Reseller Hosting is one low start-up cost home business that anyone can start. You have a total start-up cost of less than $500 for your first year. You have no staff costs, no premises costs and massive profit potential.
Most web hosting companies offer reseller packages to budding entrepreneurs who want to set up their own web host company, using the hardware belonging to the parent hosting company.
These packages cost between $40 and $90 a month, depending how much bandwidth and disk space you contract for. You can find unlimited reseller packages for less than $60 a month. You do not need to sell many packages before you are in profit.
Become a hosting-reseller #1- Who Would Buy Hosting From Me?
You need to be in a niche market to succeed. The big players have such massive advertising budgets that you cannot compete. You are not going to attract 10,000 people from the Web to your hosting service.
There are large niches related to particular software, but most of these niches are already well populated. A few years ago you could have set up as a hosting-reseller specialising in Wordpress. This niche is massive, but there are already established companies that will host Wordpress sites for very low fees, including 24/7 support.
The people most likely to buy your hosting are those people who know you. If you are associated with a local community you could market your hosting service to them. As long as your prices and services meet their needs most people would rather deal face-to-face with someone rather than through an email connection.
Become a hosting-reseller #2 - Why Would Anyone Buy My Reseller Hosting?
Realistically, there are only two reasons anyone would buy hosting from an unknown player in the market; either they know you, or you are so much cheaper that they decide to take a chance.
You have no option but to compete on cost. There are many hosting services already with unbeatable telephone, email or chat support systems, 24/7. You cannot do better than 24/7, so you cannot compete on service levels. That only leaves costs to compete on.
Become a hosting-reseller #3 - What Outlays Are Necessary?
You need to purchase a reseller package from a hosting company. Look for one that will allow you to pay monthly and to opt out at any time. The reseller package normally comes with a free domain name.
You need to sign up to take credit cards. Paypal is free, but if you need to sign up with any other credit card handling company then they will charge you at least $50 to set up your account.
You will need to buy domain name credits in advance, at a discounted bulk rate, and sell them on at a profit when your customers buy hosting from you. Your outlay will be at least $200 for these bulk domain credits, though you do get that back.
Become a hosting-reseller #4 - What is the Toughest Part?
Setting up the software is pretty difficult. Setting up PayPal is extremely difficult. You might even have to pay someone to do this for you.
Become a hosting-reseller #5 - How Can I Make a Profit, Yet Be Cheaper Than Everyone Else?
You can keep you costs down by not having an affiliate program that pays out the massive referral payments that have become the industry norm. Many of the larger hosting companies rely on their affiliates' marketing efforts and pay them up to $130 for each person who signs up.
You can keep your support costs down by doing it yourself and not offering 24/7 support. If someone asks you something you do not know, just contact Support at the parent company; they tell you the answer, you tell your customer.
At all times your prime focus needs to be on cost reduction. Reduce your marketing costs to the minimum by issuing press releases to newspapers and specialist magazines. Reduce overheads by operating out of your spare room. Reduce support costs by piggy backing on the parent host's support system.
Become a hosting-reseller #6 - How Does the Support System Work?
You are responsible for providing support to your customers. There will be lots of questions you do not know the answers to. The company you buy your reseller package from will give your customers access to a Frequently Asked Questions database, but most people never even try to find their answers there. They will email you. You then either look in the FAQ for an answer or you contact the company and they tell you, you then pass the message on to your customer, as though you had known it all the time.
This relay system is obviously very slow and unsatisfactory, yet it is the only option if you are to keep your costs to the minimum.
Extra delays arise is you have a day job and are only monitoring support requests in the evening. Your customer could have been waiting nearly 48 hours by the time their query is answered. Difficulties are made even worse if your customers are from another country because of the different time zones. When the customer asks a question, you may just be going to bed.
Become a hosting-reseller #6 - What If I Decide To Pack It All Up?
If you are paying for your hosting package on a monthly basis, the company may offer three months without charges, to help you sort things out until you have some sales.
If you have made no sales, then there is no problem. Problems arise if you have sold reseller packages to a few customers. These people will not be happy at having paid and having their hosting removed because your company has failed.
The company that sold you the reseller package may agree to take them on, but at their standard rates, which will probably be a lot more than those customers paid you. You would have to pay for these customers' hosting for the remainder of the year. The situation is not a pretty one.