Reseller Web Hosting is the practice of reselling web hosting space to sub-clients. As a Reseller, you purchase large blocks of disk space, bandwidth, and server resources and then divide it up into individual packages to resell to other clients for a recurring fee (i.e. monthly, quarterly, annually, etc.).
The average small business just looking to get a simple WordPress website online with their name, address, and basic contact info takes up an average of 500 MB of disk space and around the same amount in bandwidth tops. Because of this, they only expect to pay a couple dollars a month in web hosting.
As a Reseller, you're able to purchase these larger blocks of disk space and bandwidth starting at around $50 a month. Therefore it only takes about five or so clients at $10 a month to cover your expenses.
With returns this large, it doesn't take long to start developing a very profitable business. Consider this example:
Reseller Package - 60GB Disk Space - 600Gb Bandwidth (Monthly) - $49.99/month
10 customers -@ 500MB Disk Space [each] - 500MB Bandwidth [each] - $10.95/month = $109.50 Revenue
Resources used: 5GB Disk Space - 5GB Bandwidth = 55GB Disk Space - 595GB Bandwidth [left over]
$109.50/mo [Revenue] - $49.99/mo [Expense] = $59.51/mo [Profit] 119% [ROI]
While $59.51/month in profit doesn't seem glamorous, the ROI is incredible. It then becomes a numbers game to scale the business upward.
Tip: Set reasonable expectations that are obtainable. NameHero didn’t power 1,000,000+ websites on day 1. I took things 100 customers at a time.
The majority of Resellers tailor their services to certain niches where they offer the hosting in addition to their primary revenue stream. For example, a design agency may charge a client $1,000 - $5,000 to develop a website with a monthly maintenance fee of $50 - $100. Included in this fee would be their web hosting, monthly updates, email management, etc.
Since web hosting is the "water" of the Internet - it becomes a very valuable commodity needed by even the simplest of websites.
If you already have a customer-base it's a very easy add-on since you already have their trust. If you don't have a customer-base, your only limited by your imagination to the type of clients you can target.
Benefits Of Reselling
Being a reseller gives you the ability to own and operate the business without the headache of having to own, lease, or even managed servers.
When you purchase your Reseller Web Hosting package from a reputable company, they handle all of the server updates/upgrades, security hardening, and the good ones (like Name Hero ;)) , also back up your customer's data.
Therefore, your only job it to resell space/bandwidth/server space to your customers, handle their billing, and provide simple level 1 technical support.
Billing is super easy with automation tools such as WHMCS. In parts to come, I'm going to explain exactly how you can easily implement this piece of software, and let it handle all of your subscriptions for you automatically.
Level 1 support can often be a major turnoff to many resellers just getting started, but in all honestly, it's not that bad.
The majority of support tickets normally stem from when a customer first comes onboard. If they're already your client (whether you’re a web developer or similar agency) the customer already has your trust and just has simple questions on how to set everything up.
Most of these issues can be easily answered with good documentation. I recommend all of our resellers to go through the sign-up / account creation process just like they're a customer. While they're doing this, I recommend they record it using Screenflow, and create a PDF document with step-by-step instructions. The easier you make this, the less support issues you're going to have.
If you notice our blog at NameHero, you will see we have many text and video tutorials that walk through many of our account setups. These have dramatically decreased the number of support tickets we receive on a daily basis. Whenever I see a repeat issue, I make it a point to record a video, and make a blog post.
With server management, security, and leasing costs factored into your monthly reseller hosting fee, the benefits to being a reseller are tremendous. As long as you're working with a reputable company, you stand the chance to make astronomical returns, with not a ton of day-to-day overhead tasks.
Before You Get Started
It's important to determine who your target audience is before starting up your reseller web hosting business. If you plan on making this an "add-on" to your current business, then this question is easy. However, if you're looking to break into the hosting industry from the start - this is something you need to take a little more serious.
When I first got into web hosting back in 2002, my target audience was "anyone that needs web hosting." Very quickly, I learned this was not a good plan.
Unless you have a clear-cut path of how you're going to compete with a multi-billion dollar company like GoDaddy (who dumps millions for one Superbowl commercial) you need to start with a smaller audience, cater to them, and build as the success comes.
For example, when I first started NameHero, one of our major target audiences was reseller web hosts! While Resellers use more resources/support time, many of the “established web hosts” had neglected the niche, providing plenty of opportunity. We also doubled down by providing exclusive training to help others get started. By lasering our focus to this audience, it allowed us the ability to connect with our customers on a more personal level and be able to cater to their exact needs.
It's important however to pick an audience that is large enough to sustain your goals. For example, you wouldn't want to only target a market that was too small to be realistically profitable. Especially if you live in a small town, you may find it beneficial to start offering web hosting to local customers, but eventually you're going to want to expand beyond that.
When I'm thinking of these micro-niches to target, I often think about ones that are reachable in multiple countries. Therefore I'm able to leverage a lot more than just one or two local markets.
Another one of our micro-niches (yes you can have more than one) was affiliate marketers. We developed our entire VPS Hosting line especially for those who engage in high-volume affiliate marketing. We learned as much as we could about the industry and developed servers that are quick and easy for them to setup, all while giving them the power, reliability, and security needed for their business.
Today, we’re one of the leading WordPress providers for both individuals and small businesses, seeing thousands of new customers sign-up each week. This niche has a much wider audience but took many years of targeting sub-niches to become a credible name within the industry. While this was a goal early on – it wasn’t a reasonable expectation in the early years.