Make Money Online via Reseller Hosting

It’s been a while since I wrote about online money making ideas and I am thinking of starting a series along the MMO topic. The online business idea for today is reseller hosting which I believe can help you make a lot of money with minimal initial investment and support mechanism.

What is reseller web hosting?

Reseller hosting is a business model whereby your web hosting account resources (disk space, bandwidth, cpanel like tools, software etc) can be shared with your own customers or third parties to help host their websites.

How can the reseller hosting business work for you?

The money making opportunity that I would like to discuss here can work very well in developing nations where web hosting is still an expensive thing. We are talking about $4 or 5 for very basic hosting services unless somebody opts for hosting abroad. Now if you are able to provide quality hosting services for something like $2 per month, there will be a lot of blogs and mini websites that will be interested in your services. Now let’s calculate what it takes to run such a reseller business.

1. Find a good reseller host provider

You can find excellent reseller hosting services (such as Hostgator) for as low as $19.95 per month. They will provide you all technical infrastructure for disk space, bandwidth, email accounts,website design, maintenance and billing management of your own customers.

2. Brand name & website for your hosting service

Next, you need to have a website where you provide your hosting services. You need to have basic interfaces to promote your services, offer your packages etc. Rest of the things (e.g. billing modules) will be provided by the hosting service. If you are providing very cheap hosting service, you may not need to provide customer support. Otherwise, you may need to provide contact information for support. By the way, if you are a blogger, you can even offer these services on your blog itself.

3. Create your hosting plans

Here we are talking about splitting your $19.95 per month reseller plan into something like 50 or 100 slices whereby you charge your customers $1 to $3 per month.

An example is given below.

Your investment

Your premium reseller package: 120GB disk space, 1000GB bandwidth for $50
(Note: There are much cheaper options available)

Your returns

Your hosting package A: 500MB disk space, 4GB monthly data transfer for $2 pm.
Your hosting package B: 200MB disk space, 2GB monthly data transfer for $1 pm.

Please note that the package A will get you up to 240 clients that fetches up to $480 pm on an investment of $50 on a premium reseller hosting package. Makes sense? To make things even better you may even charge, for example, a $1 per every additional GB of bandwidth (You may have a one time investment on a small web site but that is not a recurring expense)

The value addition for your customers is the set of software and infrastructure you provide to host any blog platform or website of their choice. The model works well for upcoming bloggers.

The tricks of the reseller business model

The following are the tricks and challenges for the reseller hosting online business model.

Go local

A lot of people who are exposed to unlimited good quality shared hosting for $5 or $7 per month may ridicule this idea. But to be frank, there are 1000s of people who pay big hosting charges in their local currencies every month – either due to their lack of awareness or they want to pay in local currencies only and want to be in touch with the local people.

Cheap service, good quality

Of course, nobody can provide unlimited bandwidth and disk space for a $1 or $2 service. And it’s absolutely sufficient for small to medium size blogs and websites. For example, my blog at peak gets something like 5GB bandwidth usage per month. Hence in principle, I can still host this blog on a reseller host.

Offer attractive packages without support

Minimizing the customer support effort is the key to make a good margin in the case of reseller hosting business. You have to make the offers at very cheap prices with a disclaimer on no customer support. You can add a premium for email or phone support but even in this case it works out cheaper.

Low initial investment

You can start with one reseller account and keep upgrading it or go for additional accounts (recommended) as your business grow.

Challenges

Hosting is steadily becoming cheaper and cheaper especially due to dropping hardware prices and increased bandwidth availability. Hence at some point, it is going to affect your margins. But in developing nations, it is going to take five or ten years before hosting services are available at dead cheap prices. For example, 10 years back I used to pay $10 pm for my shared hosting services and I am still paying something like $7.

Over to you

Have you ever thought of this business model? If so what’s your opinion on the same?

Happy Money Making!

Comments

  1. The reducing price tag of shared hosting is a major concern. I sell Hostgator Reseller for 60$ yearly or lesser if I get to design the site as well. That’s 5$ monthly and one can get cheap shared hosting for that price.

    The selling points that makes it sell are, access to the quality servers at cheap price. Shared Hosting for 5$ wont give anyone awesome servers.

    Second thing that makes it sell is that many people do not have Credit cards to pay online while I accept bank transfer.

    Now this might look like a marketing comment, oh yea! It is 😛

  2. Thanks Ajith, i think lot of people making money through this way.

  3. @Ajith @Arun,

    Any idea how the payment processing is done? I had talked to one of hosting providers and they asked me to take care of it myself.

    Thanks

  4. Kurt :

    I used to do this small business 2 years ago but finally stopped and closed the website (time and studies were the priority). However I was not doing reseller of a package as you mentioned.

    Instead I was making the client to have their own account and pay the fees as the host provide it and then get my commission in terms of affiliate referral. This way even after closing the website, my clients still have their hosting account. I just had to transfer to them the gmail associated with their acc. I still do the yearly payment for some however as some clients do not have a CC or Paypal verified yet.

    I used to do it via Byethost (Their Premium account).. and Hostgator for those who afford to pay a bit more.

  5. Rahul :

    It looks good. But in actual, you need to be in market for long to get any output.

    • @Rahul, the key is advertising (not PPC but more blog advertising) and attracting your potential customers. Just buy five or six banners on blogs with good targetted traffic and that should do the trick in short term as well.

  6. Tushar :

    i thought of starting a reseller hosting business few months back but a friend of mine said it is not the best idea…the deal looks good but it is not…
    Your post have forced me to think again…and i seriously need to think again

  7. thanks for your article,it is interesting do online reseller. I will try it.

  8. Rajesh Prakhran :

    Hello,
    I want to share my experience. I have hosted my site with asphostportal.com and their support is great. I like it very much. You can go with them if you’re looking for reseller hosting.

  9. Hi Ajith,
    Reseller hosting can extremely affordable and you could potentially make a lot of money with a proper reseller hosting account, if you have enough paying clients.

  10. raz :

    Hi,
    I signed up for a reseller hosting package. they suggested I buy a domain name that has been around for a while. I’m not new to computers or websites but frankly, I’m not sure where to begin. Maybe it’s just trying to settle on a name for the site and what packages to offer, etc. not sure how to get moving with it. Had the reseller package for a couple of months….what a waste if I do no nothing.
    any suggestions?

    • Well, not doing anything about it won’t help :) I think you can try offering hosting to your friends at least thereby starting a userbase to get testimonials etc. May be while you build your domain with offers/packages etc you can give away a couple of months hosting for free and then start charging them. Just one of the ideas….

  11. Yah It is really awesome and i buy one reseller account and now i have 59 clients so i am earning more than $100 in a month

  12. seagull :

    Hi..Can any one tell me which reseller to go for..I mean is godaddy good …

    @guarav could you tell me which reseller service to go for

    Godaddy give only some amount of profit for the things sold..Anyone knows of any better options

Speak Your Mind

*