A Starter's Guide to Setting up as a Hosting Reseller on a Dedicated Server

16 Oct 2018 / Freeparking Team

The web hosting business is booming, and research indicates that it will only continue to grow. The need for websites is increasing by the day and more sites are seeking hosting than ever. For a business to be successful online, it needs the backing of a reliable web hosting package.

With a great business plan, not only can you enjoy the benefits of web hosting, you can also earn a few bucks by becoming a reseller.

You can easily start a brand-new web hosting business by leveraging reseller hosting packages from top web hosting providers without having prior expertise or investing heavy capital. While this sounds simple in theory, starting any business from scratch isn’t a walk in the park and everyone’s shot may not pay off as they initially expected. However, following the right steps will increase your chances of starting a reseller business successfully, give you more experience on how to make real profit, and, perhaps, help you start a proper web hosting business of your own.

What Is Reseller Hosting?

Reseller web hosting involves a web hosting provider who rents bandwidth and hard drive space to another small-midsize company (or individual), who then breaks down the bandwidth and hard drive space and rents to other third parties–small businesses and entrepreneurs. In simple terms, reselling is when you operate a web hosting business without owning a hosting infrastructure of your own.

This business is typical for current web designers and developers that want to extend the scope of their services, or other aspiring entrepreneurs who have clients of their own that they can sell web hosting to but don’t have the infrastructure yet. This is an inexpensive way to start up a quick web hosting business and, as a reseller, it’s possible to set up your own pricing structure, service plans, interface with your own clients, and develop other packages to make your business stand out.

In principle, reseller hosting can be seen as a relationship between a wholesaler and retailer where the hosting provider that originally leases the hard drive and bandwidth packages is the wholesaler and the reseller is the retailer. For most resellers, the opportunity comes from having too much bandwidth and disk space that cannot be exhausted, so they lease these spaces to regain what they’re spending in leasing fees – and perhaps make some profit from it.

How Does Reselling Work?

Starting a reseller hosting business doesn’t require knowledge and expertise of the technicalities of web hosting. Normally, the main data centre operator or web hosting provider has the responsibility of maintaining and servicing network hardware and infrastructure, and you, the account owner/reseller, has the duty to re-configure packages, secure the server, and carry out updates.

As a reseller, you are responsible for interacting with your own customer base, but when your customers encounter any software, hardware, or connectivity problems, you can forward these issues to the hosting provider you leased from. Maintaining a healthy and responsive communication policy will help you keep your customer base loyal, as you’ll be naturally inheriting any problems faced by your hosting provider.

While starting a reseller business looks straightforward, there’s a lot that you have to do to ensure you get it right. You have to research extensively to find the most reliable web hosting company, purchase the reseller hosting plan that will meet the goals of your business, understand your target audience, create your own branded packages, structure competitive prices, and market your products.

Why Start Your Own Web Hosting Reseller Business?

Reseller web hosting is now one of the hottest businesses in the web hosting industry. If you’re currently running a web development or design business, then you can leverage your expertise and client base and get an additional income stream by reselling web hosting. This business offers great opportunities as it involves minimal investment and it is simple to engage in from a logistics point of view. Here are five reasons you should consider the web hosting reselling business:

A New Window of Opportunity

As an entrepreneur or small-to-midsize business owner, you should look for new ways to increase revenue, expand, and grow. As starting any new business comes with risks and a substantial amount of capital, you may be wary of sacrificing your steady income. With reseller hosting, you’ll have the opportunity to start a new branch of business without much investment capital.

Excellent method to supplement revenue

Your revenue stream can increase over time through reseller hosting. If other aspects of your business are suffering from deficits, you can use the revenue from your reseller business to keep things running.

A superb means to leverage current resources

If you have a web development company or an IT firm, you already possess the expertise and requisite resources to run a reseller hosting business. And, starting a reseller business, you won’t be veering away from your core business as you’ll still be within the scope of the services you already offer.

An opportunity to explore new markets

Spearheading a company of your own should not limit you in starting an entirely new business. Through reseller hosting, you can continue to grow until you can start up your own web hosting company. This gives you the opportunity to get into a new industry and become a key player.

Enhance your brand portfolio and give your business a new identity

You may be doing well as a web development and design firm, but with reseller hosting as part of your brand portfolio, your business can enjoy a new identity altogether. This will help you promote your branding effort and add to your existing sales funnel.

Reseller Web Hosting Provider Checklist (How to choose a dedicated server provider for your reseller business)

Having learned the benefits of going into the reseller web hosting business, you should understand that the industry has become competitive and approaching things the wrong way could be costly. Retaining customers can be difficult—as a simple slip-up could result in your customers jumping ship. Before you set out, it’s important to begin by putting the right procedures in place; you need to ensure you research and get the right upstream hosting provider that will meet the requirements of your business and provide favourable offers, as well as set other effective business measures in motion. Here are some of the things you should know before choosing a web hosting provider:

Good Uptime Score

The first item on your checklist should be the uptime score of the company you intend to lease bandwidth and hard drive space from. As a reseller, it’s important that you work with a web hosting provider that offers 24/7 server operational time on stable network connections and powerful systems. The minimum  uptime score  that you should settle for is 99.8%. Anything below this could impact your business negatively, as well as that of your clients.

What’s more, if your clients encounter any issue, you’ll have to bear the brunt of the backlash as you’ll have no input or contribution to the technical aspect of your server. Your customers will blame you for server downtime and could leave your business for better service and uptime.

Customisable Packages

The needs of each business or client are unique and variable. As a reseller, you should package your offerings into customisable bundles. Each plan you sell should have assigned disk space, emails, and bandwidth in conjunction with domains, if possible. You have to forecast the growth of your client base before you optimise and customise your packages. Also, keeping the target group of your business in mind is key if you want to properly allocate storage space or bandwidth that the clients’ websites or enterprise may require.

You should confirm whether the firm you’re looking to buy hosting from offers flexible reseller packages. This will be helpful in providing scalable services to your customers as per their needs and requirements. You may start out with a Shared or Virtual Private Server, but when the needs of your clients continue to grow, you have to ensure you can scale up your allocation with your provider, possibly to a dedicated server, to keep your customer satisfied rather than have them leave for another web host provider.

Sound Customer Support

Every business is set up to see to the needs of customers. This puts customer support at the core of business processes, especially reseller hosting. Web hosting consumers want to know that their provider will always be available to offer support whenever they face any kind of difficulty. As a reseller, your customers will always turn to you for support, even for issues that you aren’t responsible for.

That is why it’s critical that you go for a parent hosting provider that offers a round-the-clock customer support—not just availability, but also reliability to solve issues on time. This is because you’re serving as an intermediary between your customers and the hosting provider and will have to relay messages between both parties. The quicker your hosting provider can respond to and resolve issues, the better for your reseller business. Your customers may not be as patient as you are with your hosting provider, which makes it imperative that they deal with issues urgently; despite your communication and customer management skills, you could lose clients if your hosting company’s customer support is consistently unreliable.

Regular maintenance

The hosting provider you’re considering should be able to carry out timely maintenance on hardware and software as well as other hosting infrastructures, to ensure things are always running smoothly. They should also be able to provide regular software updates and implement security measures to keep servers protected. Your upstream service provider, in order to maintain 24/7 operating servers, should also be consistent in mitigating  DDOS attacks, configuring custom firewalls, and ensuring Hyper Availability with multiple redundancies. They should be able to catch bugs and potential risks before these issues can cause any form of server downtime.

With this in mind, you can sell your hosting plans to your clients with the peace of mind that you have a reliable and trustworthy service provider when it comes to maintenance.

Favourable Reviews

There’s often no better way to gain insight into any firm than by looking at their customer reviews. This is also true for web hosting providers. The success of your reseller business will, to a large extent, depend on your choosing the hosting provider that provides the framework and services that align the most with your requirements. Through user reviews, you can figure out which hosting company performs well in your areas of interest. Research carefully what their clients have to say about them and dig deeper into their history to find out how consistent they are regarding quality.

It’s important that you don’t limit the reviews you search for to just direct clients. If you can also get reviews from other resellers concerning the business operations of the host, you can get more information from them. You can then go on to weigh their entire services and choose the right hosting company for your business.

Price

Considering that you’ll be reselling web hosting to your own clients, structuring your pricing can be a tricky business. If you choose to charge high, you may not attract enough customers to sustain your business, and if you choose to charge too low, you may attract customers but may end up counting losses. This is why it’s important to exhaust your options when going for a hosting provider.

You should research web hosting companies that have favourable reseller offers when it comes to pricing. You’ll have to evaluate each upstream host provider based on what they cost during the beginning stages as well as in the future when you may want to expand as your client base continues to grow.

You should also scrutinise extremely cheap offers closely and not let them fool you, as they could come with a catch. It’s either that they have side offers that are not advertised or their technical capabilities are low and unreliable. You’ll ultimately want to provide the best for your clients, so it’s recommended that you stay within the range of competitive standard industry prices and attract your customers with certain incentives and enticing customised options.

Technical Specifications

Technicality is the foundation of any web hosting business. You must understand the specifications of the server you’re looking to lease before you can allocate favourable packages to your clients. You have to know the bandwidth size, disk space, software capabilities, security infrastructure, and other specs that come with your web server. Adding extra specs can make your hosting business stand out but you should understand that this will increase your pricing.

To make customers happy about what they’re buying, you can give them the option of added server capabilities and other budget-friendly packages. This is possible thanks to the flexibility most web hosting providers offer resellers. This factor is very important or you may have limitations when it comes to allocating space and bandwidth.

Ensure your web host is offering favourable specs at competitive prices without compromising on the factors stated above. This will give your business an edge and grant you a lot of open space to play with to make your customers happy. What’s more, you should find out the prices of different packages, such as their VPS and dedicated servers, that you may likely use in the future when you want to upgrade your hosting services.

Bandwidth Limitations

The amount of data that is transferred to and from your web hosting account per month is known as bandwidth. Every time a 20kb file is downloaded from your website or that of your client, 20kb of bandwidth has been used on your account. Every page that is visited by your web users attracts bandwidth usage. Hosting companies have bandwidth prices and policies which can be charged differently from hard drive size.

When searching for a web host to use for your reseller business, you should ensure you go through their bandwidth policies before you decide anything. This is because you could be violating terms without knowing it and you may be at a loss considering that there are limits per month set by most companies. You should go for competitive bandwidth packages.

In the case where bandwidth prices are attached to the full package, scrutinise the entire package to understand what you’re paying for in terms of bandwidth allocation. Understanding your target customers is also instrumental when it comes to the kind of reseller package you will start your business with. The ability to reduce or increase your bandwidth amount will come as an added advantage.

There are hosts that claim to offer unlimited bandwidth on certain accounts, but some of these may come with a catch and it’s important that you’re aware in this case. Overall, make sure you go with a plan that comes with a favourable bandwidth policy, so that you can use enticing bandwidth as a selling point when advertising your reseller services.

Scalability

Having a hosting option that gives you the flexibility to upgrade your account should not be a bargain. This is because you have to be prepared for growth in the long run. The business of your clients will likely grow in the future and they may need to increase their server capabilities. When this occurs, you should be in the position to provide this, or you could run the risk of losing clients to competitors.

Your hosting provider should offer a package that allows you to upgrade easily. But it shouldn’t end there. You can go for a web host that offers price incentives for buying bigger web hosting products so that you can, in turn, present your clients with exciting offers and reward their loyalty to you.

What this means is that you shouldn’t just check out the favourability of the plan you’re about to start with. You should, as we’ve mentioned, understand everything that’s involved with the hosting provider’s shared servers, VPS, as well as dedicated servers.

Overselling

Overselling means selling, or advertising to sell, more disk and bandwidth resources than you actually have allocated to your reseller account. This kind of practice is frowned upon by many hosting providers and your account may be suspended due to infringement if you go against their policies. If you must choose a web hosting package that allows overselling, go for VPS or dedicated servers with these offerings.

Overselling is a risky business because offering more than you have on the chance that your customers will not use this space could cost you dearly. That being said, understanding the kind of clients you’re going for will help you know how much space their websites are likely to consume, but this doesn’t make overselling a great option. A smart thing to do could be to have multiple reseller accounts – which may cost you more – so that you’re prepared in the event that your clients use the full amount of what you offered.

You should be wary of web host providers that offer overselling on normal reseller packages without VPS or dedicated servers, as there could be a catch to these packages.

User Friendly Management Panel

Being a reseller means you’ll be managing a web server with multiple accounts. And, as a web hosting reseller, you’ll be given the ability to manage your clients how you see fit, like allocating disk and bandwidth space, as well as customising packages. To do all this, you’ll have to use a control panel.

Your control panel will come for free with your reseller hosting account and, depending on the web host provider you choose, you may be stuck with a panel that has a lot of issues. When considering which hosting provider to go for, ensure they are offering a user-friendly control panel that will make life easier for you and see to it that you can properly manage your clients’ accounts. If you’d rather go with a hosting provider regardless of how their control panel functions, then you may have to prepare yourself for a setback.

Some of the most user-friendly control panels out there include  cPanel,  Plesk, and Helm, in that order. You should go for web hosts that come with any of these panels, but we recommend that you place cPanel as your preferred option.

Setting up as a hosting reseller on a dedicated server on the right footing

By now, you should understand why the buzz around reseller hosting won’t fade away anytime soon. As long as the web hosting industry continues to grow stronger and more websites continue to pop up, smart businesses will continue to enjoy tremendous revenue from reselling. If you’re starting out as a reseller, the right choice could be to start from a shared or Virtual Private Server (VPS).

You should definitely consider going for a dedicated server if you want to offer more to your clients when you advertise, because this kind of hosting comes with a larger bandwidth, higher disk space, and better speed than other forms of hosting. What’s more, you can sell your products at a much cheaper price with more flexibility to your clients.

If you’re going for a dedicated server, there are things you should do in order to set it up the right way. It’s important that you put the proper elements in place as a dedicated server will cost you a lot more than a shared hosting reseller package. These are a few things to put in place to ensure your business goes well:

Devise a reseller hosting business start-up plan

Reseller hosting is a business and you have to set it up as one. In fact, you have to set yourself up as a corporate entity if you want to go far. Seeing that you’re going for a dedicated server, this means you’re fully invested in the venture and any slip up could lead to losses.

You should note that any problem encountered by your hosting provider will affect you and the business of those that have bought hosting from you, which may lead them to carry out legal action against you if the problem is serious. Forming a company will mitigate your exposure to this kind of risk so it’s important that you hire the services of a lawyer so as to be in compliance with the law governing the region you’re operating in.

After this, you can put other business procedures in place, like developing a cooperate website, doing research on the customers you want to sell to, and evaluating your competitors to know how they operate and how to beat them.

Stand out as a brand

Coming out boldly as a reseller may not be a good idea, as most hosting consumers hate the idea of buying from a reseller. You should ask your web host if they offer  White-Labelling  or 100% private label which means you’ll be given an IP address to register servers of your own so that your hosting customers do not see the name of the company you’re buying from mentioned anywhere in the control panel.

Once this is done, you can start structuring hosting packages and offering enticing offers that will be unique to your business. This will ensure you draw in as many customers as possible.

Do not buy the cheapest reseller hosting plan

You’ll find thousands of small-to-midsize companies with virtual servers that are offering hosting reseller packages and trying to lure in customers by offering super low prices. These prices may be very tempting but you may later find that there’s a lot to be desired in certain areas like uptime and technical support.

Price is an important factor when looking for the web hosting plan. However, performance and quality are far more important. You should keep it in mind that your customers will only stay with you – and give you positive reviews– if you’re reliable in performance and if your technical support is  responsive.

To get great reseller hosting at lower prices, you can look for well-known hosting providers that are offering special prices during promotions, which will give you the opportunity to start off with an affordable reseller package.

Use a corporate billing system

You require a superb billing system to handle your billings if you want to set up a successful reseller hosting business. You should automate the support and management of your customers by signing up for a corporate billing system.

An excellent billing system will allow you to communicate with your customers easily and give your business a professional and corporate look. You’ll even be able to activate customers’ orders automatically. Nowadays, new services are activated by reputable companies within minutes and having that kind of operation will put you well ahead of the competition.

WHMCS  is the industry leader when it comes to billing systems and it is used by most hosting providers today. The system comes with a help desk that is in-built, which gives you a central environment to manage your clients properly; it also helps you manage affiliate programmes with your clients and gives them the ability to get paid when they refer other customers.

Provide 24/7 technical support

An important element that can threaten the survival of your reseller hosting business is technical support. You must provide 24/7 technical support for your clients if you don’t want them to leave you as soon as their subscriptions expire. This goes back to choosing a company that provides this sort of support, as you’ll not be responsible for solving technical issues; they will.

While the onus is on the web hosting company to solve issues, you have to be responsive on your end as well, because you’ll be the first (and only) stop for your customers. If you have a huge clientele and can’t handle issues immediately, you should consider outsourcing your customer support to ensure that your business doesn’t suffer. You can hire more hands when your company begins to expand to provide closer support to your consumers.

If your customers are bitter about downtimes that you promised would never happen, you can give them some credits to calm them down and show that you’re on their side and not against them.

Use private nameservers

Private nameservers are important in the sense that they make you operate professionally and give you certain capabilities that will come in handy. Private servers will allow you to switch to a different hosting provider whenever you like. You’ll have the ability to transfer all your clients’ accounts without asking them to make any kind of changes on their end. They won’t have the slightest idea that you’ve migrated but you can notify them of an upgrade.

After migrating from one server to the next, all you’ll be required to do is change the IP address of the nameservers to the new one. You can ask your hosting provider to assist you with the migration details if you’re finding the process difficult.

Install an SSL certificate

Security is a must have for any hosting provider. You’ll have sensitive information like your clients’ address and financial information, so it’s important that you secure the communication between their websites and your servers by installing an  SSL certificate.

If you’re installing your billing system on a sub domain (to look very cooperate) then it’s important that you install a wildcard to protect your billing system as well as your website from any 3rd party that may try to steal information.

Add trust seals to the footer of your website

Your customers will have a higher level of trust in your website if you add trust seals, such as the PayPal seal, an accredited BBB seal, McAfee, or a PCI company’s seal that indicates you have passed certain requirements to become an e-commerce firm. Also, displaying pictures of you and members of your staff on your website will also strengthen your customers’ confidence.

Elements that Define Success and Failure for a Hosting Reseller

Some of the factors that determine success and failure in a reseller business include:

-              Customer support

-              Technical capabilities

-              Scalability

-              Business approach

-              Branding outlook

-              Security

-              Customer reviews

Take Your Reseller Hosting Business to the Next Level Through Affiliates

Many web hosting companies are adopting affiliate programmes and they have proven very successful over the years. By offering your customers certain incentives for bringing other people to your business, like discounts off their subsequent subscriptions, a percentage of what you earn from the customers they bring, or a higher and better web hosting package for a set period, then you can watch your business enjoy amazing growth. This form of marketing is one of the most effective, as people trust word of mouth recommendations.

Other ways to get more customers for your reseller hosting business

You should engage in different forms of advertising to attract customers to your reseller hosting business. As an online business, you should engage in SEO campaigns as well as social media and PPC advertising to feed your sales funnel and get new customers from different platforms.

FAQs
Should you get into web hosting reselling?

If you want to expand your business portfolio and have a side revenue stream, then you should go for reseller hosting as it is easy to set up and there are many benefits if you go about it the right way.

How much experience is needed?

You don’t need any form of technical web hosting experience to run a reseller hosting business. As a web development company or an entrepreneur that has some business skills, you can get into the venture and successfully start the business.

How does reseller hosting differ from affiliate programmes?

With reseller hosting, you’re setting up your own business by buying hosting packages from a web host provider and then repackaging those plans and selling to your own clients. Affiliate programmes, on the other hand, involve bringing clients directly to the web host and getting a referral bonus for your trouble.

What do I need to start a web hosting reseller business?

To start your own web hosting business, you need a web hosting space to resell to your own clients, software to automate your business, a domain name, and your business website.

This sounds too good to be true, what's the catch?

The real catch with the reseller business is that the web hosting industry, though lucrative, is awash with competition as every other company out there is providing similar services. What’s more, competing with the big guns can be a challenge, as they can offer better prices and other great packages. However, if you’re smart about things and provide great incentives as well as offer quality service, you can start up a successful reseller business.

 

For more information about Web Hosting please visit:https://www.freeparking.co.nz/web-hosting/


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