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How Do I Start A Reseller Hosting Business (And How Much Money Can I Make?)
by Jeff Trumble on
If you’ve read our article on selling care plans, this is a great companion piece. Nothing goes better together than care plans and a reseller hosting business – well, maybe jalapenos and cream cheese, or peanut butter and jelly. But we digress.
The first thing to do is shift your mindset about making money. Meaning, it’s not a bad thing. So many folks we chat with feel badly for upselling hosting. It’s not a bad thing, it’s a value add for the customer and because you’re offering that service, you should make a bit of money on top of what you pay. This is essentially how the retail space works. Buy at wholesale; sell at retail.
What is reseller hosting?
Reseller hosting is when you purchase server space from a web host at a wholesale price, and then offer it to your agency’s clients at retail pricing. You’re not creating your own bank of servers, you’re reselling existing hosting platforms as if it were your own.
How does reseller hosting work?
Reseller hosting works by signing up for a reseller account, and selling that to your agency clients either as a stand alone product or as part of your agency care plan. We recommend selling it as part of your agency’s Care Plans because those products are a natural fit and allow you to build in more profit and monthly recurring revenue (MRR). MRR is how agencies truly make money.
How to start a reseller hosting business?
The best way to start a reseller hosting business is to start slow with a few clients before offering it as a service to a wider audience. Start with one client if you’re nervous about it. Offer it as your packaging. See who wants to sign up. You can’t sell something if it’s not for sale. 😉
Is reseller hosting profitable?
Reseller hosting certainly can be profitable. At the same time, it can be your loss leader. It really depends upon how you structure your business. For example, you can have reseller hosting and only charge $10 more than what you pay the host. However, you can make up for that price with your monthly care plan pricing. After all, pricing is a psychological art and people love a good deal, even if the net amount is the same.
How much money can I make reselling web hosting?
Like any profitable business, volume is the key to making money. The bottom line, as they say, is net profit. So making money isn’t all about the revenue you generate. A lot of freelancers and agencies talk about revenue (what they’ve billed) without accounting for expenses. Subcontractors come off of the revenue for gross profit and expenses come off of that for a net profit. And, by the way, be sure to account for your own salary in your expenses. This is when a robust accounting program like Freshbooks or Xero helps tremendously.
How much money you make defined as revenue depends upon how many recurring clients you have. How much money you make reselling web hosting defined as net profit depends upon how lean you run your agency. The good news is you have potential to impact your top line (revenue) and your bottom line (net profit) reselling web hosting.
What is the standard margin on reselling hosted virtual platforms?
Standard margins are a good guide on reselling hosted or virtual platforms. However, they do not take into consideration your business expenses which includes your salary and cost of living. For example, if you’re a single man living in Oklahoma, you may be able to charge a lower margin because your expenses are lower. A married woman in California with kids would not.
The standard profit margin for new businesses is 7-10%. Profit margin refers to the net profit not the markup. If your looking to decide on how much you should markup reselling hosting, then the sky’s the limit. The standard markup seems to be adding $20-$50 per server. However, that’s not a percentage – furthermore, “it depends” is true in this case. Why not start with 20 or 30% and see how it works out? If you feel confident, then go up to 500%.
How do I price hosting as a reseller?
Pricing hosting as a reseller is completely up to you. As with most business models, you can experiment with your pricing. If you choose to add $10 to the reselling price and you find that is too low, then raise the price for new customers. It’s really that simple. Now, finding out if it is too low is a factor of tracking your time and either ballpark job costing or accurate job costing.
If you markup the hosting at 30% for our Tier 1 plan, you’ll earn $30 extra a month for ten clients. If you mark it up by 500%, you’ll earn $500 over what you pay Rocket. It’s important to remember that pricing is psychological and, more importantly, increasing your pricing will attract less PITA clients.
If your marketing message is about your clients hosting their sites on Cloudflare Enterprise with the additional speed and security it provides, focus on the amazing benefits that Rocket provides behind the scenes to warrant those increased margins on your end for a better profit margin. It’s all how you sell yourself and what you ultimately charge your clients.
What is white label reseller hosting?
Do you remember the white or generic labels at Lucky’s Supermarket that just said, “corn” or “soda?” This is where the term “white labeling” originated.
White Label Reseller Hosting is when you offer hosting to your clients and brand it as your own. For example, if you wanted to sell Rocket’s hosting from “Simply Better Websites” and branded it as “Simply Better Hosting,” white labeling is how you’re able to do that.
How do I market a reselling hosting company?
The best way to market reselling hosting is by offering it to your current website builds. Second, offer it to your former clients. We also strongly recommend that reselling hosting is part of your agency’s care plan. This makes your agency a one-stop shop. That’s the marketing play.
Tactically, create a landing page offering this service. People are inclined to pay for convenience so be sure to show how the customer is relieved of having to deal with hosts or IT support tickets in emails, or God forbid, waiting on hold – when they really need to focus on their customers – not the details of running their business.
When you’re ready to start reselling hosting, let’s chat. Rocket would love to be your infrastructure of choice.
Our team of experts is standing by. Most website owners have switched hosting providers multiple times over the history of their site. We’re confident that you won’t look back once you make the switch to Rocket.net.
The best customer support 24/7, super fast speed, ease-of-use, and access to top tools and industry-leading resources should always come standard. We’re revolutionizing the way your WordPress site gets served up to the world, and we look forward to partnering with you in growing your business.