The beauty of maintaining reseller hosting accounts for your clients is this: you can create a subscription-based or recurring revenue model with little to no intervention required beyond the initial setup. But what is required for you to set up a successful business in this industry?
Reseller hosting Business startup guide
If you're thinking of setting up a reselling based company - you'll need to make a few decisions. Making the right choices is the difference between an and ok and a great setup for you. That's why we've written these top tips for as a complete reseller hosting business startup guide - to help you make the right choices.
If you're looking for our recommend host, click on the link below.
What is reseller hosting?
Reseller hosting is when you purchase a reseller website hosting package and resell this to your own clients as your own hosting company. By setting your prices and features you can resell to a specific niche of users who are looking for the kind of service you offer.
Let's start with a bit of history about this industry so that you can understand the reasons for our suggestions.
In the very beginning of the web hosting industry there were two types of web hosting services which were available to end users:
- shared web hosting and
- dedicated servers.
As the market started to grow, more and more people were interested to get their online presence and with that more money has been spent on web hosting services.
That resulted in an increase in the number of companies providing web hosting services as the demand for such services was rapidly growing.
Some of the biggest web hosting companies nowadays were started as one-man-show companies having one server at the beginning which was used to host their own web site and also hosting the websites of their customers. We used to do this ourselves at CollectiveRay - and we still do.
Many people who could not afford to pay for a dedicated server though and that is how a more affordable solution for web hosting startups was born.
It has been called reselling, because essentially, you are buying a service and reselling it at a marked up price. The hosting reseller solution allowed the user to allocate space and bandwidth and other resources to his customers, apply a markup on the cost and of course make revenue from their clients.
A reseller account is much cheaper since a physical server can host multiple reseller accounts as the user will have to pay just for a part of the resources of the server while he gets the first customers and can afford to upgrade to a dedicated server and continue growing.
Check out the following short video of how to use WHM and WHMCS to administer your clients and business:
The reselling market became really popular about 10 years ago and its market share was rapidly increasing until the virtual private server hosting was invented allowing the end user much more control than the reseller account at a lower price.
At the moment, reselling is still actively being sold and mainly used by design studios, web developers, people looking to sell web hosting and others hosting their own web sites and friends websites.
If you can actually add the services of a domain reseller to your business, you'll be a one-stop shop for your clients. You could even offer an affiliate program once you start growing so that your clients can start pushing your services to anybody they meet.
If you're looking for specific reviews of different hosting platforms, you might want to see this section on Collectiveray.
Web Hosting Reseller Plans
Before we explain how to set up your business, we're going to share what we believe are the best plans and vendors when it comes to reseller web hosting.
In general, we would typically recommend that you start with a VPS, but as you grow, you can opt for dedicated hosting servers, or if you're happy to make a significant upfront investment.
We've been with this vendor for a few years and have seen nothing but great stuff. If you've seen a few of our reviews, you'll know that we've had more than our fair share of providers, which we had to dump for one reason or another. Vendors who have come and gone include some of the biggest players in the industry: GoDaddy, HostGator, SiteGround ... we moved away from all of these.
We've stuck with InMotion because we have only had great stuff, awesome support, good prices, a steady, reliable and most importantly a FAST VPS hosting plan which serves all our needs.
The Control Panel is fully-featured and we absolutely love it.
InMotion offers reseller web hosting plans and VPS hosting which start from only $27.99/month, but as long-term partners, we've got this plan for you at 50% until the end of April 2020.
The plan includes
- Free SSDs as part of the plan
- Free SSL certificate (Comodo)
- Free CPanel account for your clients
- Linux Reseller hosting
- 80GB Disk space
- 800Gb Bandwidth
- Free Dedicated IP
- Unlimited CPanels
- Unlimited domains
- Unlimited websites
- Free Domain Reseller account
- 90-Day Money back guarantee
- White label
You could also opt for the website builder, if you want to focus on simpler sites for your clients, rather than WordPress.
We'd recommend you check it out now.
2. Dynamic Edge
Essentially, Dynamic Edge combines the best properties of shared, and cloud hosting. What happens when traffic spikes hit your websites is this: the server automatically allocates resources to the current demand of your website.
This allows your server to sustain the website without any slowdowns or unavailability. Additionally, by having funds in an AutoScaling Balance, resources are allocated and charged accordingly on an hourly basis through a pre-paid model. The beauty is that resources are scaled back as soon as the spike is over, so you don't get charged when the additional resources are no longer required.
The basic package of Dynamic Edge plan provides you with 1 GHz of CPU power, 1 GB of RAM, and 50 GB SSD storage at a cost of $195 per year. The resources are charged by hourly usage, and for example, the cost of an additional 1 GB of RAM or 1 GHz CPU per hour is $0.01 - which is great for scaling up to meet demand.
The main difference compared to shared plans is that your websites will never slow down or stop working due to being overwhelmed. The resources can scale up to 64 GB RAM and 24 GHz CPU, which is more than enough to serve 99% of websites currently available on the internet.
The way to apply this for reselling is to charge your clients a fixed price per month, with a significant markup, let's say $25/month (meaning with a single client, you are already profitable). You can set up with the starting package which, given that it automatically scales, is already more than you can expect from other hosting providers offering shared or fixed RAM and CPU.
It is crucial to point out that your resources are dedicated to your account, which in practice means that a sudden surge of resource usage on another account on the same server won’t have any effect on your websites.
Comparing to a dedicated server, where you gain access to a huge amount of resources, which would work well for peaks of sudden website traffic, but those reserved resources will be dormant and unutilized when there is minimal traffic.
Of course, the expense of a dedicated server is a hefty price. As with Dynamic Edge resources are adjusted to the current needs of websites you are hosting, you pay only for what you actually use. Right as the website peeks resources are dynamically adjusted, and are throttled back as they are no longer needed.
One needs to note, that Dynamic Edge has their own dPanel software (a different custom-developed control panel) built from the ground to their specifications, which is used manage and improve the panel as it grows. The services are monitored by a group of administrators, which make sure that everything works in tip-top condition, including up to date server backups.
This means that you don’t have to have any specialized knowledge to use Dynamic Edge.
SiteGround is one of the most popular services around. From a niche service targeted primarily towards techies and geeks, always seeking ways to push technology to ever faster page loading speed, to one of the largest players in the industry.
Even if we are not particularly inclined to host with them, we do understand that they have grown because they offer a solid service at a good price, with technology as the differentiator. Their different plans also include Cloud Hosting, which is their version of a VPS.
In terms of the service, SiteGround offers a number of data center locations (4), which you can use in your favour in terms of speed, particularly if you are serving users from a particular region or locality.
With 10GB disk space, CPanel account and SSH Access, free daily backups, free email accounts, free SSL, unlimited domains and unmetered data transfer, the setup has all you need. When it comes to pricing, SiteGround has some of the prices around, starting from as little as €33/$42year.
WPEngine is one of the more pricey options when it comes to picking up a server for powering your businesses. Typical prices from WPEngine start at $35/month and their next tier is $115/month, which is not in the pricing bracket with which we are used to.
The reason though is very different than one would expect. WPE are actually a managed WordPress hosting service, with the critical difference being that you have a team of experts which are constantly monitoring your site's health.
This means that as a reseller, your work will be just to impress your clients with the excellent results that the WPE experts are able to achieve. Such a service actually implements significant technology optimizations in the hosting infrastructures which make businesses hosted on their service incredibly, fast and incredibly safe.
The bottom line is this, hosting with WPE may be more expensive, but you know that your website will never let you down. The partner program is typically designed for developers, designers, and agencies who are running websites which are mission-critical, which cannot afford any downtime ... and are prepared to pay for it.
If this sounds like your client base, then we would recommend you have a look at the WPE Partner program.
Kinsta is also a managed WordPress hosting company, so their prices do reflect that somewhat. Powered by the Google Cloud, Kinsta have set up their infrastructure such that it is pretty, freaking fast. In fact, in an article we had written for CSS-Tricks, we had gotten a full-fledged WP installation to load in less than 1s, with a few optimizations - suffice to say, they focus a lot of their energy on making sure their installs run sweetly.
Just like WPE above, if you are an agency, who has the expertise in bringing in high-paying customers who run their businesses off their websites, but do not have the expertise to technically manage a site with heavy traffic, you could choose the option of reselling Kinsta services.
Of course, this does not come cheaply, with prices being about $15/month for each WP install, if you opt for their 10 WordPress installs plan. While this might seem expensive when compared to standard hosting, you'll need to note, that these are fully-managed installs and you don't have to lift a finger to maintain these sites.
Bundled in this service you get
- A minimum of 5GB of disk space (lowest plan)
- Free CDN
- Unlimited migrations
- Automatic daily backups retained for at least 2 weeks
- 24/7 customer support
- Staging area
- Free SSL certificates
- Caching plugins and latest technology setup
- Absolute top-notch support
Once again, you might be paying a bit more, but by marking this service up by 100% or so, you are guaranteed a good income for doing absolutely nothing at all yourself and guaranteed service.
1. Choosing a reseller hosting business startup plan
Let's start our guide with how to choose from different plans. At CollectiveRay we've also reviewed such plans as WPEngine, which offer a different kind of reseller option.
This topic has been covered in many articles all over the internet, however, we couldn’t find an article that covers all aspects and all steps you need to take in order to get the best reseller hosting plan for your needs. In order to know which reseller package will work best, you must know what you want to do with it.
- Are you going to start a web hosting reseller company?
- Do you want to host your own websites?
- Do you need it for fun and testing?
- Do you want to learn to programme with it?
If you need the reseller package to host your personal websites and some friends sites then it gets easier to make a choice.
It becomes harder if you want to sell web hosting to make money or to host the websites of your customers in case you have a web design studio. We will cover those two only because if you need it for non-profit use then making a mistake will not be such a big deal. If you use it to sell hosting it becomes different because problems with the hosting service and your reseller account will affect the business of other people and they may take legal action against you.
First of all, if you are going to make money with web hosting you must form a company. This will limit your liability and exposure.
You must find an accountant or hire a company to do the legal work for you.
Then you must prepare your plan about what exactly you are going to sell, who are your potential customers, find your competitors and see what they are doing so that you can do better than them and make customers choose you instead of them.
Get a billing system such as WHMCS and start looking for a hosting reseller plan. Actually, you better get the reseller plan first and then install WHMCS onto it to configure it. There are several questions you need to ask your hosting company to make sure they can give you the features you need to sell web hosting.
Privacy is very important here. You don’t want your customers to understand you are a reseller.
Hosting customers hate resellers. They will not buy from you if they find you are reselling hosting.
Ask your provider if they support 100% private label (or white-labeling) which means they should be using an anonymous domain name for the hostname of their servers, they will give you IP addresses to register your own private nameservers and your clients will not see their name anywhere mentioned in the hosting control panel.
Make sure your provider is active on social networks such as Facebook and Twitter. That will tell you the company is looking to grow and communicate with their client base and potential customers.
They must have a blog regularly updated with unique content at least once per week. Look for statistics about their network, servers, clients satisfaction rating.
If they have a Facebook page check if their customers have left reviews about their experience with the company.
Note that there will always be negative reviews but they shouldn’t be more than 10% from all reviews posted.
Providing live chat technical support will be a big advantage for you as you will be able to contact them instantly and not wait for your e-mail to be responded to.
Test how quickly they respond to tickets and live chats. Send them e-mails at different times of the day to see if the response time-frame is different. Do that multiple times for 4-6 weeks to make sure the company is consistent with their customer support.
2. Do not buy the cheapest plan
In this one of the most essentials things on our guide.
There are thousands of small web hosting companies with virtual servers selling reselling plans and trying to grow by offering a very low price. For example, when it comes to cheap a Hostgator reseller plan and Hostgator reseller setup is hard to beat in terms of price.
Yet, when it comes to customer support and uptime, they leave much to be desired. A GoDaddy reseller is also hard to beat, yet again, their reputation has not been great.
So you really need to do your homework and ensure you've covered all the technical requirements.
- Make sure you get such features as an isolated Control Panel / CPanel WHM for each user you are servicing, to keep the installs isolated from each other.
- Free domain names are a nice perk to offer to your clients
- Standard offerings such as free emails accounts, FTP accounts, unlimited MySQL databases, free SSL also be made available to your users
You might come upon a Hostgator reseller review, which is positive, but don't be fooled quickly and check whether this is a biased opinion towards getting commissions.
The price is important however the quality is more important. Keep in mind you will not be able to keep your customers with you unless you provide them with the quality they deserve and are expecting to get.
In the end, you will pay less for your reseller web hosting account but your customers will not be happy and will be leaving your hosting services.
Look for specials instead.
Bigger web hosting companies often run promotions which you can use to get a decent plan at an affordable price. It will give you the chance to keep your clients happy and grow so one day you can upgrade and have your own servers with thousands of customers.
We've partnered with InMotion hosting to offer our readers an exclusive 50% OFF on plans until the end of April 2020 - but hurry, we've only got 3 plans left in our discounted inventory. You can also check out our deals on shared hosting accounts.
3. Use a corporate billing system
If you want your business to be a success, you really need to have an excellent system for handling your billings.
Sign up for a corporate billing system solution to automate the management and support of your customers.
It will allow you to communicate with them easier and you will look much more professional. A billing system will allow you to even activate the orders of your customers automatically. You can’t be 24/7 online to activate new orders and you can’t make clients wait because next time you come online to check for new orders you will find new orders and new tickets asking for a refund because you delayed the activation process.
All reputable hosting companies activate new services within minutes.
The most popular billing system used by hosting providers nowadays is WHMCS.
It comes with a built-in helpdesk so you have a central place to manage your clients and you don’t need to login to multiple systems to handle all operations in your company. It allows you to start an affiliate program for your clients as well and allow them to get money by referring your services to their friends.
4. Provide 24/7 support
Another essentials recommendation of our reseller hosting business startup guide is the provision of excellent, 24/7 startup.
Even some of the biggest web hosting reseller companies do not have 24/7 sales coverage but support assistance must be 24/7.
You can’t live in this business without 24/7 support.
Since you are starting slowly and you don’t have a big budget for the start you should find a company and outsource technical support so that whenever any of your customers have questions there will be someone to answer that question in less than 30 minutes.
If you can’t answer in 30 minutes you are once again behind your competitors and you can’t compete with them for customers.
Once you get enough customers you can start hiring people to work directly for you and slowly remove the outsourced technical support service. That will give you full control. The best support can only be provided by your own staff. No outsourcing company can support your customers better than you.
Never ever lie to your customers. If you do that you will quickly get out of business as customers will leave.
Go above and beyond when helping your clients and they recommend your hosting services to their friends. You will get more customers and the business will grow.
If your server happens to go down and a client complains about the downtime go ahead and give them credit. They will see you care about their business and you are sharing the loss with them. They will feel you are working with them and not against them and will stay with you forever.
5. Use private nameservers
Let's explain why this is an important part of our reseller business hosting startup guide.
Using private nameservers has tons of benefits. First of all, it makes you look professional.
Second, it allows you to easily switch from one hosting provider to another in case you become disappointed or the service degrades and you have to change the hosting provider.
The private nameservers will give you the chance to migrate all web hosting accounts of your customers without asking them to make any changes from their end.
After the migration, the only thing you would need to do is change the nameservers’ IP’s from the ones of the old hosting company to the new IP’s provided by your new hosting provider.
Private nameservers is the first thing to configure after your reseller account is activated and you receive the login details. They are registered at the domain registrar where you registered your domain name. Once the nameservers are registered you also need to add DNS A records for them in the DNS zone of your domain. That can be done from WHM -> Edit DNS zone.
Ask your hosting provider to do it for you if you are not sure how to do it.
6. Install an SSL certificate
Security is an essential part of setting a reseller web hosting business or startup.
If you are going to sell web hosting you will have to store the personal details of your customers such as names, addresses, e-mails, credit cards in your billing system on your server.
Your client must feel safe that their personal data is secure and no one will steal it. That’s why you need an SSL certificate which will encrypt the communication between the server and the visitor.
As a result, a 3rd party will not be able to sniff the traffic to steal important information.
It is best to order a wildcard certificate which will protect both your website and billing system in case you install the billing software on a subdomain such as secure.yourdomain.com.
Another option is to install it at www.yourdomain.com/clients and in that case you can use a cheaper certificate such as RapidSSL. If you want to look more professional though in the eyes of your visitors get an EV certificate. It will add a green bar on the browser and also show your company name.
New technology such as Let's Encrypt and AutoSSL, also allows you to provide free SSL certificates to your clients.
7. Add trust seals to the footer of your website
Trust is key to the success of a business startup.
What makes customers trust your website is the trust seals such as BBB accredited company seal, PayPal seal, McAfee, a seal of a PCI company showing that you have passed all e-commerce requirements for selling online and that you are running a company which is active and verified.
Add pictures of yourself and your staff members to show your potential customers that there are live people behind your website who they can trust.
Frequently Asked Questions
1. How do I start a hosting reseller business?
To start a hosting reseller business, the very first step is buying a reseller hosting plan, such as the ones mentioned in this article. The reseller plan typically includes a WHMCS license which can handle the billing and creation of accounts automatically. At that point, all you need to do is set the prices and start selling!
2. Which reseller hosting is best?
The best seller hosting is typically powered by a VPS plan. This is because you can easily move from one plan to another as you start to scale up your business. We have a list of good options to choose from in this article, but our preferred best option is a plan from InMotion hosting, for which we have a great discount.
3. How does a web hosting business work?
A web hosting business works by having a powerful hosting plan, splitting it into small chunks and reselling this to a number of customers. By setting your prices correctly, you can make a profit on the money you are spending. For example, you can take a plan which costs $29/month. And split it into 10 plans which costs $9/month. In this way, you'd be making a profit of roughly $60/month. Most web hosting companies can offer whitelabelling - this is when they can do all of the support and maintenance work necessasry, but in the name of your company instead of theirs.
4. Is web hosting profitable?
Yes, web hosting is profitable in general. Typically, the hardest part is getting your first few customers to able to offset your initial costs. The hosting market keeps growing and growing every year, with more and more websites getting created, more companies and people going online. It is competitive, but still profitable.
5. Is reseller hosting profitable?
Yes, reseller hosting is profitable. Provided you find a niche or way to market to your eventual customers which is cheap enough to offset your costs, you will be profitable. The niche is very lucrative in general. This is because once you acquire a customer, it's fairly easy to keep them for life or several years.
6. How do I promote my web hosting company?
The best way to promote your web hosting company is to specialize in a very particular niche. For example, you might want to create a niche for travel bloggers, by offering some additional features which would make your company an obvious choice. Ideally you go for a mix of traditional marketing methods such as SEO , PPC and affiliate marketing and other non-traditional promotional methods, such as creating Facebook groups, influential marketing, collaborations.
7. How do I become a hosting reseller?
To become a hosting reseller, you need to procure enough server resources and then provide reseller hosting software and plans to allow other users to buy hosting from your own company. The concept is similar but flipped on it's head, where instead of you buying from a hosting company, you become the hosting company yourself.
8. Is ResellerClub a good hosting company?
Yes, ResellerClub is a good hosting company because they specialize specifically on reselling, which makes them a leader in this sector.
9. Is InMotion hosting good?
Yes, InMotion hosting is a good hosting company. We have been with them for several years and wholeheartedly recommend them. You can visit our review of InMotion here.
If you are just starting with reseller hosting we have negotiated a special deal with our partners InMotion, exclusively for the visitors of CollectiveRay. That's surely a nice way to end our reseller business hosting startup guide don't you think? Get 50% OFF by clicking on the link below - the offer is valid until the end of April 2020 and currently we're about to run out of our discounted inventory - only 3 plans left! If you don't like it, there's always the 90-day money back guarantee!
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