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WEB
HOSTING GUIDES
This
area would cover in depth & comprehensive guides on Reseller
Hosting Business & how to make it successful. We would be launching
this on June 12, 2003 with a complete road map.
What is reselling?
Simply put, reselling is a way to make money, both in the case of the provider supplying the original service, and the independent operator doing the reselling. It is a relationship between a service provider, and a special kind of customer. In a reselling relationship, the reseller is not an employee of the service provider, but instead acts as an extension of the larger company’s marketing, sales and support operations. The reseller markets the product independently, and signs up customers to the original provider’s service, often providing the simple side of the service, like offering basic tech support and administration of the account. On the service provider’s side of the deal, a reselling program allows a business to expand its customer base without overextending its marketing and sales operations. From the reseller’s side, a reselling program allows a small, independent operator to profit from a small piece of the Internet services market without requiring a lot of technical knowledge, or a big investment in infrastructure.
How do I make money?
Resellers make money in almost the same way as the original service provider: through the monthly fees paid by the customers. Of course, the reseller has to pay a fee to the original provider, but doesn’t have to invest in the equipment or IT staff involved in actually running the facilities. Unlike the original provider, which is paid for the use of its equipment, the reseller is paid for the work it does in setting up the accounts. The customer purchases the service from the reseller, who then purchases the same service from the original provider at a discount. The profit, for the reseller, lies in the discount. For example, if the original service provider offers its resellers a 15% discount on accounts (the same as a 15% “cut” of the service fee), then the money made by the reseller would be determined by the number and size of the accounts it signs up. In the case of a $7 per month shared Web hosting account, the reseller’s cut would be about $1.05 per month. But in the case of a $300 per month dedicated Web hosting account, the reseller’s cut would be $45 per month. The more accounts the reseller sets up, the more its monthly income. The actual numbers and percentages involved in reseller plans vary from one service provider to the next, but most follow this basic model. In some cases, the reseller’s discount increases with the number of accounts sold.
what do I need to know?
There’s probably less knowledge required in being a reseller than you’d think, considering the complexity of Internet Services. As a reseller, though, what you’re ultimately avoiding is the physical contact with the equipment, and much of the technical side of things. A reseller’s involvement in technical matters can vary from program to program. And the more technically involved the reseller becomes, the more personalized and individual its service will be. But to become involved in the simplest of reselling programs, the level of technical understanding required is minimal. A reseller should have a solid familiarity with the Internet, and a good working knowledge of its operations. The reseller will also need a complete understanding of how to manage and maintain accounts with the service provider whose services it has chosen to offer. Of course, resellers have to market their services, so some experience with marketing and salesmanship will be extremely helpful. If you’re planning to run a small do-it-yourself operation, you’ll need to be able to run the fundamental aspects of your business, from setting up the Web site, to billing and accounting. And while the level of involvement required by the reseller will vary with different plans, most providers will be willing to offer some instruction in setting up and managing accounts.
What equipment do I need?
As with several other aspects of the business, the amount of equipment you will need to have in order to operate as a reseller will depend entirely on how deeply involved you want to be in the service. As a Web hosting reseller, you can go as far as to buy the server equipment and set up your hosting operations on your own machine housed in somebody else’s environment. But at its simplest, the reselling business requires you to own practically no equipment at all. To set up a simple reselling business, all you really need is a computer that you can use to manage the accounts, and a connection to the Internet. And while reseller plans vary, most service providers offer this sort of simple arrangement, requiring the reseller to supply none of the equipment actually used in the hosting operations.
Learn more about what is required to establish a reseller hosting business by reading A Web Hosting Reseller's Fundamental Requirements.
What do I have to pay for?
What you pay for depends on what types of services you wish to provide. On the most basic level of reselling, you will simply be paid a referral fee for recommending the hosting services of another company, and will therefore not have to worry about paying fees up front.
Once you become a more involved in your reselling, however, you may have to pay fees up front. If you plan to resell domain names as part of your package, for example, you will have to pay a bulk rate for them (which is usually determined by the hosting company or registrar). You can then re-sell these domains at whatever price you wish.
If you offer hosting services from a server that you lease from another Web hosting company, you will be responsible for most fees related to operating a server. These include a set-up fee (although many companies will waive this), a flat, per-month charge, and bandwidth fee if you exceed a certain amount each month. You could potentially have to pay for technical support, too - review your hosting company's Terms of Service agreement to find out. While some will offer you free support, others will charge on a per-incident basis.
What services can I resell?
Most aspects of a Web hosting operation can be resold. What type of reseller you become depends on what you would like to outsource: many hosting companies like to outsource as much as possible so they can concentrate on running the business end of things, and sometimes bundle in additional features a regular hosting company might not be able to provide, like consulting or Web design services. Others, however, take the "hands-on" approach and essentially co-locate servers, giving them much more technical control over their company.
Among the specific services that you can resell are:
* Hosting: Shared accounts, dedicated servers and even co-location space can be resold through most reselling programs.
* E-commerce: Merchant accounts, storefronts and hosting packages specifically geared toward e-commerce can usually be resold.
* Mail servers: Some clients may seek only to have their e-mail capabilities taken care of, as opposed to their Web hosting needs.
Becoming a Web hosting reseller doesn't necessarily mean the only thing you can sell are hosting and bandwidth packages, though. There are other related services you can offer your clients as value-added services. These services, however, are usually resold directly through the search service and not through a Web hosting company.
These can include:
* Domain Names: Domain names and domain name services can be profitable private label service.
* Search engines: Search engine technology and databases can be re-sold and even used as a private-label solution.
* Webmaster tools: HTML optimizers, server uptime monitors other webmaster-related tools can also be sold.
Do I have to provide support?
Becoming a reseller doesn't necessarily mean you have to be responsible for taking care of the technical needs of your clients. How involved you want to become from a support-related point of view is entirely up to you.
Many Web hosting companies offer reselling packages that will go as far as private-labeling their support services. When a client calls your technical support line, they will be connected to the technical support department of your Web hosting provider; however, your provider will use your company name and information when dealing with the client.
Keep in mind, however, that not all companies offer this solution. Depending on the reseller that you choose, it may be your responsibility to provide technical support, save for high-end issues and server reboots. This means you should have someone on-staff who is familiar with the operations of a server, and who can take care of the technical support needs of all your clients. While this may sound like a big undertaking, consider that most technical support requests (particularly with shared packages) usually involve menial tasks like setting up e-mail accounts, cleaning disk space, installing security certificates, etc..
Who operates this type of business?
The reselling business can include practically anybody who possesses some basic people skills and a working knowledge of how the Internet operates. Reselling operations can be as small as a simple business, run out of a home as a way to make a little extra money on the side. But they include some of the larger service providers in operation today, who simply resell the services of another company in order to cut back on their own hardware and staffing costs. Reselling operations are quite often run by companies already in business providing a related service, such as Web design and Internet consulting, that want to add a service like Web hosting to their portfolio. Other times, though, resellers can simply be people who want to get into the Internet services business, but can’t afford to supply the equipment, software, bandwidth and storage space that running such a business requires.
Where do my customers come from?
As a reseller of Web hosting services, you have a virtually unlimited market of consumers to reach out to. Simply put, everyone who wishes to own a Web site needs a Web host.
When starting out, your best bet is to try and attract small clients (individual consumers and small businesses) in need of beginner hosting services, like shared accounts. One of the best places to locate clients like these is to scour webmaster resource sites and related message boards; these sites are filled with self-employed individuals in need of small-scale hosting solutions. Make both yourself and your company known to them, and you will likely be able to attract at least a few clients. >From there, you can build personal relationships with them to retain their business and ensure they recommend your services to their colleagues.
Once you've established a name for your company and built up its size and service offerings, you can start to attract slightly larger clients with bigger hosting needs. If your budget allows, you might want to try an ad campaign, either online or offline. Failing this, try Pay-Per-Performance search engines like GoTo.com, Google's AdWords program, or submit your site to Yahoo! using their Business Express system. These programs allow companies with small advertising budgets to promote themselves in a big way, and could lead to a significant amount of traffic and a number of new clients for your company.
Do I have to tell my customers I’m a reseller?
You don’t necessarily have to advertise to your customer that you are operating a reselling business. There are quite a few large hosting customers in the market who don’t make it widely known that they resell their Internet services. And there are more than a few hosting customers who are not aware that their accounts are handled by resellers. Obviously the system is able to carry on like this without any trouble. But while you may not have to declare on your Web site that you are providing resold Web hosting services, you’re probably better off being honest with the customer who calls and bluntly asks whether your services are resold. Keep in mind that there is a lot more to a business relationship than the exchange of goods, services and money. Being honest and forthright will go a long way toward establishing good customer relationships. They’ll appreciate that you were up-front about it. And if you explain to them that they’re receiving this personal level of service at the same price as they would pay for the account directly, they’ll probably appreciate that too.
Being a reseller can also be advantageous, and this fact should be conveyed to your customers. For more information on how to do it, read our article on promoting the benefits of choosing a reseller.
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