.
I just finished reading your e-book, it was very helpful. One of the things you mentioned was about typos and that English is not your first language.
You write pretty well … there is one typo though in this particular post that you may want to consider fixing - I think you mean RESIDUAL INCOME and not residue income
I run my dedicated server, and I sell hosting time to time to beginners
Free cash out of nowhere for me.
I’ve just started to use web hosting reseller program.
I started a hosting company back in 2001 and sold it about 2 - 3 years later and worked there until a couple of months back. It requires a lot of commitment. The hosting company hosts 3000 - 4000 domains. It’s that same rule of 20% of the clients need 80% of the support. Some I never heard from and some it was daily.
I actually found that those who paid more money for the larger plans required less support in general because they tended to be more technical type people. The ones with the small 7 - 10 dollar a month accounts required more support as hosting was newer to them and it tended to be their first website.
i tried to run this kinda business about 2 years ago. I like the prospect to get a “passive income” from loyal clients. I then found out that it is not as simple as it seems.
Running hosting business need more than just a bunch of commitment. It also need you to -at least- knowing some technical aspect of hosting.
I leave this business opportunity, lose some money, but got some useful knowledge of hosting
“Running hosting business need more than just a bunch of commitment. It also need you to -at least- knowing some technical aspect of hosting.”
That’s just common sense. If you don’t know the business how can you run it?
Probably a good way to learn the ins and outs of hosting too.
Yes.. Reseller webhosting is one of good income..
There’s many affiliate webhosting worldwide.. You can choose one of them..
OHHH…
so you are the one who hosted my sites long times ago??
*noh.. kidding
I had this same problem both times I tried to run reseller hosting. The first time was as a part of a web design business. I thought it would be a nice little ‘extra’ to be able to say “oh don’t worry about hosting, we can set you up”. Clients loved that. What I didn’t love was those people calling my house at 3 in the morning because they lost their email password. (Most of them were local and managed to get my home phone number by simply calling 411… a mistake I won’t repeat!)
The second time it was a standalone business, and I thought because people weren’t local, it wouldn’t have the same problems. However, I found that 9/10 accounts set up were fraudulent by spammers looking to set up an account they could spam bomb with and then delete without having to pay.
In the end it was a nightmare business that cost me more in terms of headache than it could possibly be worth.
Not to mention that the hosting market is absolutely saturated. Competition is high and advertising is expensive. That shrinks the profits down and sharpish.
Anyway, all of that was to say that it was such a horrible experience that the best book in the world couldn’t talk me into repeating that particular nightmare.
Like in any other online business, there are big boys and starters. The well established companies will get the most of the clients while the new and small ones will have to deal with 10-50 extra-super-mega demanding customers and will eventually end by closing down.
A few years ago I start reselling hosting services but soon I realized it doesn’t make any sense to deal with silly people for only a couple of hundred dollars a month so I end up by giving free hosting and making indirectly a steady income from this.
John, the last person I expected to call his customers names! Right or wrong, John, they are customers, in my lexicon, Gods!
This however is a great article pointing me in the right direction. Thank you.
Another way to make money online …!
I never think of this kind of affiliate program before read this post.
We run a reseller hosting program and usually only sell hosting to businesses that we design sites for. Most of the sites don’t require much bandwidth or space. We also manage the servers and the clients have no access, so any problems we run into are usually our fault.
It our case it is not difficult dealing with the customers. One a site is up we just keep charging them renewal fees. No changes are made to the server until the client decides they want to pay for a new design or feature. Our hosting company also has a pretty good help desk that can answer our questions if we can’t figure out what is going on.
The web hosting business actually is not a easy task. It could be easy to get started, with a reseller account and a website and a billing software, but the hard part of the web hosting business is to keep clients satisfied and this is where your limits come when you use a reseller hosting, because all technical stuff are as backend of the company which rents you that reseller space.
Apart that, the phone calls from the customers, when you are under a reseller hosting you can’t really know whats going on with the server and hence you can’t give a precise answer to the clients which makes you sound so unprofessional (well, after all, it is unprofessional to start with reseller).
reseller hosting can be very profitable if you can provide good support to your end users
yeah, but that’s where the headache comes…tech support is a bit*h…
In my opinion it’s pretty hard to get this from the ground and to start making profit of it. With a high level of competition i would not advice this to any starter in this business..
I have always found resellers more committed to selling their 20GB space to 1000 customers 1 GB each. When your site goes popular and starts consuming bandwidth your site is deleted quoting unreal reasons.
Secondly they tend to switch to different providers at least 2 times in a year requiring you to upload afresh each time…
- Based on experience with two resellers
“Many people don’t know this but one of the first Internet business I started was a web hosting company.”
Same here!
Hey one good way to make more is not to sell on price but on service and to find a niche you can dominate, basically not going after general hosting but a smaller segment like game clan hosting, or business hosting, or even smaller. Easier to advertise if you are focusing on business owners or gamers.
Reseller hosting is not as easy as it sounds and is probably the toughest market to be in and actually make a decent amount. As the market is getting saturated with REAL web hosts offering dirt cheap prices, the margins for resellers are getting smaller and minuscule.
The easy part is signing up and having the multitude of tools at your disposal. The automated reseller tools some of companies provide nowadays are unbelievably good. BUT the hard part is to try to convince the clients that you are better than a Godaddy, 1and1, Enom and many other big reputable companies that offer hosting at less than $10. 1and1.com offers a $5.99/ month deal — how are you going to compete with something like that and still try to get a decent commission? Top that with the advertising you need to do to get your word out, the already small commissions you get will dwindle away and have you running at a loss real fast.
Also, when you are going into reseller hosting, the type of the people you are going to try to grab are the relatively new guys (or the ones that don’t know anything about web hosting). You aren’t going to get many clients that have hosting knowledge and are wanting to switch to another host (as they are smart enough to know that you are a reseller without a physical location etc.) and not a business that owns their own servers and dedicated support staff. So being stuck with the newbie market, and trying to support them. It’ll end up more hassle and manpower than it is worth trying to earn the meager commission per month. It doesn’t pay enough with the amount of “free” support you are going to provide.
Bottom line is, it was much easier years ago (when John) started when reselling could actually get you a decent buck and one just needs to be aware of that fact. It is a way to make money online — but probably one of the toughest.
I disagree, I think it is easier, more people need it and you just need to find a smaller niche, no small company should go after general hosting market, they should find a smaller market where they are competing on service ;
That’s exactly what I am saying — it doesn’t pay with the amount of service you will give. Count the service hours you going to give them and convert them into dollars and how much commissions you earn per customer — you’ll end up running at a loss with the time spent with supporting them. You just can’t compete, even in a niche market. And tell me how you going to compete with service when the big companies are offering 24 hour LIVE dedicated teams of support staff ready to help someone with a problem and solve it. You want to do that with 50-100 customers alone — good luck to you. And the average commission you’ll get per customer is about $5 if you’re lucky — that’s at a 50% margin.
For $250-500, is it worth it? And don’t forget, I’ve not added in supporting, advertising and marketing costs yet.
Don’t forget that you probably get a small and close to no customers buying higher priced packages as those customer will probably go with the big boys. Your niche would be selling the smaller cheaper packages with smaller margins too.
To get profitable would be to go into a clientele range of 1000s and then you are left with the daunting task of spending your labor hours with support them. If you can sign up that amount of customers, then the whole story changes but for small one man resellers like us, it probably will be impossible. There are very few John Chows out there capable of signing up that amount.
I want to emphasize that this doesn’t apply to those that are already established i.e. the resellers have already a foothold on the niche markets or the ones that have been doing it “from way back”. For the new ones that are trying to break in, it’ll be really tough.
I’m disagreeing, it is easy to find a small niche and charge a price premium and make great money. Service is what you compete on not dollars. 24 hour staff is not hard to do with an off hours support team or in niches customers are way more understanding of business hours with an emergency phone number.
Charge $25 per customer, provide service to a niche that is untapped, and you can make good money and grow/market easily. I actually think its way easier now for resellers as the internet is more developed and these small niches are actually quite big in terms of possible customers.
if you can find someone that will pay $25 for a personal or business account (even in a niche market), than my hats off to you. Be honest, how many customers you think you’ll sign up and translate that into commissions. Estimate how many hours you going to support your customer and times that by how much you are worth per hour. E.g. if you think you are worth $5 per hour and you think you are going to support the customer 5 hours a month, then your service costs would be $25/ month. Then take the commission you just got and deduct the advertising costs (which you have to do), misc costs that you have to put out to support your reseller business and that support $$ that you just calculated. Now we can see how much you are really earning per month and whether it is worth it.
Remind you that even in whatever the niche market is, one will be hard pressed to not go with the big boys that charge $5.99 for a personal and $9.99 for a business account with all the bells and whistles that come with it. The customer really couldn’t care less what niche it is if it is going for that price.
If you are business minded — service does translate to dollars although it is not obvious. “Time is money” — If you are going to provide the service and support, you need to create a fine line between how much time you spend on per customer and your return.
The big question is that if you going to provide service, is it worth the effort for a small commission when you can be more productive spending your time on something else and earning more money. Only you can be the judge of that.
Thanks but its not that hard, like anything it takes good marketing and hard work. I can easily find 2 to 5 people a day willing to signup for business class hosting and willing to pay $25 to $50 for that expertise, just read the article at resellerguide.com on the frontpage.
Cheap hosting is leaving an entire class of customers wanting reliable hosting and they are willing to pay for it, as well as professoinal help. Just because you don’t think there is a market doesn’t mean there isn’t one. Check out webhostingtalk.com for some recent posts as there are a lot of companies doing just great with small business niches that are local or niches on the web.
I think you have a rather negative view which is ok as its not for you. But generally you have to like providing service and support and business hosting is one way to escape from the typical cheap hosting customer who makes so many support requests.
tell me this, is a business going to trust a small company reseller without physical presence charging $25-50 or a GoDaddy, Enom or 1and1 charging sub $10 business hosting with excellent customer service and support? then there is the other big boys like Media Temples and Blue Host of the world which aren’t resellers but targeting niches with hosting packages of $20-25. Good luck competing with them. They are the ones that are killing the smaller guys. Honestly, if I were to put you and them on the same table, both charging $25 — which one would you choose… an unknown, no name company that supposely gives great service or a Media Temple that boast hosting for the likes of Michael Arrington’s Techcrunch. Hmmmm… i won’t even flinch with whom i’ll choose. I think you get the point.
Regardless of what resellerguide says, I find it really hard to believe that you can find 2-5 business customers a day willing to pay that amount to an unknown just starting reseller. I dare you to do it and prove me wrong. If it was a great money seller, John Chow would still be in it making $1000s.
It’s not that I have a negative view — i just have a realistic one. I speak from experience — been there, done that. I did reseller hosting for 2 years and had a few hundred customers but margins were so small and it was too tough to break into the business sector as bigger hosting companies emerged with their ridiculous pricing and extravagant advertising. I have since sold the business off as it really couldn’t be a part time side business. I was also spending alot of time doing service and support with nothing to show in return — yes, customers were happy but it didn’t translate to profitability and growth on my tiny margin.
When you talk about business hosting, it’s too hard to break into the market AS A STARTER as businesses look more for at the credibility and perception factor.
Ofcourse there is always a market for everything but reselling is not the way to go in web hosting. You want to sell hosting, you have fork out some money to buy or rent dedicated server and go that route. There is no short cut to it, especially in the world of web hosting. You really have to show the customer that you have a physical presence and not one that will close down tomorrow ESPECIALLY dealing with businesses. No amount of words of how good the service you going