Starting a hosting business

Hello,

I know starting a hosting business is not a easy task. But what are the things to be considered to start a hosting business. I have few questions related to hosting. It would help if you could give me a good response to those.

1. Is hosting business profitable?
2. What is more profitable VPS or Dedicated servers?
3. I know any host can have there own profit margin on sales. But i would like to know whats the standards of profit startup hosting business have to run their business by which they dont run loss.
4. How to get the popularity?
5. How to make good sales since hosting is not done by word or mouth.
6. What are the major thing to be consider before starting the business?

I know there are lost of questions, but looking forward for healthy answers.

Have a nice day!

Thank you

 

Hi, Web hosting business is tricky to start but if done well can pay very well. How i know this. I run a successful hosting & web design company.
Goal is to provide the best quality support.

Here are some tips for you
http://jhosts.com/file-hosting-businesses-quick-tips/
http://jhosts.com/start-wordpress-based-business-today-options/

if you need help feel free to PM me.
Regards!

 

Thanks for sharing your knowledge base.

 

Webhosting business can be quite rewarding, but it takes a while to learn everything, and it depends on your luck if you get nice clients, I believe the most profitable type of hosting would be to buy dedicated or vsp servers and split them up for shared hosting.

 

Hi DihhDigital,

I will tell you some tips to consider before starting your business. The hosting industry is fully saturated and to invade the market is very difficult task which requires a lot of money and effort and this business would have been great if you started it a few years ago as there's a lot of large companies eating the competition.

I'm not disappointing you but I'm only showing you the scene today so my tips to you are :
1- The business may be profitable if you are unique and you can be unique by your OFFERS and DISCOUNTS only.
2- I suggest to start with a fully managed VPS (not dedicated, not reseller) to get more control options and the most affordable, stable and reliable company is WiredTree.
3- The secrets are "WebHostingTalk" and "DigitalPoint" markets, specially WHT because these forums are highly targeted clients. Don't use google adwords as it's money eater.
4- Your Support MUST be perfect via tickets system.
5- I suggest to sell Shared hosting only to be easy at its support.

Good Luck with you business

 

Thanks for sharing information. But at initially, if we take up only shared hosting business we will have lot of maintenance issue.

This is best suggestion i have got. Thank you

 

Thank you @DiggDigital . You are welcome.

 

@dooma i hope it would not be a problem if i ask you further question when i come across

 

If you are a starter then reseller hosting will be better for you. By starting with reseller you will not have to pay charge so much when you are not in so much profit. So start with cheap and measure the market demands.

 

If you are committed to this, I would recommend you read a LOT on forums like webhostingtalk, vpsboard and lowendtalk. Providers sometimes reveal some information inadvertently. You won't find many webhosts willing to reveal to you their profit margins, how many clients they have per server etc. etc. Another piece of advise is start small- on a quality reseller - and grow from there. A quality reseller is going to set you back $15- $30 /mo. It will allow you to see what sort of issues crop up i.e. what support questions clients are asking. Be prepared not to make money for the first 6 months too.

 

Thanks Sambling,
What are the marketing strategies to be incorporated. How do clients reach me? I have read in few other forums and seen people talking about discussion in forum, but i dont see any big difference. I see all other hosting companies around rather then someone to buy. Discussing in forums also be showcased as spammers by others. End of the day i feel its cheer waste of time, buzz around by others hosting providers which would yield nothing other then fight among us.

I would like to know if there is any way which help me do business better. I am not looking at profit, rather then setting up a strong and good foundation. All suggestions are welcomed.

 

No problem, you are welcome any time.

 

Web hosting is really competitive business, there are big giants in this industry which you have to compete in order to get rankings and good customers. You need a huge budget for advertising.

 

OP, I am earning from hosting, but my focus is on end users, not on resellers / vps. End users generally only need low level support which can be handled almost by "reception". Whereas resellers and vps users need a higher level of support. If you do start, you need to be sure that you are able to provide adequate level of support for what is needed. Resellers in particular really need live chat. A simple ticket system, (even if it is fast), is often inadequate. What also is unacceptable, is if the support operators are low level, and have to escalate simple tickets. Responding to tickets quickly is not as important as resolving it completely. For example, if a reseller gains a new client and needs an account moved / migrated / restored, and the files are already provided, a reply within minutes is useless, whats important is how fast its resolved.

For me, I discovered that it is better to give clients $50-$100 cash for signing up + 1 first year free, then it is to invest in advertising. I am not kidding, investing in advertising has had dismal results for me.

With hosting, there is a major resistance for people joining. People can check your domain registration date, if your new, then GOODLUCK! There is so many fly by nights, (hosting companies started by kids in school holidays and sold off when they go back to school) that people want a company that they think will still be in business for longer then a weekend. Once you have been in business for a few years, then people will trust you more. But getting through the first few years needs alot of cash.

Getting affiliates to sign up is insane. You need to match the commissions that hostgator offers. One thing to be mindful of is that if you gain 1000 clients from coupons / discounts, most wont renew. If you make a loss by providing the service at the discount, when they dont renew, thats a loss that comes out of your pocket.

Realistically, if your hosting prices are competitive, you wont have funds for affiliates, or advertising. If your prices are realistic, then you wont have clients at all.

But op, here is the thing, if you read around, you will find ALOT of support encouraging you to have a go. Think about something, what would resellers, vps providers, dedicated server providers, and software sellers possibly benefit from you starting in competition to them? The answer is simple. Alot of people are earning NOT from the end users (who have a simple wordpress site with 2 visitors per month) but from the people that think they can start a hosting business. If I con someone into starting a blog, thats maybe $20-$100 per year. If I con someone into starting a hosting company, thats thousands that they will invest, and if they start to offer reseller accounts, then they too will be encouraging people to go into the system. Tomorrow, there might be $10,000 invested by another 1,000 people all wanting to start their own hosting company. They wont earn much, but they keep other hosts in business. I think whmcs would close if it was not for the influx of noobs keeping them alive.

Webhostingtalk is an eye opener. If you look closely you will meet people who talk big. WOW they have thousands of clients, they are a big boss, they earn enough to put me to shame. But when they sell their company, everything is out in the open. You can see how much they lost, you can see their expenses are more then the income. You can see that they made not even $0 per hour, but a NEGATIVE for every hour they worked.
For most people, you are better to sweep floors for people for $1 per hour, then to invest in hosting. Just give $10k to charity, spend $10k on a holiday for yourself, and you will be better off then starting a hosting company. You gotta spend time in the loser section of WHT, buy and bid on hosting companies for sale, see what they did, what they spent, and how much they lost, and ask yourself, can I really do better?

The reason most people wont tell you the truth is that doing so instantly means that they are "small". For me to look like a big hosting provider, I too need to declare how much money you can make.

wait, forget everything I just said, what I am meant to say is "yeah bro, you can make $1million dollars, just get reseller account from me "

 

Attention TL;DR!!!

Hey from me too.

Being a part of a webhosting company myself I will be glad to share some insights. Some were already covered by others above, some I can add and some I don't really agree with. For starters I can confirm that your best source of knowledge (and even maybe initial ads) would be the WHT forums. There are a lot of host owners there and there is even a specific section where questions like yours are answered daily. Speaking of which lets check yours:

1. Pretty vast question. Anything can be profitable if done right! How you do it right is the big question. One thing I see most fail to do when starting such a venture is compiling a business plan. I cannot stress enough how helpful this is and can get you from a whole lot of trouble. You will research your market, your competitors, your chosen niche, your target audience, possible risks etc. which will all give you valuable insights on how to market your business. As mentioned it is best to find your unique trait and go from there. Though I cannot really agree that Offers and Discounts are the only way. The hosting market is very saturated so without any glimpse of uniqueness you have to triple your marketing efforts.
2. If you are asking on what platform you should start - Reseller or VPS would be the best one. You have to find a really reliable provider (best if you have tested their services already) and use their servers to begin with. This way you can expand steadily as your client base is expanding. If you are asking on what offering should be best - VPS or DS - I am more inclined to choose VPS. Though there are several big providers that already offer ultra cheap VPSs, the DS niche is even harder as you have to market an expensive product to more high-end users. Such users are serious businessmen with a lot of demand and there are already some companies which can serve them perfectly both on a resource and support level. Many startup hosts prefer to stick with Shared as a main offering, but due to the high saturation there you have to be very clever in your marketing.
3. You will never get a straight answer to that question. I can tell you one thing tho. If you want to be really safe better start with a hefty sum of money in advance and expect to make NOTHING, at least in the initial year. Many hosts compete on initial discounts and the real profit flows come their renewal. You have to use this time to really showcase the quality of your services so you can build the trust and loyalty so much needed in this business. This is something the so-called Kiddie Hosts still fail to grasp and this is why when their initial budget is drained and they don't see any profit they just leave it.
4. If you are not a well-versed marketer you better find one. You don't necessarily have to spend a lot of money on marketing but you have to make sure you know what you are doing. Advertising in forums, social media, a few respected directories, relevant blogs etc. will get you going. But constantly entertaining your clients with useful content can also help. There are quite some more ways to apply good marketing but I would prefer not to get into details
5. First of all you are mistaken that hosting does not benefit from word of mouth. On the contrary, depending on where you are located that can be a very strong asset and bring you a lot of trusted customers. As mentioned you would also be looking at relevant forums and sites, connected to your biz. You can also try some paid advertising like AdWords or FacebookAds but i would strongly advise not to do so before you gain some knowledge about it or you risk your whole budget disappearing in an hour.
6. Quite many things to consider actually (ring-ring, remember that Business Plan from above?). Lets name a few. Assess your personal skills and see where you might need help. Tech savvy people are often not very good with Sales and vice versa. What type of servers and virtualization you will use? What packages and pricing you plan to have? How will you deal with backups? What payment processor will best work for you? Howe about a billing software? What procedures and tools you will use to detect and prevent fraud? What communication methods you will make available for your clients? Do you have the manpower to serve them? Do consider customer support a VERY important part of your biz as this is something that lacks immensely in this industry. Even the best (especially them) have quite some crappy support. And even very small providers do have 24/7 support. My advice would be to gather a very knowledgeable and versatile team that will impress clients even from a single contact.

This already became too long and I haven't covered even a small part of what you should expect. Head around the WHT forums and read, read, read, a lot of useful info there. Hope I was able to help too

 

Starting a webhosting business is never easy especially with the over saturated market currently however that being said if you are serious about building a business i have a couple of tips

1. Preplan your budget before purchasing any services ensure you have enough funding for a minimum of 6 months
2. Research on the market which market your aiming for there are several different markets in webhosting from onshore / offshore shared vps dedicated etc etc
3. I recommend if you do decide on a vps or dedicated business always rent direct from the datacenter or from a provider that colocates this will bring you full power over your infrastructure should something go wrong your not relying on the business you rent from to contact the datacenter
4. Build unique plans to suit the market your aiming for your biggest competition is not just the bigger company's but also the other smaller business's that are slowly growing
5. Be prepared to loose you most likely wont generate any profit for the first 6 months and it is likely to receive a couple if any orders within the first few months
6. Ensure you have a solid team to back support clients need 24/7 support also consider livechat it is quite popular amongst clients

These are just some of the main points i could go on but the list would get way to long

 

One more info you may like it:
Instead of purchasing a $50 to $80 decent VPS, you can have a look at OneProvider and grab yourself a dedicate server instead.
I don't waste more time with hosting providers. I tested more than 15, and had problems with all of them.
Thereafter, if need something I rent a dedicate server.
Which are the costs?

As low as $10 monthly, believe me! However, of course you don't want to put your customers on any $10/Mo server.
I'm not in the hosting industry, and I use it for personal purposes. I usually purchase a $42/Mo server with the following specs:
Intel Xeon E3-1220 3.10Ghz + OIT, 2x 2TB HW RAID 1, 32GB, 1Gbps
Quite affordable, no?

I never had a problem with them, and now I don't need to face the hassles with hosting providers.
It means: Don't over-sell, and manage your servers as nicely as possible in a manner you don't miss you customers like those ones did with me.
This is my point of viewing it, as a customer.
I wouldn't move back to a hosting provider anymore since I really don't believe they will do a good job in the long run.

Good lucky buddy,

 

I can see that you have got a lot of feedback and opinios for your quries. Just adding to same, the hosting business now is a very saturated one with a lot of big players with deep advertising spends and huge clientle. The bottomline is also catered by a lot of local players and freelancers that offer cheap solutions. But with the growing internet pentration & e-commerce boom and more are more people /organistion now requiring a web solution, there is still a lot of scope left. Innovation is designs/solutions coupled up with great offers can definitely help you getting clients on board.

To start off your hosting business, you can definitely go with shared hosting package which can be cost effective. Once you achieve a certain amount of scales, you can move on to a VPS or dedicated servers.

I would also beg to differ from the point made by you that hosting is not done by word or mouth. You can get a lot of business through reference of your existing clients if you give them a quality solution and more importantly good support. Ensure you have a 24x7 Support team to support clients need and this can be backed up by ticketing system & live chats as this are preferred by a lot of clients.