Can You Make Good Money Offering A Reseller Hosting Service?

The business of a reseller hosting service involves on-selling web hosting. It's a type of shared hosting account that allows the reseller to set up each add-on domain with it's own cpanel. 

This allows an account owner to share and allocate any defined bandwidth and storage as though it were their own, when in actual fact they are renting it off a large hosting company. In many ways it is like drop-shipping - the parent company takes care of the customer service, supplies the product, and even maintains it. The reseller simply has to set up the individual accounts and concentrate on the marketing.

Is Reseller Hosting a Good Business?

The answer to that is yes and no. Reseller hosting services are probably most successful as a business model these days when they are offered as an adjunct to an existing client base, one with whom you have a relationship because you've provided them with a service or product before. And this client base should have no great technical knowledge. Preferably, they either don't have the time to learn about the technical side of web hosting, or they find it too difficult.

The most obvious candidate who could benefit in adding reseller hosting services to their product is web designers. Many offline companies who are the clients of web designers are far too busy running their business to spend the extra time mastering the learning curve that is involved with maintaining a website. So, they are happy to go for a full service option where the web designer offers to host their account through their own reseller account.

Another scenario is that of a product owner who markets to newbies and those just getting their feet wet, in the 'make money online' market. Whilst this market usually doesn't have the cash flow of an offline business, if you offer them competitive terms, and they have a positive relationship with you through your other product, this can be a lucrative additional income stream. This scenario works particularly well if you offer them a level of support that the big hosting companies don't.

Trying to compete with the big hosting companies is really not an option, given their 'unlimited bandwidth', 'unlimited storage' plans that are everywhere these days. The truth of these plans is very different. You'll find if you look closer at the terms and conditions, that the offer is really not unlimited. If you use more than what is defined in their "Acceptable Use" policy, you won't run into problems. But if you do, then your site could be suspended without warning, and with no recourse.

Unfortunately, sometimes 'acceptable use' is not even really defined at all, except in a way that makes it really difficult to calculate what the plan's limit really is. For example, it might be referred to as representing an 'average' of all sites, which is never actually defined in GB.

There is a production cost for everything - bandwidth, storage, server use. So it is illogical to offer unlimited use of these limited resources for far less than what they actually cost the company. But the average consumer will never be any the wiser as most small websites do not use much bandwidth and storage at all. Just as airlines overbook flights on the understanding that most of the time there are cancellations, so web hosting companies oversell space on their servers. Not because there would be cancellations, but because they know people will never really use what is on offer.

Where does that leave someone interested in setting up a reseller hosting service? It is simply not viable to try and compete for that mass market of small time website owners who have the nous to set up their own website, but not enough knowledge to know they're being tricked by marketing when they sign up for their unlimited hosting plans. - Or their hosting plans with massive bandwidth and storage which, for example, prohibit you from offering any video or audio from your site.

The key to succeeding in any business is to find your market, or niche. This is particularly true of reseller hosting services who are trying to establish an income in a market with big players who actually own the infrastructure. Your customer service, your willingness to help newbies, a special area of expertise with a popular software program, are all ways to differentiate your reseller business and give customers a reason to use your services. For example, there are web hosts who specialize in shopping cart programs like xcart, or content management systems like joomla.

The best way to succeed with a reseller hosting service is to have an existing customer base, or to be able to incorporate it into a product or service you produce. Of course, if you're a gret marketer, you can probably succeed in any market!