How to run a profitable web hosting business
The online space is booming with opportunities and running a web hosting business could not have been easier. Reseller web hosting, for instance, is a very easy way to add residual income or set up a venture from scratch. If you are an owner of an IT company or a web design studio, by selling web hosting through reseller web hosting you can add a new vertical to your business. It is the best way to leverage the existing resources to set-up a full-blown web hosting business. However, running a profitable reselling business is a different ball game altogether. There are several things you need to pre-determine. Right from picking up the best reseller hosting plan to understanding the market to business projection to the implementation of a strategy requires careful consideration and input.
What does it mean to Resell Web Hosting?
Reselling web hosting entails purchasing of a ‘White Labeled’ hosting product from a major web hosting company, and selling them to members of that target group which is looking to get online with a website. White label hosting plans allows resellers (first-time web hosting business owners/ owners of IT Company or web designing company looking for residual income) to rebrand and sell the hosting plan under their name. Thus, becoming a reseller can be very profitable. All the major back-end processes that include server maintenance, software update, bug fixing, etc. is the responsibility of the hosting company, while you have the complete freedom to run and expand the business under your logo.
Reseller Web Hosting – Endless Scope & Opportunity
The business eco-system of today is incomplete without a forthcoming web presence. Every big or small venture is looking to set up a website or launch a mobile app to promote their business and services. To initiate website development, businesses must purchase a server space.
In fact, it is the one of the most fundamental requirements for developing a website. Therefore, the demand for server and web hosting will never decline as more and more businesses are moving online. In short, as long as you are running a web hosting business, there will be no dearth of clients looking for a reliable web hosting plan.
Tip 1- Make a Business Plan
If you want to make a mark in the web hosting domain, you need to start by penning down a detailed business plan with realistic projections, budget, resource allocation and infrastructural spending. Some key questions in this direction are-
- How much will you be spending on marketing in the first quarter?
- How much profit do you anticipate in the first quarter?
- What is the projection of the growth of your business in the first and the second quarters
- Will your Reseller Hosting plan and/or provider be able to handle the load at desired quality standards for the projected growth?
- What will be the division of resources for both offline and online promotion?
- What portion of earning are you looking to put back in the business?
A clear position on these questions will help you allocate the resources in the right direction. Always remember that the optimum use of finance and resources lays down the foundation of a profitable business.
Tip 2 – Channelize Marketing Effort
Now that you have a crystal-clear business plan, you precisely know the budget you have to spend on online marketing. While organic SEO is the best way to boost online traffic, for an initial impetus spend money on a PPC (pay per click) campaign. You can run a PPC campaign yourself or hire a PPC expert. Either way, make sure that you run a well-optimized campaign to increase the web traffic of your reselling business.
Parallel to this, promote your business on social media websites like LinkedIn, Twitter, Facebook and similar platforms.
Tip 3 – Target a Realistic Profit Margin
On a payment of $30 to $50 a month, you can easily purchase a reseller hosting plan. You could further divide the package and sell it to small business owners, independent webmasters and owners of IT companies. To earn a realistic profit margin, pay attention to acquisition cost as in adjustments of discounts, incentives, offline promotion and other necessary expenses.
Also, estimate the lifetime customer value or LCV, that will help you determine your optimal marketing spends and choose the right target group. For example, from which platform your business is receiving maximum leads. Is it through organic SEO, paid campaigns, or social media platform? This information is necessary for allocating marketing budgets in the future for greater ROI and profit.
Tip 4 – Offer Good Service & Customer Support
Running a profitable business not only necessitates bringing new customers onboard but also the retention of existing ones. This can only be assured if you offer excellent service and superior customer support. Prompt redressal of queries and working as an intermediary between your client and upstream hosting provider will improve client satisfaction which is a crucial factor for client retention.
Tip 5- Choose a Reliable Upstream Partner
Typically, resellers do not purchase a dedicated server space as it will entail a lot of expenditure and hiring of a system administrator for the day to day management of the server. Instead, they divide their reseller hosting packages into individual shared hosting packages with certain amount of disk space, CPU time and bandwidth attached to it. However, reliability and performance are a big concern with shared hosting packages.
If you don’t want your clients or customers to face problems arising due to downtime, poor software infrastructure, security threats it is advised to partner with a reliable upstream hosting provider. Partner with a parent host who has a long and successful stint in the web hosting business. Read up online reviews and purchase a reliable plan which after careful analysis, could count as one of the best reseller hosting plans.
Tip 6 – Promote Business Offline
Do not commit the mistake of ignoring the offline promotion for your reselling web hosting business. Networking, particularly attending tech symposiums and seminars will give you the opportunity to learn more about web hosting business. In addition to that, you may also meet potential clients and customers. Newspaper advert, printing, and distribution of flyer are other ways to promote your business offline.
The initial six months maybe a little bumpy. Consistent effort is important to reap the benefits a year or two later. One thing is certain that if take your reseller business on a well-defined path, you will always remain profitable.