Is Reselling Hosting a Good Option for You?

If you’re fairly web-savvy, or you’re in a web-related business — maybe you’re a site designer, developer, marketer or analytics person — you may have considered reselling hosting services as a side business or perhaps even as a main occupation.

After all, the upsides are pretty appealing:

1. Steady Residual Income Flow

Anyone needing web hosting services needs service day in and day out usually for years at a time. Signing up just one client can represent thousands of dollars in revenue over the lifetime of the account, with much of that potentially representing profit.

2. Low Maintenance Clients

For the most part, web hosting is a low-maintenance business; once clients are set up, support calls are rare, and when they happen, usually, they are one-time occurrences that can be addressed relatively quickly. In addition, you have the ability to choose your clients, so you can select people or companies that are as savvy as you’d like them to be so that maintenance overhead can be reduced.

3. Low Or No Physical Infrastructure

If you have a computer at home, you can likely administrate between dozens and hundreds of hosting accounts from your desktop without any additional hardware or network resources, except perhaps a fast Internet connection. The best reseller host companies make all of their hardware and software “white label,” meaning your clients will usually be unaware that you are not the primary hosting company.

4. Built-In Needs For Ancillary Businesses

If you’re already in the web design or web marketing business, hosting will almost guarantee you reciprocal sales for years to come. Multiple existing accounts by referrals, client customer inquiries, and new marketing opportunities, and you may only see possibilities for growth.

5. Make Your Own Hours

Since this can conceivably be a home-based business, you can usually set your own hours and work when you want as long as you’re capable of handling the workload.

6. Remote Clients

Many or all of your clients will likely be located a fair distance away. Some of them may be in other states or even in other countries. More than 90 percent of most hosting company clients never meet their host’s employees or visit the company’s physical address for any reason.

Of course, as with any too-good-to-be-true-sounding business.

There are multiple downsides as well:

1. Tech Knowledge Necessary

You must be knowledgeable about most aspects of the business, many of which can be extremely technical and change often. Software and OS updates, upgrades, new version releases and bugs are all things you would likely need to know about to some degree.

2. Support Is Key

As most hosting resellers can tell you, the biggest component of the business is supporting your clients. Standard support hours are 24x7x365, so you would need to figure out how to handle such support, which is likely done using outsourcing. And just because you can outsource it doesn’t mean problems get solved. In fact, this can mean additional headaches as you attempt to communicate with remote personnel that are often located on distant continents.

3. No Holidays

Because of the 24 x 7 x 365 nature of the business, holidays are few. In fact, holidays can be when you get the largest number of support inquiries, so you should be prepared to work extra-long hours during those sometimes-hectic days. Murphy’s Law can apply here.

4. Dealing With Idiots

Depending on who your clients are, you may have to deal with people who are at best naive and at worst absolutely rude in terms of conversing with customer support personnel. If you thought you knew the definition of Luddite, you might want to re-examine your dictionary.

5. Remote Clients

Even though you may never meet your clients, this can be a negative factor as well as a positive one as sometimes communication can be less than ideal via the phone or by email. Add in time zone differences, tech “newbie” clients and esoteric hardware problems and you have a recipe for frustration.

6. The Business Is Mostly Marketing

Many experienced web hosting resellers will tell you the business is essentially about marketing — keeping existing clients enthused while continuing to sign up new ones. If you’re not a good marketer and you don’t naturally have access to potential clients via an ancillary business such as web design or marketing, this may not be the right business for you. On the other hand, if sales pitches come naturally and you have a talent for staying organized, detail-oriented and clear-headed, reselling hosting services could be your calling.

7. How Is Your Support?

Besides your marketing, your support needs to be rock-solid as clients will quickly leave hosts who can’t answer technical support inquiries or get their servers back up and running after crashes at any given hour of the day. This means that however you handle support, it needs to be done in a robust, professional, consistent manner, or you risk getting a reputation for poor service that you may never be able to recover from.

8. Who Is the Primary Host?

Going hand-in-hand with the solid support is the reliability of your primary hosting company. There are many companies that are set up to serve resellers, but how good they are and how well and/or transparently they support resale customers can vary widely. It pays to figure out who your primary host would be by doing thorough research on them before getting into the business because once you’re online with multiple clients, switching to a different hosting company can range from nightmarish to impossible.

9. Financial Considerations

And finally, as with any business, there is the financial aspect to consider. In the pre-planning stage, it would appear that the potential upside is substantial, but once the costs of your support overhead and/or any human resource costs are factored in — including those of your own time — you may have to consider if the business is really worthwhile to run.

If you already have an ancillary business up and running, will you really be able to handle both businesses simultaneously? What happens to clients of both if one of the businesses suffers? What happens if your hosting business grows more rapidly than you expect — or worse — shrinks more rapidly than you had anticipated?

These are the kinds of questions you should answer before making a serious decision to embark on this occasionally tantalizing business.