Hello, I am considering using some of my dedicated servers to host clients websites on them. I am looking to begin offering plans that will be in the $0.50 - $2.00 per month ranges and will offer specs: 1 GB of storage 25 GB of bandwidth 5 Databases, Email Accounts, FTP, Etc... 2 Domains Maximum $0.50 /Mo. 1% of CPU/RAM maximum average daily. 3 GB of storage 75 GB of bandwidth 10 Databases, Email Accounts, FTP, Etc... 4 Domains Maximum $0.75 /Mo. 2% of CPU/RAM maximum usage daily. 5 GB of storage 150 GB of bandwidth 25 Databases, Email Accounts, FTP, Etc... 8 Domains Maximum $1.00 /Mo. 3% of CPU/RAM maximum average daily. 12 GB of storage 350 GB of bandwidth 50 Databases, Email Accounts, FTP, Etc... 16 Domains Maximum $2.00 /Mo. 5% of CPU/RAM maximum average daily. These plans would be paid monthly and would come with cpanel and installatron... I've done the calculations and these plans can be profitable with the current hardware I own, thus that isn't a problem. My questions revolve around the logistical aspects of these plans... - What do you think about these plans as a whole or individually? - Would you purchase these plans? - Do you feel our CPU/RAM usage limits are fair? - These plans would offer limited support (aka we're available to answer questions, however we wouldn't be offering site transfer or other extras that other hosts provide)... We'd also be limiting the amount of support a user can receive to only those matters that effect their hosting (uptime, bandwidth, cpu, etc) we won't answer tickets in regards to matters that don't effect hosting (IE: how do I install wordpress on my website)... but would instead have a repository for those answers. Do you feel this is fair? - Each server will be limited to 100 accounts and servers will be load balanced so that high usage users are mixed in evenly with low end users (so that load among servers remains even)... - Each server will be at a minimum CPU: AMD Athlon X4 620 and RAM 4 GB DDRII 800 Memory.
The first thing you are forgetting are payment gateway fees. Unless everyone pays with cash, you can count on making almost nothing on the first three plans. The CPU usage is extremely low. A simple WP site is most certainly going to use more resources than that. The bandwidth also seems oversold. Other than that, if you think you can turn a profit, go for it!
Considering the Disk allocation and Traffic, there is no doubt you will end up overselling, and with an overloaded server sites will be loading slowly. But what ever you may give it a trial and then see what you need to correct.
Agreed with WSWD, The bandwidth seems oversold, also, i would up the cpu usage, most sites would exceed the 1%.
How would most sites use more than 1% on average over the course of a day on a quad core server? (that 1% is literally 4% of a single core...) - They can burst to use as much as required, it just has to even out to 1% of the 4 cores... My plan was to charge a small fee if the user decided to pay monthly on the plans (IE $0.10 to help cover fees) and then offer them quarterly, semiannually and annually without the fees... As far as bandwidth is concerned the server has a 100 Mbps connection, thus 31 TB of bandwidth a month should be plenty of bandwidth to cover these plans. Not saying your wrong about the cpu, just saying maybe you didn't realize what I meant...
It does not seems profitable still.. ANything below 10$ (Plan A) is not available in market with good quality server, simply because they are not profitable for any of the host... Unless you are hosting it on your home server I fail to understand how you will make profit ?
The point wasn't exactly to make a profit, more offer a broad service for websites to be developed... Possibly use the popularity of the service to grow a community of some kind... I'm not sure yet, I mean I have 6 servers just sitting around and I'd like to do something interesting with them that might be profitable in the long run but doesn't need to be in the short...
I know what you meant. Didn't misunderstand it at all. In my experiences, CPU usage is reasonably higher than your figures. Looking back, it probably isn't terribly low, given the prices, but I do have a good amount of clients who use 5+% of the CPU daily. Many are also below 1%. Just depends I guess.
The major users of cpu/bandwidth are proxies, rapid leech and torrents... none of which will be allowed. All plans will come with a 30 day 100% money back guarantee, in addition yearly plans will come with a reimbursement of credit (IE - They paid for a year, but request a refund after 30 days of use: Their paypal will be credited based on how many months are left of their purchase minus a small fee for processing.) The only exception to that rule is if the user violates certain sections of our TOS and gets their account suspended (IE phishing, server abuse, proxy hosting, illegal downloading, etc...)
Of course. But as I said, you might be surprised how much resources simple WP sites use or even some reasonably-large forums.
Everyone has their own price-points but I have to agree with the general consensus.....you won't make any money and you'll probably make a loss. You have to consider the lowest common denominator. 100 of your lowest paying accounts will only be $50 per month less processing fees. That won't even cover the server costs, never mind making any money to cover support, licensing, or emergencies (they DO happen). Why do you want to work at the low end of the market? It's not always about price, and when you attempt to attract with bottom-of-the-barrel pricing, that's the kind of clients you will attract. Those who are clueless, think everything on the internet should be free, and won't understand why the 100 plug-ins they've installed on Wordpress are consuming too many resources when they only get X visitors per day. Think it terms of value, add in the fact it will consume lots of your time, and then you need to make money to run a business. If you think you can make it work, good luck to you, but I can't see it being a sustainable business, and it will never grow unless you have a lot of funding behind you to soak up the losses you will make.
I'm still in the development phase as far as a business plan so your thoughts have helped me formulate some contingencies and some general directions to go towards being profitable. Thank you
It is against PayPal's TOS to charge your customer extra to cover their fees. That means PayPal will eat up a good majority of the monthly revenue that you would end up receiving. You seem to be going after the crowd who wants everything for next to nothing. These are probably not the type of clients that you want to have. Bigger companies can offer the world for such low prices due to economies of scale. However from a practical point of view, any small provider would drive themselves out of business. The only way that you would make money on this is by overselling your resources (particularly bandwidth). If you get users who suddenly start using the bandwidth that you have allocated to them to the fullest extent possible, they will put you out of business. Another comment about the crowd that you are targeting: they aren't in it for the long haul. If they find a cheaper provider or someone who offers more resources than what you offer for 50 cents they will likely leave.
Welcome back Ron! Always a pleasure. To add, you're also going to be competing with the free hosting market. Why would someone pay $6/year for your hosting when they can just try a free host? Yes, I know very well there is a difference, however the bottom-of-the-barrel clients that are seeking probably don't care about some of the limitations of free hosts, or the fact that free hosts come and go as often as you change your underwear. These people will just jump around from host to host, as Jeff noted. What are you going to offer that the free hosts don't? Non-overloaded servers is a good start, but your servers are clearly going to be oversold with the plans you list.