I am not a host owner. But I know for fact that webhosting isn't really a kind of business that could generate lots of money and make one become rich.

But from time to time there are still many newcomers rushing into this industry and contest badly even willing to make no profits just to attract new customers. It not only brings no revenue for this hosting business but it will hurt hosting business future prospect in the long run. Big boys like sea-eye host still earning tonnes of big money while other newcomers struggling for low or no profits at all.

Why is that?

Some people enjoy it, You may not make millions, but you can make a career out of it.

Why do people volunteer? There’s no money at all in it….?

Who says you can't get rich. Webhosting is a business where you can make tons of money with time put in, plus effort and support given. Look @ these companies who own their own datacenter, now I hope you don't think the owner of the datacenter is struggling to pay a bill or riding around in a car thats known to break down once a week.

People enjoy it, and soon I will be getting into the business, as far as running my own company.. I have learned lots and its something that I don't want to turn away from unless I have tried it first. Because big fish are getting all the food, doesn't mean the little fish should just lay down and get eaten... Gotta Fight, and survive for yourself.. The bigger the fish, the harder they drown <--- :confused: lol

Actually I don't see connection with voluntary work and commercial work.
I myself sometimes volunteer for some non-profit organizations with the mind to help. But if I were to earn (that's the main objective to open a hosting company isn't it?) I wouldn't be offering free hosting to clients. Even if I offer free hosting it must carry on with profitable minded hoping to generate some ads revenue from it.

But I somewhat agree there are minority of people doing this for interest. Though the number doesn't reflect correctly compared to the number of people jumping into this hosting biz.

I will never just jump into hosting when I know im not receiving anything.. Technology is getting better and better.. I gots to have the money to keep up

Who says you can't make anything from web hosting.. Our servers are *incredibly* profitable with our model... We target only businesses and they pay for our service and support.

With 10 full servers we could be bringing in around $80,000 a month.

After paying salaries for all our techs and all other bills, that would leave us with around $50,000 profit. That's to reinvest or pay the owners salaries.... tell me how that isn't profitable or worthwhile?


Of course.. I don't HAVE 10 full servers... but.... ya get the idea.

Jwise, just a quick question, are you doing this for interest or for living? Please choose only one (so you won't answer both :) ) or which one carries greater weight?

Erm, seems like I've attracted the attentions from some bigger hosts here. :)

Actually I mean those starting hosts who tend to make no profits. There are lots of them aren't they?

Originally posted by kyun
Actually I mean those starting hosts who tend to make no profits. There are lots of them aren't they?

How are you suppose to make it big if you don't even start the company in the first place?! You can't start off big; it's impossible, if even you have the money. But in order to make it big, you obviously have to start.

Actually.. you *can* start off big if you have the money..

You'd be surprized at what money could do...

So your first day you're going to get 1,000+ customers? Doubtfully.

secludo, yes I fully agree to make a solid business it has to be built from the ground up.

But the question playing in my mind is why would so many hosts willing to pull down the markup price just to attract the new customers, this is not a healthy trend for the long term, not for those hosts nor the hosting industry. Why would they do that? Sooner or later they would fail with this sort of business plan. (if there is one for them)

Most of the people opening up who have incredibly low prices and almost no profits are hosts who usually are kids or people doing it in their spare time.

They get a resller or a rackshack server and a hosting website template all for under $150 and then they start posting offers to ofset the cost of the $150... they just some extra cash...


You can spot a real host from a part time host...

Originally posted by Lirath
You can spot a real host from a part time host...

Unfortunately, not many consumers can.

Chad Lomax you make it sound like what those people are doing is so bad, everyone has to start somewhere some of those kids on resellers with low prices could end up huge companies.

Originally posted by Biobob
... some of those kids on resellers with low prices could end up huge companies.

Biobob, you hit the point. That is something highly questionable and one not foreseeable. :)

Experience tells a lot (mostly in this community), from the past we have yet to see anyone who is offering low price share hosting packages could turn to a final big success in their biz venture. (except the dedicated package providers, sometimes I think they are the initiators of all these low-price hosting, but they have financial background and proper business plan to back them up)

While I have no objection to Lirath's comment but I'd try not to relate the age issue for running a successful biz. They have been too much controversial opinions over this topic and there's no need to bring up another no-ending dispute for it.

Or can anybody give some inspiration or share with us some success stories of yours (personal experience) that offering low-price hosting is well working?

Originally posted by kyun
I am not a host owner. But I know for fact that webhosting isn't really a kind of business that could generate lots of money and make one become rich.

But from time to time there are still many newcomers rushing into this industry and contest badly even willing to make no profits just to attract new customers. It not only brings no revenue for this hosting business but it will hurt hosting business future prospect in the long run. Big boys like sea-eye host still earning tonnes of big money while other newcomers struggling for low or no profits at all.

Why is that?

Well.... I make enough profit to have a place to live, nice things, etc. If someone can't generate profits then they're simply in the wrong business.

I make more than both my sister and my mother and they've been working at their jobs for 7 years and I've only been doing this since March (but I also do freelance web development which pays a lot better and I can host my clients from that too ...)

You're not going to make a lot if you're not serious about it, or if you start off with no money... but if you do it like a normal business and have the funding to 'break in' to the business it's highly profitable.

Great to hear such positive comment from you, Darktides. :)

So it proves that you're not one of the webhosting providers who would attract customers simply by giving away low pricing scheme instead you had set up proper biz plan to provide some extra services to customers as your selling point.

Excellent one. I wish there are more hosts like you and can use your case as a model when starting out a biz.

No.. that's the problem.. I don't think you can just come into this with no money in your basement and get somewhere... That's where all the crappy hosts come from.

In order to make money you've got to have money.

You're not going to open a coffee shop offering instant coffee are you? No.. you're going to buy the java making machines and tables and cups and a register.... the only thing I find okay for a webhost when starting up is a reseller package... as it's just cheaper, but it's still doing something.

You'll find people who get some hosting, see how much money they pay for it and think, wow, i could do this too!... buy their reseller package, buy a small website template and start promoting their crap on boards... they didn't spend any money to get started, their service is rather low end because it's usually a one man job with no dedicated time.. meaning, if something better comes up they're not going to say "Oh nope, can't go out tonight, my clients might need me"..

I know I'm probably wrong here.. I'm sure someone has started up with absolutely scratch... and that's great. But I don't think anyone starting up with absolutely nothing is going to be a "big company"... the web host industry has made people believe having quite a few clients that you talk to online from your bedroom is considered a big company...

I don't think it's an age issue.. really... I think a teenager could easily run a profitable business... if they had the proper funding.

I agree with Darktides when he said you need to have money to "break in" to the business...

Actually, kyun, I did originally ($2.99 packages -- it was spare time quick money), but now my cheapest is $8.99 (except a custom plan ... which could be virtually any range), but I had to get real. I don't care if JoeBlow can give you what I do for $8.99 for $2.99, my clients will tell you that our support/customer care is worth every penny.

I think companies who don't bother worrying about cheap people out to make quick cash (like I was) and focus on their original goals will prosper. I still have friends who don't use me and go with those "$30 a year" people... they come back in 1 week with a bunch of complaints and I just laugh in my head.

Once you get serious, and you need additional help (support, admins, sales) and such you can't do it on $2.99. I started small, but now I have a few other people on the roster, and keep moving up the ladder. Luckily for me, I've been programming since I was 13 and I have worked from home for the last 2 years which allows me to put a lot of time into hosting, support, etc. I think that time I get to put in is what makes us profitable.....

Don't get me wrong, I can't buy a new car or anything because almost all my free money goes back into the company to promote, upgrade servers, get better providers, etc.

I understand you, and can totally get where you're coming from because I was there personally; however, in the long run, only those who know the real world requires more than $2.99 * 50 clients + server costs + support (or you'll lack support while you're sleeping etc...) and then to pay your bills isn't going to work.

One day I will own my own DataCenter! Well, I can dream :D :D

I tend to agree with the comments already made, ... "You need money behind you to start a successful business." .... you also need several other things as well.

What I can't understand about the whole computer world is the incredibly low margins people are willing to operate on. I have been involved with building and selling computer hardware for the last 13 years and we as resellers are expected to operate on around 7 to 10% mark up. i.e. If I sell a computer for around $1000.00 I make a gross profit of around $100. If I was in the white good .. Fridges, washing machines etc I would be getting around 60 to 70% mark up. I believe in other areas its 100% or even higher.

Now you would think that with such incredibly low profits people wouldn't bother opening computer shops ..wrong .in our town we have more computer shops than anything else. I live in a small town yet we have more than 50 computer resellers. Every few months one closes down, but people still keep opening new ones. :confused:

Now Kyun I know you asked about hosting however I can see the similarity ..people starting out with very little money or backing, opening up and selling there product/service for cost or even below cost and making it difficult for the whole industry. I can also see where the big business are partly to blame. In the case of webhosts you have large companies offering reseller packages that probably look great to the small person wanting to start out but actually are designed to make the large company rich not the reseller.

In the case of computer hardware you have the large importers/wholesalers telling the resellers what the RRP should be, there the ones that say it should only be around 10% markup. It is also these companies that sell to the end user as wholesale prices.

It's a crazy industry and one has to be even crazier to be in it especially for 13 years. :crap:

It's interesting to get various types of responds from people coming from different background here. I really appreciate all of your comments and definitely will jot down all these valuable advice into my diary.

It's even fascinating to see how all these great opinions differ from each other yet to have some common ground overlapping one another.

1. It needs to have some solid financial background if intend to grow big. (though bit opposed to Robert Kiyosaki's idea :) )
2. It has to diversify (or broaden) in terms of services provided so to be more competitive in the market.
3. No matter how low the margins are, there are still inevitably new people coming into this field to compete with each other.

So summing all three it reads to me like a conclusion:
- To seriously get into one business to compete with others or even overcome others, it needs proper organizing & financial background, learn more skills & provide more approachable services, giving some good effort & do lots of thinking on how to become better than others.

All in all, it needs a good planning. :)

If people could just learn to wait to become rich. You could make lots of money in any type of business, including monkey business if you are just patient.

My name is Elmer J Fudd....

I own a mansion and a yacht....:D

Originally posted by JWise
Look @ these companies who own their own datacenter, now I hope you don't think the owner of the datacenter is struggling to pay a bill or riding around in a car thats known to break down once a week.

Naaa, I'd never be so naive as to think that. :D :D

BTW, I know a guy in the Chicago area who's got a little data center he wants to sell. Take over the payments of $25K a month and its yours. Oh, never mind that his best month only earned $7K. It's all about perception, right?

Some "small" hosting providers bring in 2-3 thousand dollars a month, now that may not be enough to live on, but that's enough to pay for the servers themselves and enough for one to still get by.

I believe most small hosting firm owners have 2 jobs. The hosting biz and a well enough paying one.... or I hope. lol.

If I believe the idea that I need to have money to make money then how much money is needed to start and be successful? 100? 1000? 10,000?

It seems to me that a better measure of your success is going to be depend upon your desire and determination to succeed. If you want it bad enough then you will find the ways to make it successful.

I have frequented this board for probably 6 months now and have been soaking in as much as possible. I have seen many people suggest starting out with a reseller account, then move to a dedicated server, then several dedicated servers, and so on as a method to break into this business. It would seem this could be done on a rather low budget initially.

I am working on starting my own web hosting business as well. I am currently working on my business plan. I don't plan on spending more than $1500 in startup costs. I believe that with dedication and hard work my business will grow and continue to grow and be successful.

Back to my original question... how much is needed to start and be successful in this business? Is my $1500 enough in everyone's opinion? Thanks in advance.

Mike

Who says you can't make good money in the hosting business?

Don't know about you ...but there is money to be made. For example, i started as a reseller...made 50% profit on each plan sold.

Now 2 years later ..i have my own servers......my yearly revenue is in the high 5 digits (no i didn't make a million..oh the dreams), but i now have more financial freedom.

Freedom...that's what it was for me and i want nothing else.

Oh..well maybe to make a six figure income ...;) :cartman:

Yup it's not hard to make alot of money in the web hosting game, you need to know what your doing though.

Without experience and knowledge you will get nowhere.

As said before, preception. One thing I noticed is that almost every webhost here will announce that they are starting up, almost none anounce that they are closing, we just, never hear from them again, unless they decide to give it another go which has happend once or twice. The other thing is, everyone is doing great, best months all around. At least that is what they say. Not many people will say, I cant get any clients(I mean why admit you suck?) I dont see any websites that say they are a one man operation, because they dont want to sound small. They promise 24/7 daily backup(I want to see a ratio of people who say they back up to people who have acually had their host preform a backup when needed), monitoring, etc. Again because they dont want to seem small. I think(this is my opinion) that many hosts lie. They run multiple services, talk big, say this and that, explain their great buisness plan, but in reality they are in trouble. And that is why so many people jump on. Because there are 50 times more "succsesfull(sp)" hosts then ones that admit they failed and close shop. Plus I know after running(and finding out after 2 years I couldnt handle the stress and didnt want to deal with the money any more) that even though this is the last thing I would EVER want to do again, hearing people talk about how they just got their XX client, and are getting XX more servers along with custom software that will improve preformance, a part of me says hey, that sounds like fun. I know especially when new versions of Plesk comes out, I say I would love to try that. It seems like fun, it really does. But I know I wont, I still remember the work and all that. Its not worth it. I wasted two years of my life, even if I came out with 50k in the bank, it would still have been a waste. I wasted 2 years of running and over a year on planning for something that sounded like fun. And I think thats why people get into it. Distorted perception. "But thats just my opinion and I could be wrong" - DM

Nope it's not hard to earn money in hosting if you know how to market your company properly. If you have no marketing know how then you may as well give up before you even start. (And no marketing doesn't involve vast amounts of money).
A business venture that has several investors that have put thousands of dollars in your hands does not give it any more of a chance to succeed than someone with no investment - the only difference is the speed at which things are done. A small startup company with business and marketing experience is better off than a large firm with millions invested without business knowledge. The difference is the experieced company know's what works and what doesn't, thus skipping all of the crap in between, the unexperienced company goes through this crap and if they are lucky manages to stay alive.

ok, this is an interesting thread.

investing an adequate amount of money in a startup venture does make it much easier to start off.

but don't confuse starting a business with running a business successfully. they are two different things altogether.

the most important things you need in business is not money...

they are, in this order of importance:

common sense (comes first)
experience/knowhow
communication skills
hard work
money (comes fifth) !!!

why common sense is first... simple... because if you do not have common sense, then you most probably do not have or will find it very difficult to attain the rest.

Great points mjack.

Just because you have lots of money at your disposal...does not mean you will succeed. Take boo.com for example...blowing over 500 million and only selling around 500 products...lol

Basically, you have to have a natural nack for business. My major was business .....but i also have that extra nack...that most ppl lack ....and used it to my advantage.

That's how you will make it.... i knew my marketing...what my customers wanted...and needed (both different things...important to understand that) and applied that knowledge.

ok enough rambling :eek2:

davidb, you put that so much better than it could have ever been put.

Amen...

Originally posted by kyun
I am not a host owner. But I know for fact that webhosting isn't really a kind of business that could generate lots of money and make one become rich.

Someone said that there was no market whatsoever for a personal computer and that maybe a dozen corporations around the world would ever use them.

It's also been said that everything that can be invented already has. It's also been said that AOL sucks, yet somehow they are one of the largest, if not the largest, dial up ISP in the US.

Originally posted by kyun
Actually I mean those starting hosts who tend to make no profits. There are lots of them aren't they?

You have to start small. You can't be a Fortune 500 the second you incorporate. It takes, time, effort, capital, and other sacrifices.

Also, what TheDoctor and daveb said are right on.

Secondly, read a book about starting a business. They will tell you when planning, be sure to have 6 to 12 month's worth of costs at hand before you even start, not including start up costs. Than add 20% because you can't forsee every expense you will have.

The saying used to be the first year, a business will lose money, the second it will break even, and the third it will start profiting. It takes time to earn back the money you spent on starting up, not to mention time to finally start breaking even on operating costs. And than once laons and stuff are paid back, than the business can truley start to grow and profit.

No, I could of done a tad better, I forgot about the positive note(of course now I think that I am just exciting people about starting one). Back when I did free hosting, I ws talking with someone and they were starting up. Now their buissness plan(the small portion of it I heard) was just wrong. It wouldnt work(this was hosting based on advertising after advertising took a huge hit.) Anyrate we talked a little bit, he asked me a question or two, but I forgot what it was about. At any rate I could of swarn he would fail. That buisness model lasted I dont think even a day, but it did change, and now he is pretty big(for real big, not lies). Anyways, it is possible to become big from knowing nothing, but its still not likely, he was one of those 1/1000 people, but none the less he made it.

It's like anything, if you work your tail off, put your best into it (and have the skills so that your best is good enough) you can make a living. But I don't reckon there's any Ferraris in my future.

Originally posted by Lirath


In order to make money you've got to have money.


That is not true. Back in the days you were able to make big money just from website getting 2000 unqiues/day and simply a banner at the top of the site=]

But those were the good old days=]

Originally posted by sHosts


That is not true. Back in the days you were able to make big money just from website getting 2000 unqiues/day and simply a banner at the top of the site=]

But those were the good old days=]

thats still possible.. :)

lol lame question, of course theres plenty of money to be made if you do it right. sure you dont buy a server and find it comes pre packed with customers and sure it costs lots of money to start up properly but if you have 10k and the time then theres plenty of money to be made.

Originally posted by richy
sure it costs lots of money to start up properly but if you have 10k and the time then theres plenty of money to be made.

You can do pretty well starting with about 6k :)

I made a few analogies of similar IT biz here.

1. Software biz - I never work for any software company but some friends had (they work for local software vendors). According to them software is one of the biz that makes highest margin profits and could easily start up with very low operating costs. Some these companies willing to give 80% away to all the sales made as commissions. 20% enough to cover everything and even make the company growing bigger everyday. That says it all.
2. Networking - Seems like a server admin's job but not really. It's about setting up all the equipments for LAN (office, building, datacenter, whatever). An experienced network technician (most I know around me are 1-man operation company) could easily earn 5 digit every month. I watch them drive their luxury sport car to service a small office's server.
3. Web designing - If some of you happen to be in this business for some time you'll know people like Robin Williams (not the actor), Jeff Zeldman, Lynda Weinman these big names really make sky figure income every month. Don't believe? Get a book written by Kelly&Emily entitled "web redesign workflow that works" and it's faily easy to spot something like "... if you charge a small project for less than 10k ...". Unless they're bombasting but I believe they have no reasons to do so.

There are still many more other biz like web programmings, databasing analyser, network security, even animated cartoonists or so on and so on, to name the few. Simply browse over the elance to get quotes from some these people and again go to ebay to checkout the latest bargains for hosting solutions. You'll easily know where my worry comes.

Compared to other IT biz in this "soft" fields, today's webhosting biz stands like an odd bird, low profits, 24 hours dedication to work, what else? Yes the non-stop price wars to woo new customers especialy by the new hosters.

I mean, if they are so many more profitable business out there besides the hosting biz, why do people still jump on and trouble themselves?

Yes while I agree some said we must start it somewhere small, but definitely not like this, no proper market planning for everything, even the basic element - price , it's always not correctly labeled. Not to mention some even think it's extremely easy to handle a hosting biz and the only thing you need to know on earth is a piece of control panel and you're set to go!

Compared to 2, 3 years ago now the hosting price has dropped deep into the down valley. The hosting's best brother - domain name, in the good old days people don't have much options but to go for $35 domain and now almost anybody can easily get one $8 domain and still it's after a bad contest among each other.

Is this because just about anybody can buy a $20 reseller package and start up as "we are a team of professional hosting provider"?

This is a trend starting to worry us ...

Originally posted by kyun
Jwise, just a quick question, are you doing this for interest or for living? Please choose only one (so you won't answer both :) ) or which one carries greater weight?


Sorry, I can't answer for only one.

The answer is both...

See, I love the internet and the webhosting business plus I know its a good way to earn money from home ( which everyone actually wants )

If you think companies don't make money from webhosting, please do some research on google and on these forums. Im sure you will find it very resourceful.

The business is fun, and a great way to earn income.. But it takes time and paitence :)

Kyun,

People still jump on and trouble themselves because majority of the time they do not know what they are in for. Most companies go down quick because of the few knowledge they know, and the way they run their business.. IE.. Offering more than what they can afford.

Compared to other IT biz in this "soft" fields, today's webhosting biz stands like an odd bird, low profits, 24 hours dedication to work, what else? Yes the non-stop price wars to woo new customers especialy by the new hosters.


Kyun, The same is true for ISP's and Computer hardware. It is exactly the same

There is two other points that nobody has touched on.
1. Personality. It would seem that generally speaking technically minded people .. network lan etc type have little or no "people skills" and shouldn't be put in situations where they have to deal with the public

2. The abilty to be able to convert technical jargon&nbsp;into plain everyday language that people can actually understand.
Seems to me to more technical it is the less the tech actually know about it so they resort to hiding this fact by rambling of a lot of meaningless technical mumbo jumbo
&nbsp;

Originally posted by kyun

I mean, if they are so many more profitable business out there besides the hosting biz, why do people still jump on and trouble themselves?


I don't find this business as troubling myself :) It is a source of income. And it is something I know and have been doing for years. So why would I jump into a secure and known profitable business that I wouldn't know about? The internet and customer support is what I know. It is what I have known for over 5 years. It only made sense.

Just like any business it is a tremendous amount of work. I agree, if people are getting into this for a quick buck or think it is easy they are in for a very rude awakening.

Sure, maybe I could go work for a company or ISP and do tech support or handle some hardware and make more than I do now, but why? I guess for me and why I started was more of personal reasons. I have never been one to enjoy having a boss telling me what to do, or limiting what I can do. That just isn't fufilling for me, so I went my own seperate way and am where I am now.

Infact, I get great satisfaction from helping people and providing services to them. Infact, earlier today I received a message from a customer who praised me for helping with their trouble ticket. Called me amazing, and said they will provide me with business for years to come. Well, I'm not sure why others are in the business, but for me, hearing comments like that make the headaches and high levels of stress all worthwhile.

After having many bad hosts who don't care, don't help customers... but knowing that people across the country and world thank me personally for being there for them, that just makes everything I do pay off. If I only made 2,000 a month with a few dedicated clients who loved the services and support they received and thanked me for it that is worth more to me than driving a lexus around on my 6-figure income with a bunch of no-name clients who I didn't give a crap about.

But I agree with a lot of opinions here, there are way too many new hosts who jump in thinking a cheap reselling plan can make them some easy money. But, without researching the industry and market they are doomed to fail, shut down, cause more angry customers.. its just the way it is. But then again, these angry customers are the ones who come to honest hosts who don't offer the world for nothing realizing you usually get what you pay for.

Anyway, I'm rambling, but that is my 2, well maybe 8 cents :)

Face it, if I won the lottery for $7,000,000 I would get about 1.75million in cold cash after taxes and instant payment charges. Well, first off I would bank the $750,000, so I wouldnt have to worry abou living for the next 7 years at least (because I would by alot of things in the mean while)...

So I have a million bucks. I think I would be much better off starting my webhosting company (with my own datacenter <maybe, if I could get a loan, because that could cost a pretty penny>) and hire PixelBrick to make me a design...


Would I be better off than Joe Teenager? Most likely. Would I succeed? Maybe, maybe not...It all depends on sale skills, and your market.

Originally posted by kyun
1. Software biz - I never work for any software company but some friends had (they work for local software vendors)...
Yes and no, some of the larger game development projects take years to develop, in some cases they even have to develop their own software engines to run the software :). But targeted software development (E.G. making software specifically for a "Pizza Delivary Ordering" company, would see massive profit margins.

2. Networking - Seems like a server admin's job but not really. It's about setting up all the equipments for LAN (office, building, datacenter, whatever)...
I'm currently majoring in CS with a networking emphasis, so I certainly hope you're right :).

3. Web designing - If some of you happen to be in this business for some time you'll know people like Robin Williams (not the actor), Jeff Zeldman...
Very true, 2advanced and PixelBrick are examples of that theory. Sure you can get a fair template for $200.00, but if you want truely seamless design, where it's actually well tested and approached from a consumers point of few, not to mention support.[/B]

Any business can make money, as long as you have something that either consumers want or need. 99.9% of any business is support and marketing and a solid business plan. Without any of these three things, your business won't make it, plain and simple. Furthermore, those $.99/month hosts can only last so long, especially when Cogent dies (and they will... or raise prices). And besides that, I'd still rather have 2 customers paying $50.00/month then 10 paying $10.00/month, and you'll find that in most cases, those 2 high paying clients will need less support then the other 10 combined.

Originally posted by WindsOfNihility
Would I be better off than Joe Teenager? Most likely.
If Joe Teenager isn't stupid enough to buy a datacenter with no clients then I'd bet my money on him.

Originally posted by WindsOfNihility
Would I succeed? Maybe, maybe not...It all depends on sale skills, and your market.
You're 1/3 the way there, if you sell 1,000,000 accounts and don't have the support to back it up, then you'll lose them all. If you don't have the business plan to plan for growth, you may grow too fast, or too slow and be in trouble. Sales skills are a very VERY small portion of this business. The best way to figure things, is the best sales tool is great customer support.

Web hosting is only a cut-throat, bottom of the barrel, work for no money, slim margin business if you let it be. You say software development is huge mark-up, but I see tons of programmers and so called programming companies sell their products and time for peanuts. And then I see some sofware companies that charge more than most businesses make in a year.

The same can be said of web hosting. In this microcosm of the hosting industry called WHT, you see the low priced, sell it for a dollar, hosts much more prominently than what is the average, as this is where the small hosts hang out. All one has to do is look at high priced hosts such as Rackspace, etc... and see that not all companies sell for peanuts.

Our lowest account is $20/month, and it comes with less than 100 MB of disk space, less than 4 GB of xfers per month, etc... Our average ecommerce account is around $70/month, and even that has less than 300 MB of disk space. We have shared accounts as high as $300/month. We have a good, healthy mark-up, and continue to signup clients. Maybe not 5 per day, but it works for our business model.

What some sell for $100/month, others sell for $1.00 per month. It all comes down to your target audience, and your support and perceived "worth" to the client. If you refuse to swing at the low pitches, and base your pricing on what works for you and your clients, then you will see growth, and not have to work 24/7 for nothing. It take hard work, the right partnerships, and a dedication to the business plan you laid out, no matter how tight the times are, no matter how many people initially complain about your high or low prices, etc...

If you compete on price, then your service is only worth what you charge (and that you continue to build up clients continuously). For some, this is their business model, and it works for them. For others, higher level support and services with a lower # of clients is the way to go. Hosting is no different than any other technology service in the end. It's just that the barriers to entry are much lower than setting up a network (you must produce results in that arena) or developing software that works. Put up a website, offer cpanel, and you're a hosting company! What "geek" or unemployed technician wouldn't want to try and run a hosting company? (Yes, that's an attempt at sarcasm)

People ask me what I do for a living? I respond that I run a traditional brick-and-mortar business on the Internet, with a company name that ends in dot com. Because in the end, business is business, or at least it should be for any successful hosting company. It's just a matter of making rolexes or timexes, burgers or steak, ford fiestas or jaguars, high service oriented hosting or low-cost budget hosting....and the list goes on.

:)

- John C.

Originally posted by JohnCrowley
Web hosting is only a cut-throat, bottom of the barrel, work for no money, slim margin business if you let it be. You say software development is huge mark-up, but I see tons of programmers and so called programming companies sell their products and time for peanuts. And then I see some sofware companies that charge more than most businesses make in a year.

The same can be said of web hosting. In this microcosm of the hosting industry called WHT, you see the low priced, sell it for a dollar, hosts much more prominently than what is the average, as this is where the small hosts hang out. All one has to do is look at high priced hosts such as Rackspace, etc... and see that not all companies sell for peanuts.

Our lowest account is $20/month, and it comes with less than 100 MB of disk space, less than 4 GB of xfers per month, etc... Our average ecommerce account is around $70/month, and even that has less than 300 MB of disk space. We have shared accounts as high as $300/month. We have a good, healthy mark-up, and continue to signup clients. Maybe not 5 per day, but it works for our business model.

What some sell for $100/month, others sell for $1.00 per month. It all comes down to your target audience, and your support and perceived "worth" to the client. If you refuse to swing at the low pitches, and base your pricing on what works for you and your clients, then you will see growth, and not have to work 24/7 for nothing. It take hard work, the right partnerships, and a dedication to the business plan you laid out, no matter how tight the times are, no matter how many people initially complain about your high or low prices, etc...

If you compete on price, then your service is only worth what you charge (and that you continue to build up clients continuously). For some, this is their business model, and it works for them. For others, higher level support and services with a lower # of clients is the way to go. Hosting is no different than any other technology service in the end. It's just that the barriers to entry are much lower than setting up a network (you must produce results in that arena) or developing software that works. Put up a website, offer cpanel, and you're a hosting company! What "geek" or unemployed technician wouldn't want to try and run a hosting company? (Yes, that's an attempt at sarcasm)

People ask me what I do for a living? I respond that I run a traditional brick-and-mortar business on the Internet, with a company name that ends in dot com. Because in the end, business is business, or at least it should be for any successful hosting company. It's just a matter of making rolexes or timexes, burgers or steak, ford fiestas or jaguars, high service oriented hosting or low-cost budget hosting....and the list goes on.

:)

- John C.

Incredible post John, one of the best i have seen in a while!

Thanks. I put some time into actually thinking out a reply for once. :)

- John C.

John does have some excellent points in his post. If you run your business like a dotcom, you're doomed. You treat it like a brick and mortar establishment and then you've got a real foundation.

The problem is that many host try to start out offering everything and expect people just to flock to them because they have .com after their name. That just simply isn't going to happen. I started out in 1999 as a reseller, shortly moved to Unix boxes after that in parnership with another. Later when to NT, but still with a partner.

That built my foundation. All along the time I treated my online customers like they were standing right in front of me at a counter.

Within the last year, we moved to having our own servers that we manage ourselves. We no longer are in a partnership with anyone else and from this point forward we control our own future. We started out with nothing and now we have something to show for it because of hard work. We don't try to compete on price. We offer plans from $10 a month to $80. We have yet to get a sale off the WHT forums, but that's not the main reason why I am here personally. Soaking up some of the vast knokwledge here has helped us *locally*. We're basically picking up the good of the forums without going through the trash of the $2 hosts offer 50 gigs of bandwidth. They'll be gone soon enough and there will be another host just like them to take their place. Eventually, the customers will get screwed over by several of them and take a different look at the hosts that offer ridiculous prices and then start actually looking for hosts that offer *service*.

When they start looking for that, then they come to us.

We push ourselves in our local market and don't try to be "everything to everyone". The money is there to be made, but in the meantime until I'm making six figures, I will continue working on the side doing various web design projects and computer servicing and repair and building.

So, yes it's possible to start out of your home and build something good. However you better be prepared to spend countless hours doing it and ALWAYS back up what you say you're going to do.

Finally, if you don't love what you're doing, you won't be around long either. It's very easy to get burned out in this industry.

-Chris
The 29 year old teenager that does occassionally not go into the office and works out of his home and plays on his PS2 during slow periods.

its fun

:confused: :confused: :confused: :eek: :eek:

From my dictionary:


Business: Commercial dealings; patronage

Commerical: Of or relating to commerce

Commerce: The buying and selling of goods, especially on a large scale, as between cities or nations

Now based on these a business is a commerical thing in which commerce is used in which money is generated from.

Now lets go to what you said:

"Webhosting isn't a biz can earn you tonnes of money, why still lots of ppl"

Alright, you said its a business so therefore it generates money. ALL BUSINESSES GENERATE MONEY OR THEY WOULD BE CALLED AN ORGANIZATION. So that is why people get into the biz.........On another note, there is plenty of money in the business. You know why? Because no host is perfect therefore there is competition and competition means good business.

And if anyone says that there are perfect hosts then they are completely wrong, because no host has the perfect price, service, quality, quanity ect. ect. ect.

Its late....Im going to bed.

Great thread! Thanks to everyone for sharing.

It would be great if more folks would share what strategies and offerings they feel will result in host making OK (or even great) money in the future besides space and bandwidth for a low price.
The discussions on what's mentioned might prove fruitful to all.

Also, what about folks who sell stuff TO hosting companies? How are they doing? Anybody from bobcares.com to demodemo.com want to comment on how catering to the hosting inductry is treating them?

Sometimes I wonder if writing software (non-free) for host might be a better way to go than offering hosting itself.

Would appreciate your thoughts and sharing.

Thanks and take care,


Louis

Erm, actually I didn't say hosting is a business which can't earn one money, maybe not too much (in common case). However I do respect all the opinions here.
I apologize if I had offended whoever in this thread.

Hi kyun,

Heck, I'm glad you started the thread. Very interesting replies. We all need to think about the financial and profitability aspects of hosting. You know, the requirements of hosting .vs the rewards. Especially those of us considering hosting .vs something else to spend time mastering so as to start a business to earn one's living.

I hope many more folks will share their thoughts on this. Please do, everyone!


Take care and thanks for starting a thought provoking thread.

Louis