So, you’re considering reselling and you need the straight scoop on it?
There are so many hosting companies, all claiming to be the best deal, and all telling you that you’ll make more money reselling their services. Who’s to trust? Which is best?
Hopefully you have questions about the business itself. How does this all work? How do I set my prices? How do I market the product? What works? What doesn’t? Who is my competition?
My name is Eddie Brown, and I am part owner of a primary web presence provider business. In real English, that means I partially own and operate a web hosting company. I started out in the Hosting Industry by reselling accounts for another company. Today, we operate our own servers and have a reseller program of our own.
This has given me a unique view of both sides of the reselling coin.
How you choose to run your reselling business will depend, primarily, on how you answer the following 3 questions:
1. Will reselling be your primary or secondary focus?
2. Once you sell a hosting account, will you retain control of the website it houses? I.e., you are the designer and will maintain the site.
3. Will you be marketing online, or to your current clients?
How you determine your pricing structure will hinge on how you answered these three questions.
If you will be offering hosting to existing clients as an added service, you can, generally, charge more than if you were marketing exclusively online.
When an individual purchases web hosting online, they take a risk. Perhaps their newfound host will be a top-notch outfit with superb tech support, reliable servers and excellent prices. On the other hand, perhaps they will find themselves in the middle of a horrendous tale of inadequacy.
But, if this same individual already has an existing business relationship with you, a person they already trust, much of the fear is removed. This reduction of risk, worry and stress is worth a premium. Ask any website owner if they would rather pay a little more for reliability, or stay up at night worrying about their website.
Another factor in deciding your prices is cost. Your number one cost will not be the wholesale price you pay your provider. Your number one cost will be your time. What is it worth, and how much time is involved?
If you answered yes to question number 2, your time investment will be minimal. Customer support is a huge time expenditure, especially if you do it right. By being both the host and the site administrator, you come out way ahead.
Finally, you must look at your competition. In order to do this properly, you must determine which market you will be competing in.
In general, there are two markets for web hosting services. These are the online market and the local market.
If you choose to market online, you will be forced to keep prices extrememly low. You will also incur some fairly heavy customer support costs. Because your prices will be lower, so will your profit margin. This means one thing – VOLUME.
For the online operator, automation is crucial. The more streamlined your system, the higher your profits and the lower your blood pressure.
Let me interject one thing here, while we’re talking about marketing. Streamlined does not mean neglecting your customers. A little consideration goes a long ways in this business. If you answer your customers emails, return their calls, take time to listen to them, you’ll build a large base of loyal customers in no time at all.
Regardless of your marketing approach, there is one more huge question to answer before you begin.
Who will you be reselling for?
When choosing an upstream provider, pay particular attention to the three R’s:
The company you resell for should, above all else, be impeccably reliable.
Consider this scenario:
It’s 2 A.M. on a Wednesday morning. Your phone rings. It’s your most valued client, and his website is down. You quickly check your email, and find several more pleas for help. You dash off a quick email to your upstream provider.
It’s 6 A.M. No answer from your provider.
It’s 2 P.M. You receive a garbled email from your provider. Something about a relay that went down in Kentucky, and it’s completely beyond their control.
It’s 6 P.M. The server is still down. You seriously consider taking your own telephone off the hook. You wonder if you’ll be able to keep half your clients. You realize, with a sick feeling in your gut, that there is nothing you can do. You have placed your credibility in the hands of a company that is not returning your calls.
Hopefully, this scenario drives home the fact that when problems occur, you can do little more than call your provider. It’s crucial that your provider be reliable.
Resalability comes next on the list. Take a good look at the product. Can you sell it? Would you buy it yourself? Are there plenty of features and selling points?
Finally, consider the relationship you have with your provider. Can you call the company and talk to a real person? The same person each time? Do they remember your name? Do they answer your emails promptly?
Remember that your upstream provider is the only link between you and the server. Having a strong working relationship is vital to the success of your business.
Reselling web services can be an extremely profitable solution, but, like any other business, you will do best if you do your homework before jumping in.