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Thread: I'm Thinking of Starting a Web Host - Need Input!

  1. #1
    Zash's Avatar
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    I'm Thinking of Starting a Web Host - Need Input!

    Hey guys,

    I'm thinking that soon (not now, but in the next year or two), I will open up a proxy web host. However, since I am completely new to this, I am asking for lots of input on different things.

    I am thinking that for startup, I will get a VPS with these resources:

    75 GB Disk Space
    3 TB Monthly Transfer
    4 GB Guaranteed (8 GB Burst RAM)


    1 CPU Core Guaranteed (Burst to 4 Cores)
    Hardware RAID 10
    CentOS 5 Operating System
    4 IP Addresses
    Unlimited Domains and User Accounts
    FREE Virtuozzo Power Panel
    FREE nightly backups
    FREE cPanel
    No set-up fee
    $199 monthly

    This will be a fully managed VPS by a very reputable company, and I will have root access, auto-reboot during failure, and 24/7 support.

    However, there will also be a lot of costs involved, and this is what I calculated (for the first month, it may increase):

    Server - $200 (At the beginning, this will increase).

    WHMCS License - $281.85 (I plan on using the renewable license for the first two months, and if I stick with it, then I'll buy a full license).

    Design - Free or $30 (I may make it myself, but if not, I can get a good design for fairly cheap).

    Logo - $20 (I can't make logos )

    Advertising - $100 (I plan on doing a lot of free advertising, I may or may not participate in AdWords or other programs).

    Support - ??? (I'm leaving this for last because I honestly don't know how much it will cost. I want ticket support, as well as live support using a chat system and MSN and AIM. I can support for several hours a day, but I know that's not enough. If anybody can help me out with this, it would be great).

    Legal Fees - ??? (I am going to write my own TOS/AUP and Privacy Policy, but it would probably be wise to get it checked over by a lawyer).

    Miscellaneous Fees - ??? (When life gives you problems).

    So that leaves me with $431.85 + $200/month + ??? as the costs.

    Now, this server will has 3000GB of bandwidth. To play it safe, I will only offer 2000GB of bandwidth, so that other resources like CPU don't have issues during peak times.

    So, my largest plan (high bandwidth for less proportionally) will probably be 200GB. Now, if I only offering this, then it would be 10 customers/VPS. A good price for 200GB would probably be $29.95/month (correct me if I'm wrong). So in a worst case scenario (since the cheaper plans will cost slightly more/GB), I would be making $299.50 - 5% fees of PayPal (estimate) so that would be $284.52. After just server costs, that leaves me with $84 per month, and that's not a lot, especially since I still need to break even.

    The smallest plan, would probably be 50GB for $8.95. That means I can have 40 accounts, giving me a revenue of $358. After fees, that would be $340, leaving me with $140 for costs outside of the VPS, and I would break even a lot quicker.

    -----------------------------

    Another thing, I really don't know about staff contracts and stuff. I know some hosts that have no contract for staff, and simply say 'You're hired' and pay them on a weekly basis via PayPal. I think I may need Terms of Agreement/Contract for my staff, what they can and can't do, and outlining payment agreements and that stuff. Although I'm not sure.

    And then I'm definitely not providing my staff with health benefits or anything, since it's a simple online part-time job. And this kind of ties with legal, in case something happens between me and staff, or possibly members.

    I'm also curious how it works if I end up going out of business. I can't just go offline with all of my clients, I would need to warn them ahead of time, right? How about the ones that pay in advance...

    I'm only a 14 year old boy

    Either way, I've kind of outlined my plans above, some of it may look very ignorant, and that is probably cause I am. I know somebody who really doesn't know too much about hosting, yet he's doing well with 'CreativHost.com'. I'm reading everything I can find about web hosts.

    I appreciate comments and lots of help
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  2. #2
    Coastercraze's Avatar
    Coastercraze is offline Net Builder Legend
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    Go for one of these:

    Unmetered $49/month servers - FDCservers bandwidth challenge 2009 !!!! - Web Hosting Talk

    and then go for:
    Platinum Server Management, Inc. for management of your server. I am using them to manage my servers while I am busy with real life and don't have time to manage them myself. That and when I am too lazy to fix something its great to have someone available to help fix it quickly lol.

    Since I've experienced the whole server trip / web host trip / crazy ideas, I have lots of knowledge to help you not make some mistakes I've done in the past

    First things first, make sure you have AT LEAST 3-5 months reserves saved up (so that if something were to happen, you'd be able to keep the server running until you got back on your feet). I know it sounds crazy, but a crash, or a job loss could impact your server quite well and having a reserve helped me outlast lots of my competition on Digital Point.

    Second, get a friend or someone you can trust to help you out if possible. If you want you can even hire support technicians at like 20-30 cents a ticket answered and like 50 cents per ticket leading to a sale or something similar.

    For backups, use PSM as they're great with that area.

    Legal fees, well if you're crafty, you can write a good terms of service / Acceptable Usage Policy just by looking at like 30 other different companies and making a consensus of what you think should be the rules in your own wording.

    Advertising, once everything is in place, just forget adsense as it doesn't help much of anything you advertise is thrown away. Advertise on Web Hosting Talk Web Hosting Talk - The largest, most influential web hosting community on the Internet here on NB, Free Web Space Free webhosting - Freewebspace.net and Digital Point if you want (not recommended as much due to problems in the past I've faced over there with people) forums dot digitalpoint dot com (censored cause DP doesn't deserve a backlink from me )
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  3. #3
    Zash's Avatar
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    Hey thanks very much!

    I'm actually staying away from FDC, since it's banned in many places. I also don't really trust unmetered/unlimited.

    About the reserve server, since Im reselling a bigger company, do I really need it? Won't the deal with crashes, transfers, etc?
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  4. #4
    Coastercraze's Avatar
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    Quote Originally Posted by Zash View Post
    Hey thanks very much!

    I'm actually staying away from FDC, since it's banned in many places. I also don't really trust unmetered/unlimited.

    About the reserve server, since Im reselling a bigger company, do I really need it? Won't the deal with crashes, transfers, etc?
    Try for InterServer, Inc - Advanced Hosting and Custom Dedicated Servers with Managed² support then to get you started out. You could also even try JustEdge Networks - Affordable Co-Location, Dedicated Servers, Managed Exchange & SQL Hosting - New Jersey/New York if you'd like.

    As for reserves,it helped to have extra cash laying around when I needed it. That's what the purpose is of having a backup funding source. I think every hosting company should have something to fall back onto if necessary.
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  5. #5
    Mr.Bill's Avatar
    Mr.Bill is offline One is glad to be of service
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    I'm actually staying away from FDC, since it's banned in many places
    Could you explain what you mean by this? I have been with them for over a year and only have been blocked by myspace twice for a few days but all proxy hosts have suffered this. Since if anyone using a proxy hosted on there IP range violates certain rules a certain amount of time then Myspace puts a temp block in place.

    What other sites are they blocked from never had any complaints of sites being blocked.

    Reverse IP Check ಠ_ಠ Proxy Sites
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  6. #6
    Zash's Avatar
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    I keep hearing people on wdservers and techentrance getting blcked. Maybe it's not true.
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  7. #7
    ebizlaunch is offline Newbie Net Builder
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    I would budget at least $50 a month for support / service; even if you're going the per-ticket route, you may need to have some ongoing backup for which you'd need to pay. If you spend less, it's a bonus

    Plus, allow for any unexpected expenses; you may need to do additional advertising, or give a free trial, or startup period discounts; factor in a flat amount here again per month for contingency.

    Next, figure out if the entire business makes sense; you're going to be spending a fair amount of time setting this up & running it; are the profits going to cover the cost of your time?

  8. #8
    Zash's Avatar
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    Quote Originally Posted by ebizlaunch View Post
    I would budget at least $50 a month for support / service; even if you're going the per-ticket route, you may need to have some ongoing backup for which you'd need to pay. If you spend less, it's a bonus

    Plus, allow for any unexpected expenses; you may need to do additional advertising, or give a free trial, or startup period discounts; factor in a flat amount here again per month for contingency.

    Next, figure out if the entire business makes sense; you're going to be spending a fair amount of time setting this up & running it; are the profits going to cover the cost of your time?
    For support, I know that I can handle ticket support for a chunk of the day. I was thinking maybe paying around 20 cents per ticket response to my staff.

    As for unexpected expenses, I am not sure how much payed advertising I am actually going to do. I also do not think free trials are going to be given out, since that is actually not good to my existing members in case of server overusage. I will give coupons though.

    Another cost I just found, external backups. I know a service where I can get backups for this much:
    10GB - $5/month
    100GB - $20/month

    Yes, I am very interested in this hosting experience. Obviously, it seems much easier to run a normal web host, but then there would be too much competition. And yes, I do not expect to make any money for the first while.
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  9. #9
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    You won't need staff right away but put it in your business plan for the future. Do you have a high demand planned at first? Do you have the capital to hire staff right away?

    You need to focus on having proper procedures in place to make sure you provide good customer service. Like making sure tickets are answered when you are away from the computer etc.

    In terms of support ticket systems you can use clientexec (lower priced) or WHMCS (higher priced) both work well but more people seem to rave about WHMCS. I personally use clientexec and it great.

    There is a lot to consider. Make sure you think of as much as you can.
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  10. #10
    Zash's Avatar
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    Hey,

    I don't plan on having staff at first, but I already know somebody who is going to work really cheap. I also plan on using WHMCS, since I'm familiar with it.

    BTW, I've already started offering this hosting. Anybody who's interested, PM me.
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