How much do hosting companys money $ do they make inaa month.

How many users does the average hosting company host?

between - $1000 to + 1,000,000 per month

average in between there somewhere.

I know which end I am towards;)

1000000000000000000000000000000000000000000000?

d2, all depends on:
- amount of clients
- type of hosting (shared, reseller, dedicated)
- Do you offer true 24/7 support
- Do you do this fulltime
- etc

I make about $10,000/month unless you're from the IRS. Then I am still losing money. Actually this is a personal question to which you probably won't get any usefull information.

<edited> If you are my ex-wifes attorney see the IRS answer.

Originally posted by dapon
I make about $10,000/month unless you're from the IRS. Then I am still losing money. Actually this is a personal question to which you probably won't get any usefull information.

<edited> If you are my ex-wifes attorney see the IRS answer.

That's the funniest thing I've ever read!
I agree, this is somewhat of a personal question. It would be like going up to a courthouse and randomly asking lawyers how much they make....

30% make -$5000 to $0 per month
40% make $0 to $1,000 per month
15% make $1,000 to $5,000 per month
8% make $5,000 to $10,000 per month
4% make $10,000 to $50,000 per month
2% make $50,000 to $100,000 per month
1% make $100,000 to $???,???,??? per month

This is one of those questions that never gets answered (truthfully) around here. :eek2:

Yeah I am in the 15% category :) Exact figures are a personal question, but I've narrowed it down for you ;)

I personally think this is a darn good question, as alot of us are just starting out, and have poured our whole existence into making it work; I for one would love to see a general polling using the scale above to see if I am hoping for too much?

Shannon
<<Mod Note>>Signatures are to be setup under your profile.

Originally posted by CarbonFusion
I personally think this is a darn good question, as alot of us are just starting out, and have poured our whole existence into making it work; I for one would love to see a general polling using the scale above to see if I am hoping for too much?

Shannon
<<Mod Note>>Signatures are to be setup under your profile.

Murphey's Law: You are hoping for too much.

God's Law: Ask and you shall receive.

:cool:

Also, do a search there was a poll like that before, but it might have been real long ago.

Work your ass off...get little sleep...have no personal life...purchase lots of meds for stress...and you MIGHT just make as much as I do. :P

--Tina

Originally posted by AffordableHost
Work your ass off...get little sleep...have no personal life...purchase lots of meds for stress...and you MIGHT just make as much as I do. :P

--Tina

Sounds like the story of my life..minus the meds...oh and minus the making as much as you do:(

I know you have worked fot it Tina, cause I only hear good things about Affordable;)

Originally posted by kwes43
Sounds like the story of my life..minus the meds...oh and minus the making as much as you do:(

I know you have worked fot it Tina, cause I only hear good things about Affordable;)

Heh...thanks! I was joking though. Although I do alright...I'm still not yet sipping pina coladas, on the beach, in the Bahamas yet! :D

--Tina

Ok, I am just gonna lay it on the line here, and hope the forum gods don't flame me good for it.... I will only talk about myself and let's see if anyone says I can do it.

I want to make 38000/year or more just like my day job. I am just starting my webhosting business and already have the family in, just like you guys taught me :-)
Now my prices are standard, and well averaged against everything I have seen out there... If I continue to bust ass, as some of us eloquently put it, can I make it to quit my day job by the end of the year? At least?
I really want to spend more time with my family, like some of you have noted, but I am willing to sacrifice the next 8 months of my life to get where I want to be with my family.. Any thoughts?

PS. Of course, I haven't factored in domain transfers, new webdev clients, affiliate advertising, or any of the other stuff I want to offer... Just trying to get a ballpark figure of whether I can use this to support my family :-)

Also remember there is a difference between gross and net profits. Lets say you pull in on average 30 clients a month with a $10 plan. In a year you should have 360 clients, and if they are all monthly you can have 3600/month. However, you have to add in the cost of 'doing business' (i.e. server space, site upgrades, etc...) this will lower the amount you make per month.

You also have to spend a lot on marketing unless you just plan on going around yourself trying to sell the local businesses on your service. I would figure your company would have to make twice as much a month to comfortablely 'quit your day job', and have it do it for 6 months. When you reach twice as much your first month don't just submit your letter of resignation. You need to know if your company can sustain that kind of cash flow.

It is possible, and I myself am working towards the same goal. But making money is all about generating new clients, and that is only done with marketing. Looks to spend a lot of your monthly costs on advertising alone!

Good luck!

You might if you've got the right budget for it, but honestly for the first couple of years at least, you should pour every dollar you get right back into the business.

Originally posted by CarbonFusion
Ok, I am just gonna lay it on the line here, and hope the forum gods don't flame me good for it.... I will only talk about myself and let's see if anyone says I can do it.

I want to make 38000/year or more just like my day job. I am just starting my webhosting business and already have the family in, just like you guys taught me :-)
<SNIP>

I won't flame you, but I'm going to tell you the odds are WAY against you. Here's some basic "industry math" I'll use.
The average hosting company is probably looking at a 30% or less profit margin. So if you earned 30% profit, and payed yourself the entire profit (which obviously isn't the worlds best idea) your looking at $120,000 in revenue, now assuming your average sale price is $15.00 (which is a guess since I don't know your pricing) your looking at 8000 total customers.
Now growth for growth rates. To get those 8000 customers, let's assume you get 100 in the first month (very unlikely) and you have an equal % increase in sales each additional month. That would mean, each month you would have to have a 100% increase in sales (100 first month, 200, 400, 800, 1600 etc).
Over 7 1/2 months that would give you your 8000 clients.

The odds of that happening? Not bad if you have a very very very large advertising budget. Is that going to happen by listing yourself in hosting directories? Nope.

Thank you, thank you, thank you comphosting... Someone finally saying something that made sense to me, heh. I appreciate everyone's comments so far, and this is the kind of crux financial talk I was looking for, not a cheesy way of finding out how much people here make, just want to have a better, more 'clean', less naive way of looking at my business... Got the 30 page business plan with sales forecast numbers and vision and all that. Got the site, got the consumer base, learning the marketing and trying hard to get started on it, and trying my damnedest to keep a positive perspective. I can do this! I can do this!

Partly trying to convince the wife too that owning a business is not a waste of time. Or that ME owning a business is not a waste of time, heh. Thanks for all the advice, and please keep it coming. I would love to hear more and more from the veterans that are out there that remember starting up.

Search this forum for:
"advertising"
"marketing"
"expenses"
"incorporation"
"billing"
if you haven't already.

I did a search of this forum on "expenses" and these two seemed to offer the most information. They will give you an idea of what may be missing from your business plan.

first thread (http://www.webhostingtalk.com/showthread.php?s=&threadid=128350&highlight=expenses)

second thread (http://www.webhostingtalk.com/showthread.php?s=&threadid=97257&highlight=expenses)

Key points a lot of people seem to agree on:

Work your local market first. You have mentioned that you have talked to friends and family. That’s great. Tell everybody you know that you are in business. It's surprising how well this works.

Working locally can also mean:

- You can evaluate the client’s needs and may lead to niche opportunities you wouldn't otherwise know you have.
- Reduce the number of support calls you get at 3 am.
- Allow you to more comfortably accept checks (no CC fees).

Advertise first in free (or cheap) local publications first.

Offering a web design is a great way to increase your income, and it gives you an opportunity to sell you hosting in a non-competitive environment (more $ per customer).

Try and find a way to keep your day job and still provide support. You need to grow slowly enough to maintain good support so that your business can grow by word of mouth.

Be careful though. You will probably learn so much, your job performance may get better, you might get promoted. Then you will have to earn even more before you can leave!
:)

Originally posted by CarbonFusion
Ok, I am just gonna lay it on the line here, and hope the forum gods don't flame me good for it.... I will only talk about myself and let's see if anyone says I can do it.

I want to make 38000/year or more just like my day job. I am just starting my webhosting business and already have the family in, just like you guys taught me :-)

It's possible, I started Oct of 2001 and I had more than you listed in taxable income last year (2002) and I only have the hosting business (no side work) so yes it's possible.

But it's gonna depend a lot on luck, circumstances, and how hard you work for it than it will whether or not I did it.

(edit: put the wrong year in haha it was 2001 not 2000 as I put at first)

Originally posted by kwes43
30% make -$5000 to $0 per month
40% make $0 to $1,000 per month
15% make $1,000 to $5,000 per month
8% make $5,000 to $10,000 per month
4% make $10,000 to $50,000 per month
2% make $50,000 to $100,000 per month
1% make $100,000 to $???,???,??? per month
We're in the 4% bracket. Been operational since Dec 2001. Nett growth is nice and steady at 10% per month. Pre-tax profit is 42%.

My advice is to stick to your guns, work hard and be very patient. Think 2 to 5 years etc. Hosting is far from a get rich quick business. It can provide you with a comfortable living.

I've never been focussed on growth. Just content to manage what we have and do the very best for our clients. New growth is then organic and nice and slow. :)

Originally posted by Aussie Bob
We're in the 4% bracket. Been operational since Dec 2001. Nett growth is nice and steady at 10% per month. Pre-tax profit is 42%.

My advice is to stick to your guns, work hard and be very patient. Think 2 to 5 years etc. Hosting is far from a get rich quick business. It can provide you with a comfortable living.

I've never been focussed on growth. Just content to manage what we have and do the very best for our clients. New growth is then organic and nice and slow. :)

We're also in the 4% mark though admittedly towards the bottom of it :D

Pre-tax would be roughly 40% as well, we concentrated on growth last year and now it's a concentration on managing what we have.

We're in the middle of the 4%. Which brings up a question...where did these stats come from? Three posters, in a row, at 4% seems a bit odd.

By the way, it seems as if the right way to go is SLOW AND STEADY. We've been at it since 1997...although not actively pushing hosting until 1999. I like slow and steady growth, its comforting. Although, everytime there is a slowdown of sales (for whatever reason) I think "Okay, this is the end of a good thing!". haha.

Those %'s were pulled out of thin air. There's no way I can think of that the poster would know the percentage and income of hosts, especially in a targeted market such as WHT. Honestly I would guess closer to 75%+ of hosts on WHT make in the -$5000 to $0 per month range ;).

Man I feel bad for being in the 15% range :( Well I hope to one day acheive the 4% block. Congrats to all of you who are there, it was probably a long and hard road!

Originally posted by Dixiesys
It's possible, I started Oct of 2001 and I had more than you listed in taxable income last year (2002) and I only have the hosting business (no side work) so yes it's possible.

But it's gonna depend a lot on luck, circumstances, and how hard you work for it than it will whether or not I did it.

(edit: put the wrong year in haha it was 2001 not 2000 as I put at first)

The example I used is more of "today's standards". I remember my company in 2001 had a lot higher sales per month then new companies do today. I think it has a lot to do with the end-user getting smarter and going with the companies that have been in business longer, in addition to how saturated the market is. Now your company is old enough (considering the age of hosting as a whole) that new clients are probaby refered by others.

Man I feel bad for being in the 15% range Well I hope to one day acheive the 4% block. Congrats to all of you who are there, it was probably a long and hard road!

Dont feel bad...work hard, have patience and you would be there very soon...










But if you do what ipowerweb type of companies do in terms of advertising and you would be there tomorrow. :D

If I had the kind of advertising budget ipowerweb has I could do it ;) But I don't so I will just go slow and be patient.

if you answer the ads on web hosting request you will be lucky to break even i've been doing it only a short time and finaaly relized it might take a year or two to get a steady income and all the bugs worked out. as far as income monly I'm at $0.00 seeing what comes in goes out for add features.

Originally posted by ffa
If I had the kind of advertising budget ipowerweb has I could do it ;) But I don't so I will just go slow and be patient.

I'd hate to have the debt load Ipowerweb is pushing.

I'd hate to have to know that i need to grow by 20k customers or else i can't pay for the last 20 customers i need to wait 1 entire year before i make a profit on.

Ipowerweb is a gamble, that appears to be working but i sure as heck wouldn't be doing that myself!!

Originally posted by gman48088
if you answer the ads on web hosting request you will be lucky to break even i've been doing it only a short time and finaaly relized it might take a year or two to get a steady income and all the bugs worked out. as far as income monly I'm at $0.00 seeing what comes in goes out for add features.

Honestly i can't imagine anyone making a profit answering ads in the webhosting request forums here! :)

Originally posted by AffordableHost
We're in the middle of the 4%. Which brings up a question...where did these stats come from? Three posters, in a row, at 4% seems a bit odd. . . .
Guess there's no way to know for sure if those stats could be accurate. They could be, IMO.

Originally posted by ffa
If I had the kind of advertising budget ipowerweb has I could do it ;) But I don't so I will just go slow and be patient.


We have only JUST started actually paying for advertising this year...and only because we wanted to break into the colo/dedicated server market. For shared hosting, 99% of our new clients come from word of mouth. As I understand it, that is VERY typical.

--Tina

We have had our share of "word of mouth" and clients signing up for multiple packages. However, in order to "ride" it I feel you need a somewhat decent client base (ours is currently between 100 and 150). Correct me if I am wrong, I hope I am. But doesn't it take a thousand plus clients to generate a good "word of mouth" base?

No, word of mouth starts with your very first customer. Again, SLOW AND STEADY growth is best.

Don't expect to go from $100 to $10,000 a month in a few months. Its definitely not impossible...but you'd probably have to have a REALLY solid business plan, some decent financial backing and some corporate business management experience.

Originally posted by ffa
We have had our share of "word of mouth" and clients signing up for multiple packages. However, in order to "ride" it I feel you need a somewhat decent client base (ours is currently between 100 and 150). Correct me if I am wrong, I hope I am. But doesn't it take a thousand plus clients to generate a good "word of mouth" base?
Depends by what you define "good word of mouth". It's all relative.

If you have 10 clients, then those 10 clients will share their experiences about you, with their circle of friends/associates/family. That will deliver a certian amount of new business.

If you have 100 clients, then you should receive more business from word of mouth. The same applies for 1000 clients.

You are at the 100 - 150 level. That should double in the next 3 to 6mths. Of course this depends on what you're selling, your service and pricing etc.

Nurture your 100 - 150 clients and give them all you've got. They will spread the word for you. No need to worry about new business. It will just be a natural result of your good service. :)

If you have $90 in your pocket and really need a truthful answer to this question head over to bizminer.com an pull a report on internet hosting SIC code. You'll get this and a lot more info on this topic :).

Thanks Aussie Bob you have instilled new confidence in me :) I might shut off advertising for next month and just monitor, adjust, and service our current clients :)

Originally posted by kwes43
4% make $10,000 to $50,000 per month
2% make $50,000 to $100,000 per month
1% make $100,000 to $???,???,??? per month
We're in the "2%" bracket of those made up stats. But, we have been in the web hosting business since early 1996. It can be profitable, but it takes hard work, dedication, and a "stick to your guns" mentality in the beginning, with an emphasis on being flexible at the same time. A business plan is key, and being able to adapt it to the real world is even more important.

Timing, niche marketing, living up to what you state on your site, and being able to see where the market is going in your niche are key ingredients to a successful business. If you do not have the angel investing power to throw money at the problem, then it takes some serious work and perseverance to see it through. Especially these days where there is competition everywhere.

Too many companies try to be all things to all people. They try and cater to the teen fan site and the fortune 500 company at the same time, often offering ridiculously low priced plans to both ends of the market. This often results in high signups, high turnover, low profits, and a stressful environment. Pick a group of people you want to offer hosting, market to that group, exceed their expectations, charge realistic prices to achieve your goals, and you'll be amazed at the growth you'll get.

The dotcom get rich overnight plan is long gone, and now it is more like a traditional small business market. The same principles that guide regular businesses actually DO apply to web hosts.

Just some ramblings from one of the "old timers". :)

- John C.

EXCELLENT POST, John C.! :)

wow, good stuff. good stuff, i am going to go print this all out right now... I am going to hang it in the office above my computer in my trailer, and dream of the day when I am where some of you guys are now.. Hopefully my mission statement and vision along with all of your incredible advice will guide me there....

CarbonFusion

Originally posted by ffa
Thanks Aussie Bob you have instilled new confidence in me :)
No worries. :D
I might shut off advertising for next month and just monitor, adjust, and service our current clients :)
I wasn't saying that you shouldn't advertise. If you're advertising somewhere and you're getting good results there, then maybe keep the ads running. All depends on how that outlay is effecting your cashflow.

Wow some good advice here. I finally made $108. But I have spent well over $1200. I am taking it slow and easy and hope to make more than what I spend on the site.

I hope to be doing some advertising here shortly and see what the results are. I have wanted to do this for five years now.

My main goal for this year is to just break even and keep improving our service. I have another business that most of my income comes from ,so I have the time to focus on customer support and improvements.

Its true if you work hard you will get there. I have taken my other business from about $160,000 year to over $500,000 a year in just two years. Lots of work and little sleep but well worth it.

This is a realistic goal to aim for. I wouldn't count on it, but at least you're not hoping to become Bill Gates by the end of the day like a lot of other people I see passing through here.

There are going to be a LOT of factors in whether or not you will reach your goals, but it is always good to have something to reach for. Make sure you set yourself with a very solid business plan. It looks like you've done some preliminary(?) market research, which is nice to see and something I think a lot of people neglect.

Keep in mind, the more you re-invest in the company, the faster it will grow. The more you take out to support yourself, the slower it will grow. The longer you hold your day job, the easier this will be to accomplish. As your company grows it, however, it will become exponentially difficult to succeed at both and eventually you will have to take a leap of faith. The stronger your company's financial position is, the shorter the leap ;)

~ my 2 cents

Ya, it's all about true dedication. If you're not busting your butt in the first couple months of starting up then you'll never get anywhere. Been there, done that.

Let me be the first one to say the starting a web hosting business is by no means money in your pocket overnight. You need creativity, ingenouity, and adaptivity in your corner, and a good business sense doesn't hurt either ;)

A business plan is essential - you must always know where you stand financially or expenses can sneak up on you.

Don't expect to be profitable in the first couple months - you'll need to throw in quite a wad of dough to begin with. Yes it's depressing to start off - you get maybe less than 10 people who visit your site - 5 of those being yourself. :D

But, if you've set the pieces in place you can be successful. ditto to John C. Cater to a specific market, you can't possibly be everything to everyone especially when you start out.

Always look for the weakest link whether it's in your network, your business plan, or your marketing strategy and improve it. Web hosting does eventually become something of a self governing money machine, this happens when you've proven to a strong customer base that you have the goods and can properly run a business. Over 25% of all our sales now come from repeat business. If it's a bad day we can always count on that 25% coming through, and believe me when I say we worked for that 25%.

Because there is so much competition, undercutting of prices, and pushes to improve technology you're greatest advantage as a beginning webhost is your ability to cater to your clients needs. People are always changing webhosts and looking for either a better price, a better service or both. The price is up to you, but your level of customer service is your greatest leverage. You can spend hours of your time with them if they have a problem - they will eventually be your "cheering squad" and they are the ones who bring you the referral sales.

Oh and when you find you have nothing to do, market, market, market. Webhosting is more of an exercise in marketing than any other aspect.

Well, i've never been profitable per say, but i've never lost money either.

I can happily say i've re-invested 100% of my receivables back into the business and it has done good!

I got good advertising partners, i grow about a server a month now (~250 clients) and i'll be reaching my business plan goals for expansion and proposed!

Stick to your guns, learn your market and adapt! Don't spend all your time focusing on the wrong group!!

My biggest advice:

1. If your gonna offer cut-throat rates at bottom dollars, don't focus on high maintenance customers! Advertise on "geek" sites, maintain your servers and focus on people who know what they wan't and don't want to pay alot for it. Don't promise phone/24x7 support if your charging 99cents a month! Be realistic and honest!

If you want to gain even the newest customers then charge more but provide a better service!

I've honestly lost customers because they were upset i didn't call them and tell them how to use frontpage BUT they were happy when i honestly told them at our prices and rates we supply tech support via email, forums and return calls and we can't promise to help with site design or how to use frontpage. He understood that and went to a host that costs more. BUT he said when he has a good understanding of how it works he may come back because we were honest and we were cheap.

my point i guess is don't spread your resources thin looking for every receivable you can get. Focus on your market, make up your own verticals and attack them as long and as hard as you can.

as i see it, too many people low ball for whatever business they can get and end up struggling to support it and burn out real quick.

just my 2 cents :)

More good advice. Make sure your customers know what you will and won't provide, for the price you charge.

I made the mistake of trying to solve ANY and ALL support questions, regardless of the actual problem, when I only had a handful of support tickets per day. This included installing custom scripts, for free, when customers had problems with them. Personally phoning up a customer when he couldn't figure out how to make his HTML tables the correct width...and on and on.

In the beginning its VERY tempting to do that...because its only a few minutes out of your day. The problem is, once you get alot of customers you just can't afford to do that...unless you factor that cost into your pricing schedule. Alot of the customers, you had in the beginning, will not understand that you can no longer offer hand-holding for the price they are paying you for hosting. NOT a good way to build a loyal customer base.

Seriously, map out EXACTLY what kind of support you are going to offer...and factor in growth and cost for the future. I was smart enough to figure in the cost of future growth/support...but I didn't figure that I'd have 100s of customers still wanting me to phone them up, at all hours, to tell them how to make their webpage text blink. ;)

--Tina

I'd like to thank all of the Hosting Veterans that have posted their experiences, thoughts, advice and "average" gross ranges. I very much enjoied reading all of it and it gave me a boost!

I am one of the ones you warned the original poster NOT to be but not entirely by choice. My new, flegling hosting business is my only "job" now. About 2 weeks after I took the leap and decided to take my small reseller account (that was originally just for my own sites) and start selling from it, I lost my job due to my vehicle developing mechanical problems. Because I had no way to get to work for almost a week (woulda cost me $45 each way for a Taxi -- $90/day for a job paying $8/hr??-- and no co-workers lived near me to give me a ride), they "let me go".

This was actually sort of a blessing in disguise. My job was sucking the life out of me anyway! After I got the car repaired and back on the road, my VERY supportive wife made an offer. She proposed that I stay home with our 4yr old son and start building the hosting business and she's go to work full time so I could. And, here I am... "Mr. Mom" the Hosting Co owner! While our money is tight, my wife says she has seen a drastic change in me. I'm running my own business and loving it! (I've owned businesses in the past but thanks to a former spouse that was ZERO support, they didn't last)

Granted, I would have MUCH prefered to have a full time income of my own while building this business, but I have to admit that having the extra time to sit here reading forums, compairing sites & rates, and researching the market in general, has been priceless.

I've now moved to a larger reseller account with a better host, revamped our website with a more professional look and started getting things inline to "beat the streets" for more business. I'm better prepaired and armed for battle thanks to all of you here on WHT. I still have ALOT to learn about this industry.. but every day I get my dose of hosting meds from all of you! (sometimes I overdose!!)

Thanks for the willingness to share what you know. And to the thread starter, I'm in the trenches with you my friend! Only thing I can offer advice wise is there is nothing better than the support of a great spouse! DON'T quit your job untill you KNOW the business is stable and growing! I have the luxury of doing it but at the sacrifice of income! Makes building business much slower!

Alex "Chuck" Taylor
Two-A-T Web Services

Wow, I didn't know this topic was going to get this many replys.

Usually a topic like this doesn't get many. But I can tell you from the companies that have replied, mines excluded, a lot of the good companies have given very forthcoming answers to the questions set forth here. Take it and read this thread through and through.

Good luck! :)

EDIT: Just to clarify the "mines excluded" part is I don't feel my company now is not on the same level as HTTPme, HostNexus, Affordable Host, etc... as they have posted. But I do feel I run a good company. But one day I hope to reach their level :)

Awwww....GROUP HUG! :D

--Tina