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