Hello everyone, my name is Mike Brown, and I have been in the hosting business for about 5 years now. I, like most people did, started out thinking I was going to be the next Godaddy! I quickly learned that it wasn't going to happen.
I am sharing my experience with you so that you can avoid some of the common mistakes, and have a better chance of being successful with your hosting business.
Where to start!
When you decide you're going to go for it, you first need to think about a name for the hosting business. You have to think of what type of hosting you're going to offer, it's called your "niche". Then you have to make your decision based on the availability of the name, and domain name.
Decide on a domain name
While deciding on a domain name, try to find one with your keywords (your niche) in them. If you're going to offer clan hosting for example, you should try to find a domain name that has "Clan Hosting" in it like, superclanhosting.com, or something along those lines.
Take your time while searching for available domain names, they are a very big part of your business because that's how google and other search engines will find you (that and your keywords), and Google is your best friend!
You can look for domains that people are selling, domains that are expiring, or even a domain on Ebay! If you choose to get a domain name that has not been registered before, and is available, I suggest registering your domain at Godaddy.com. Stay away from 1and1.com!! Also, Godaddy.com is great for
registering domains but, their hosting is horrible, so avoid that, too!
Designing your website
If you're a good designer, you can make your own, and save yourself a good bit of money. The problem is, most people are not web designers, and have to either pay a designer to create a unique design, which can cost a pretty penny for a "good" design. What I suggest is, go to TemplateMonster.com, and purchase a design from there. They have tons of GREAT hosting templates that come with 5-6 pages already designed, you just have to edit the template with your information. You also have to edit the images on the template, if you need help with that, contact me and I can do it for a small fee.
Making the choice, reseller, VPS, or Dedicated!
I know that it's hard to commit a lot of money to something that could, and could not make any back for you, it's a gamble. I also know that people with a reseller account sometimes get put down but, personally, I think it's the best choice when you're first starting out for these reasons:
- It's cheaper! You can get a reseller for $20-$35, or you can get a good VPS for $60 - $100, or a good server for $125 - $$$$$!
- The reseller host handles all the server support, so you don't have to know how to manage a server.
- Some hosts in that price range will offer free end user support (they take care of all of your client support anonymously!).
Don't by the cheapest reseller you can find!! You should expect to spend anywhere from $20 - $35 a month for a good reseller. Also, don't start out with just a 5GB/50GB (DS/BW) reseller. Instead, go for a package that has at least 10-15GB of disc space, and at least 100GB of bandwidth. The reason for this is simple, you should always have a little more than you need.
What do I use for a signup script?
There are a lot of choices in this are, and the prices can vary a little depending on what you want. The top 4 client management / signup scripts (in my opinion) are ModernBill, WHMCS, ClientExec, and WHMAutoPilot (in that order).
I prefer WHMCS but, it's a more advanced system, and a beginner might get overwhelmed trying to set it up. For a beginner I suggest ClientExec or WHMAutoPilot. Modernbill is the best out of all of them I think, it's got everything you could ever need from a billing/client management system but, like WHMCS, the beginner would have no need for most of it's features, and would probably end up lost and asking for help in just a few short minutes!
What you DO NOT do is, setup PayPal links and use them as signup links! I have seen many hosts do that, and it just screams un professionalism! Using PayPal for your payment gateway is fine but, don't use PayPal signup icons on your pages directly!
How do I get the money?
Like billing systems, there are a lot of different payment gateways available, and most charge a signup fee, a minimum usage fee, or some other type of tricky little fee they can throw in!
I suggest you just stick with PayPal, MoneyBookers, or Google Checkout. They do take a small percentage of each transaction but, you cannot avoid that, so try and find the cheapest one. PayPal does not accept all countries, so make sure your country is not blocked. Moneybookers is a credit card processor, and can accept payments from anywhere. I have never used Google Checkout but, I have heard good things about it.
How do I get clients!
There are a lot of things you can do to advertise your services, and one thing might work well for host X but, not work well for your business. So, you should try all of them to see what's best for you. What I do not suggest is using Google Adwords! You'll spend hundreds, and you might get 1 or 2 new clients from it!
What is "Overselling", and should I do it?
- Forum posting: You can find a ton of forums that have a section for advertising hosting services. Some will even have section where people request hosting services, you should check these daily and respond to any requests wit a package that might fit their needs. You can find these forums by going to Google and searching for "Hosting Forum", "Webmaster Forums", Web Hosting Forum", or "Web design Forum"
- Text Link Ads: Advertising can be expensive but, text links are usually the cheapest way of getting an ad on another website.
- Banner Ads: Banners ads cost a good bit more, but they do get noticed a lot more, so it really all depends on how much you want to spend. If you need a banner ad, or logo made, contact me, and I can do it for about $15 for a banner ad, and $10 for a logo.
- Word of Mouth: This is by far, the best way of getting business. If you can keep your clients happy, and offer them good service, they'll tell their friends about you when they need hosting!
- Local Advertising: You can try paying to place an ad in your local weekly ad browser, or newspaper. Maybe you could even buy ad space on a bus stop bench or billboard.
Overselling is the practice if selling more of something than you actually have. So for example, let's say you have 1 apple, and you sell 1/4 of that apple to 4 people. If those 4 people don't eat all of their apple, you can sell what's left to 2 more people. So, you're basically selling more than what you have. But, if all 6 of those people decide that they want to go back and eat the rest fob their 1/4 of that apple, and it's not there, you're in trouble!
Every host has to oversell a little to compete but, going crazy selling 10 people 250GB disc space and 1000GB bandwidth on a server that only has an 80GB hard drive and 1500GB of bandwidth total, is a bad thing. Instead, take the amount of disc space you have on your server, and add 10-20%. Then, as I said above, when you reach about 75% usage, it's time to upgrade.
What should I charge for my packages?
There are a couple of different ways to figure out what you should charge for your packages. The first way is this:
Take the amount of disc space you have (remember to add in the 10- 15% more for overselling), and break it down into 8th's (1/8), and then break the total price of the hosting package down into 8th's (1/8). You should then be able to get a better idea of what each GB of disc space cost you. You can do the same thing with your bandwidth.
After you know what each GB of disc and bandwidth cost you, you can then start designing packages based on those prices. You could sell them at cost, below cost (adds more overselling), or over cost.
How do I support my clients?
If you choose a reseller host that offers free end user support, you don't have to worry about this part of it! If you don't, you have a couple of options. You can either, start learning everything there is to know about WHM, CPanel, FTP, and anything else webmaster related, or, you can find and outsourced hosting support service such as Bobcares.com, and let them handle all of your client support, and spend your time promoting your business.
At first, 5 - 10 clients, you might get a ticket here and there, then, you get up to 25 - 50 clients, and you'll be getting tickets a few times a week. You get up over 100 and you're swamped! If you have 100 customers though, you should be able to pay for an outsourced company.
When do I upgrade to a VPS or Dedicated server?
Some people will cram their servers full of wesites until their so loaded down that they cannot fit another MB on it! Don't do that! Instead, you should upgrade to a large reseller until you reach about 35-40gb of disc space used. After that, it's time for a VPS or Dedicated server. Basically you should upgrade when you have reached about 75% usage of your current account.
For a reliable VPS or Dedicated server I suggest LiquidWeb.com.
This should be enough info to get you going. If you ever need any help, or have any questions, please feel free to contact me!
Your tips are great and very inspirational Thank you!
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I would like to add that you should price in the cost of support.
There's also a risk that one of your users gets you banned on a reseller account. I think that it will be safer with your own server.