WillSmith
11-05-2001, 07:34 PM
Hello all,
As the owner-operator of http://www.resellerconnection.com, I have decided to address what seems to be strong demand for some sort of Reseller Guide or How-To. I've written and included below the first little piece of the upcoming Beginner's Guide To Reselling, and I would love some input. Please address any issue you like, from accuracy to inclusiveness to clarity to grammar to structure. I would also like some suggestions of what topics to cover next. Some of my ideas, in the order in which I have prioritized them, include:
- first month expenses
- credit card handling
- advertising
- non-payment
- credit card chargebacks
- how many hosts per server
- graduating to a dedicated server
Your thoughts, please. I'd appreciate any input you can volunteer.
Thanks!
Will
will@resellerconnection.com
Reselling web hosting: What is it and why?
WhatIs.com defines "reseller hosting" as:
The provision of Web hosting services to companies that in turn act as Web hosts for other companies, typically providing Web site design and management services as well as acting as host for the site and serving its pages to users.
When one resells web hosting, one buys discounted hosting services from a web hosting company, then resells them at a profit to one's clients. Typically, a reseller adds some sort of value to the hosting services, thereby providing his clients incentive to purchase the hosting services from him rather than directly (and more cheaply) from the primary hosting company. Examples of such added value are web site design, maintenance, and improved support.
There are three primary parties involved in any reselling arrangement: the web hosting provider, the reseller, and the end user. Discussed below is each party's perspective.
From the Reseller's Perspective
The typical web hosting reseller, if there is such a thing, provides web design services as his primary service offering. This web designer, whether a freelance individual or a sizable web design firm, has neither the resources nor the inclination to invest in, maintain, and service an expensive web hosting infrastructure. By partnering with a web hosting company and reselling its services to the design clients, the web designer is able to provide hosting services without paying for a high-bandwidth Internet connection, heavy-duty web servers, an on-call 24/7 technical support staff, or any of the other expenses that burden a hosting company. In addition, the web designer earns increased revenue from the markup he charges on the web hosting, and he is able offer his clients more competitive, more appealing all-inclusive web development services: design and hosting.
Web hosting resellers are not always web designers. Some are entrepreneurs seeking to enter the lucrative web hosting business. Unable to lay out the initial investment required to establish a hosting infrastructure, these resellers start reselling as an affordable foray into an industry that otherwise has prohibitively expensive barriers to entry. With hopes of gradually growing the operation's client base and revenues to the point where reselling is no longer necessary, such resellers plan to ultimately become full-fledged web hosting providers with their own hosting infrastructure. A handful of today's most well known web hosting companies followed this track; once resellers, they now host tens of thousands of clients in their own multimillion dollar network operating center (NOC).
Other resellers are located outside of North America, where web hosting is not available as reliably or affordably as it is in the United States and Canada. By reselling for a North American web hosting company, such international resellers can profitably sell high quality hosting within the their country while managing to undercut the local competition.
An important similarity among most web hosting resellers is that they target a local market, be it Fargo, North Dakota or Buenos Aires, Argentina. Resellers typically realize some sort of local market advantage that does not exist for them in the national market or on the web. Given the hyper-competitive nature of the current web hosting landscape, obtaining hosting clients from the web market often proves much more expensive and difficult than obtaining them from the local market. Locally, a reseller might be able to capitalize on an existing client base, social and
professional connections, a low level of competition, cheap advertising opportunities, or all of the above.
From the Web Host's Perspective
Why do web hosting companies have reseller plans, and why are they willing to sell their services at a discounted rate to resellers?
Put simply, resellers generate sales for hosting companies. With revenues being the name of the game, sales generation is of tremendous value to web hosting companies. By independently marketing and selling a hosting company's services, resellers bring the hosting company clients that it might not otherwise have had.
This is particularly valuable in the web hosting industry. As industry estimates continue to suggest enormous profit potential from aggressive, unmet demand, new entrants are attracted to the industry every day. With the number of web hosting companies rising, the market is becoming more competitive, and prices are falling. Thus, with web hosting fast becoming a commodity and prices falling all the time, volume (that is, the rapid accumulation of large numbers of clients) has become the most profitable and competitve strategy for large-scale web hosting companies. As a cost-effective and efficient sales channel, resellers provide web hosting companies a means to quickly aggregate clients.
There are two reasons that hosting companies offer resellers discounts. The first is the age-old law of wholesale: buy in volume, receive a discounted per-unit price. It is absolutely worth a hosting company's while to offer a reseller a 30% discount on each of 100 hosting plans he has resold. Obtaining these same 100 clients through the hosting company's own expensive marketing and sales efforts would have cost decidedly more than the discount given to the reseller.
The second reason for the discounts is simply competition. Discounted prices are one of many features web hosting companies can competitively offer to obtain new resellers.
From the End User's Perspective
Web hosting companies typically require resellers to handle the support and billing of their clients. Thus, when an end user purchases hosting from a reseller, the task of hosting his web site has been divided; the web hosting company is dealing with the technical end while the reseller is dealing with the billing and support end. Because resellers have fewer clients than the web hosting company whose services they resell, and because they are not burdened by the technical responsibilities of maintaining their clients' web sites, they are usually able to provide a superior, and oftentimes personalized, level of support. In an industry where support is so crucial and yet so often insufficient, the added support resellers offer their clients is one of the most beneficial end products of reselling.
As the owner-operator of http://www.resellerconnection.com, I have decided to address what seems to be strong demand for some sort of Reseller Guide or How-To. I've written and included below the first little piece of the upcoming Beginner's Guide To Reselling, and I would love some input. Please address any issue you like, from accuracy to inclusiveness to clarity to grammar to structure. I would also like some suggestions of what topics to cover next. Some of my ideas, in the order in which I have prioritized them, include:
- first month expenses
- credit card handling
- advertising
- non-payment
- credit card chargebacks
- how many hosts per server
- graduating to a dedicated server
Your thoughts, please. I'd appreciate any input you can volunteer.
Thanks!
Will
will@resellerconnection.com
Reselling web hosting: What is it and why?
WhatIs.com defines "reseller hosting" as:
The provision of Web hosting services to companies that in turn act as Web hosts for other companies, typically providing Web site design and management services as well as acting as host for the site and serving its pages to users.
When one resells web hosting, one buys discounted hosting services from a web hosting company, then resells them at a profit to one's clients. Typically, a reseller adds some sort of value to the hosting services, thereby providing his clients incentive to purchase the hosting services from him rather than directly (and more cheaply) from the primary hosting company. Examples of such added value are web site design, maintenance, and improved support.
There are three primary parties involved in any reselling arrangement: the web hosting provider, the reseller, and the end user. Discussed below is each party's perspective.
From the Reseller's Perspective
The typical web hosting reseller, if there is such a thing, provides web design services as his primary service offering. This web designer, whether a freelance individual or a sizable web design firm, has neither the resources nor the inclination to invest in, maintain, and service an expensive web hosting infrastructure. By partnering with a web hosting company and reselling its services to the design clients, the web designer is able to provide hosting services without paying for a high-bandwidth Internet connection, heavy-duty web servers, an on-call 24/7 technical support staff, or any of the other expenses that burden a hosting company. In addition, the web designer earns increased revenue from the markup he charges on the web hosting, and he is able offer his clients more competitive, more appealing all-inclusive web development services: design and hosting.
Web hosting resellers are not always web designers. Some are entrepreneurs seeking to enter the lucrative web hosting business. Unable to lay out the initial investment required to establish a hosting infrastructure, these resellers start reselling as an affordable foray into an industry that otherwise has prohibitively expensive barriers to entry. With hopes of gradually growing the operation's client base and revenues to the point where reselling is no longer necessary, such resellers plan to ultimately become full-fledged web hosting providers with their own hosting infrastructure. A handful of today's most well known web hosting companies followed this track; once resellers, they now host tens of thousands of clients in their own multimillion dollar network operating center (NOC).
Other resellers are located outside of North America, where web hosting is not available as reliably or affordably as it is in the United States and Canada. By reselling for a North American web hosting company, such international resellers can profitably sell high quality hosting within the their country while managing to undercut the local competition.
An important similarity among most web hosting resellers is that they target a local market, be it Fargo, North Dakota or Buenos Aires, Argentina. Resellers typically realize some sort of local market advantage that does not exist for them in the national market or on the web. Given the hyper-competitive nature of the current web hosting landscape, obtaining hosting clients from the web market often proves much more expensive and difficult than obtaining them from the local market. Locally, a reseller might be able to capitalize on an existing client base, social and
professional connections, a low level of competition, cheap advertising opportunities, or all of the above.
From the Web Host's Perspective
Why do web hosting companies have reseller plans, and why are they willing to sell their services at a discounted rate to resellers?
Put simply, resellers generate sales for hosting companies. With revenues being the name of the game, sales generation is of tremendous value to web hosting companies. By independently marketing and selling a hosting company's services, resellers bring the hosting company clients that it might not otherwise have had.
This is particularly valuable in the web hosting industry. As industry estimates continue to suggest enormous profit potential from aggressive, unmet demand, new entrants are attracted to the industry every day. With the number of web hosting companies rising, the market is becoming more competitive, and prices are falling. Thus, with web hosting fast becoming a commodity and prices falling all the time, volume (that is, the rapid accumulation of large numbers of clients) has become the most profitable and competitve strategy for large-scale web hosting companies. As a cost-effective and efficient sales channel, resellers provide web hosting companies a means to quickly aggregate clients.
There are two reasons that hosting companies offer resellers discounts. The first is the age-old law of wholesale: buy in volume, receive a discounted per-unit price. It is absolutely worth a hosting company's while to offer a reseller a 30% discount on each of 100 hosting plans he has resold. Obtaining these same 100 clients through the hosting company's own expensive marketing and sales efforts would have cost decidedly more than the discount given to the reseller.
The second reason for the discounts is simply competition. Discounted prices are one of many features web hosting companies can competitively offer to obtain new resellers.
From the End User's Perspective
Web hosting companies typically require resellers to handle the support and billing of their clients. Thus, when an end user purchases hosting from a reseller, the task of hosting his web site has been divided; the web hosting company is dealing with the technical end while the reseller is dealing with the billing and support end. Because resellers have fewer clients than the web hosting company whose services they resell, and because they are not burdened by the technical responsibilities of maintaining their clients' web sites, they are usually able to provide a superior, and oftentimes personalized, level of support. In an industry where support is so crucial and yet so often insufficient, the added support resellers offer their clients is one of the most beneficial end products of reselling.