I am seriously considering starting my own webhosting company and I am cautiously learning the in and outs.

When you first start out, and you really have no customers, how many months should you estimate to operate at a loss prior to breaking even? I am trying to estimate my expenses and I realize that I have to include some sort of advertising expenses. Should I estimate three months? Six months?

Second, is it really cheaper in the long run to lease servers from another company than it would be to have your own box? The largest expense is the bandwidth and you end up paying that anyway, right? So, why not just get your own, unless you are not in an area where it is available to you?

Third, how do you get around being a new company? Some suggested registering your domain so even though you have only been a business one month, your domain was registered six months ago so you are not as new. To me, I would prefer to be honest and say I am new and accept the consequences, but am I burning my bridges being too honest?

Thanks.

Micky

Some tips...
- You are never too honest with your customers. You don't have to tell everyone upfront how many customers you have, but you don't have to trick them into thinking you exists for 10 years... that will only get back in your face.

- We personally had funds for 1 year of loss, but after a month we were not loosing anything anymore. I guess that 3 months with a bit of advertising, sweet talk, etc, can get you on the positive balance. Of course, not counting your own time or the time of your employee. Don't really expect to live off it for about 1 year if you want to expand asap.

- I personally recommend getting your own server and co-locating it somewhere. That way you have the full control over your server, totally. However, if something goes wrong... you are screwed. Depending on how much money you can sink azt first, that should define wether you're going as a co-location or dedicated. The first one require a bigger investment than the second, but the second will cost more in the long terme.

Feel free to ask any other questions you might have :)

Good tips, Felix.

First, I'll echo the bit about being honest with your customers. To tell you the truth, it might hurt your growth in the short term, but you'll always be better off in the long term for it. Some people are just naturally leery of new companies, and there's no way of getting around that. Offer incentives to help sway their decision, and emphasize strongly whatever money-back and satisfaction guarantee policies you might have. Be sure you're set up to accept credit cards, as this offers protections that consumers like.

How soon you can expect to break even depends entirely on how you're doing things. Are you going to start this as a home-based business and co-locate your servers, or are you going to go rent office space somewhere and run a T1? Are you going to hire employees, or do everything yourself?

QWK.Net was at the break-even point within three months of starting, but that may be an exceptional case. I spent a lot of time doing systems administration before starting QWK.Net, so I didn't need to hire anybody else to take care of servers. If you don't have this kind of background, I would strongly recommend that you contract with somebody to administer your server for you. Perhaps it would be best to get a server with one of the companies mentioned here that specialized in dedicated servers for resellers.

If you have any other questions, feel free to ask here or mail me directly.

I would also like to advise you to look into reselling as a starter, there are great hosts here that will get you up and running with a reseller account, and your customers won't ever know if you are doing it so (unless you wish them to).

The great thing about it is you can start making money right from the start (well .. maybe 10-20 bucks a month), but there is never loss.

This is a great way to start if your funds are limited, there have been other threads here about it, then when you grow you can move to a server.

We started like that also, and now we have our own servers, like I said, it's a great way to start with little capital.

Now, going back to your other questions, I advise you to buy your own server and have it co-located, if you go with the server, expect at least 6 to 9 months of loss before you can break even (hey, it maybe only 1 month, who knows), and pay very carefull attention to support ;)

I want to start off by saying that I invite anyone to send me email at darkarrow@writeme.com. To properly respond to this, it would probably fall into advertising and I do not want to break the rules of this forum.

I was thinking that the best way to start off would be to resell. Then I read a thread about moving your clients from one server to another and it scared me to death. :) Reselling seems to be the safest choice for now but the thought of changing that stuff over almost makes me is making me gray at an accelerated rate. :)

Then I thought about a dedicated server but I think that would be taking on too much too soon. One of the reasons I was looking at this is because (and correct me if I am wrong) you are stuck with the packages the host offers. For example, if there is a host that offers 50, 100, 150 and 200mb packages and I get a customer that wants a 25mb package, then I am out of luck right? Unless the host will set up a special size package? Are hosts willing to do that? Or is it best to represent multiple hosts?

The other reason I am looking into this is because my fiance is launching a network of sites, and this seems to be a way to get separate hosting packages inexpensively. However, are you allowed to do that? For instance, if I have four domains with a hosting company and I decide to resell for them. Can I set up my reseller account and then move the four domains under my account?

The main thing that concerns me is support. If a customer is having a problem and they contact me, since I will not have root access, then the provider needs to have 24x7 support, right? That is the way it works, am I correct? Another thing that concerns me is the control panel. Will I be able to manage these accounts? Make sure no one has gone over their bandwidth limits, their hosting limits, etc. I looked at many reseller plans and they say I have to supply my own support. How can I do that when I do not have access to the server? If it's down, what can I do about it? If they are not getting their email, again, what can I do?

As you can see, I am real green at this. I spent alot of time researching the dedicated servers and with the launch of the websites, I need to prioritize.

My last question is about spam...some idiots insist on doing it, and unfortunately, you do not know who the idiot is going to be until they do it. If it is reported, and I am reseller, who does the complaint go to...me or the provider? I would want to have the control to get rid of the person myself prior to it being reported to the provider. I wanted to set up free email and squashed the idea because I do not know how spam complaints are handled and I do not want anything negative on any of my domains.

Thanks....I appreciate your help and please feel free to email me...I welcome the responses.

Micky

In (kind of) reverse order:

Spam complaints generally go to the reseller if the reseller uses his/her own nameservers, since that's where the resold clients' domain will point. You might have your upstream contact you to let you know they've killed a spammer who was one of your accounts, based on something they saw on the server; we've done that quite recently, in fact.

Most hosts will require you to provide your own support. However, keep in mind that the types of support requests that you usually get are the same types over and over again: I forgot my password, I uploaded my site and the old site is still showing (because they uploaded default.htm and the server looks for index.htm first, etc.), how do I set up my email client, and on and on. Many hosts will allow you to use their support documentation - with a bit of judicious editing, you can place it on your site for your clients to use. Those types of things are not things you would need root access for (and I don't know a host that would willingly part with the root password anyhow). The things that do go wrong that do require root access would be severe enough that your upstream would likely already know about them.

It's easier for some hosts to create specialized resold packages than it is for others. Alabanza-based hosts, for instance, would have a tougher time with requests like that, as all resold-type packages would show up for all resellers, and not just you. Other providers, such as Ultraspeed, have control panels that aren't so tightly wound in that manner, which makes it a bit easier.

Once you've gotten a reseller account, you can pretty much do with it what you like (within the host's AUP, of course). There are even scripts you can use to redirect various domains to various subfolders at your main site; alternately, you can set up NameVirtualHosts, or have your host do it, to point those domains to subfolders on an existing account (this would be one of those things that would require root if there's no particular script or automation to handle it).

It would probably be best to resell for a host that uses the provider you think you will use once you get your own server. That way, the features will already be there, you'll know how the service is, and the provider can likely lend a hand in getting you and yours moved as quickly and painlessly as possible - especially since you'll be leasing a server from them.

1) I understand the support issue better. I was thinking about the problems I have had with my own sites and they were primarily the site was down and mysql was down. I forgot about the little things like I forgot my password or my email does not work. I can handle those. :)

2) For those of you using a service like PayPal (business)/InstaBill, have you had professionalism issues when a client clicks on a page to submit their info and they see PayPal at the top of the page? Or getting an email from PayPal confirming the transaction? I would prefer not to get a merchant account.

3) Another note on support...can anyone recommend an inexpensive trouble ticket program written in perl or php? I am thinking of using HumanClick (I see it around alot) but I am afraid my customers will get use to it and in 2001 the price will be raised to something I am not able to afford yet. Will the beta versions still be free after and the new version you would have to pay for?

4) For those of you that started off as one man operations, did that hinder you in anyway? I have access to a computer all day long but a guy has to sleep. :) My fear is that everything will get crazy while I am sleeping like a baby. I guess going on vacation is out of the question until I get a laptop. :)

5) Does any resellers represent more than one company? For example, a VDI host and a Alabanza host?

6) Annette mentioned in her post that once you have a reseller account, you can redirect domains to a subfolder in my directory. I would not want to do that as a rule but there may be a time when i want to donate space to an open source development project. Would that domain that is pointed to the subdirectory have it's own email account?

Thanks, I appreciate your help.

The domain pointed to the subdirectory *could* have its own e-mail account.

Just set an MX record for the domain to point to one of your IP's that has POP accounts.
All it means is that the domains sharing the mail server can't have the same word before the @ sign unless you do what affinity.net do and have the account number before the address and then forward that to the appropriate account.

Sorry, that sounds complicated but theres no easy way to explain it.

By the way, could someone recommend a script that will allow pointing of domains to folders in an account.
I have tried three and found them to have all sorts of problems.

Gordon

Micky,

In response to some of your questions:

2) For those of you using a service like PayPal (business)/InstaBill, have you had professionalism issues when a client clicks on a page to submit their info and they see PayPal at the top of the page? Or getting an email from PayPal confirming the transaction? I would prefer not to get a merchant account.

I would *highly* recommend getting your own merchant account. Later, you will want to automate billing, and this will be difficult-to-impossible to do without forking over large sums of money to somebody else, if you don't have your own account. Merchant accounts are a lot cheaper and easier to get these days than they used to be. Talk to Costco if there's one in your area, or somebody like CardService.

3) Another note on support...can anyone recommend an inexpensive trouble ticket program written in perl or php? I am thinking of using HumanClick (I see it around alot) but I am afraid my customers will get use to it and in 2001 the price will be raised to something I am not able to afford yet. Will the beta versions still be free after and the new version you would have to pay for?

I wouldn't worry about a trouble ticket system until your support volume grows quite a bit. Standard e-mail works great in most cases, and has a more personal feel anyway. If you do decide to go with a trouble ticket system, you can find a huge list of them at http://www.helpdesk.com

4) For those of you that started off as one man operations, did that hinder you in anyway? I have access to a computer all day long but a guy has to sleep. My fear is that everything will get crazy while I am sleeping like a baby. I guess going on vacation is out of the question until I get a laptop.

It worked for me. Just be prepared to be chained to where you live (if you co-locate locally, as I recommend.) And, I hope you don't mind getting woken up in the middle of the night now and then. :)

Well-run servers won't wake you up very often. Whatever solution you use for your hosting servers, make sure it's reliable. I build my own, but I have a lot of experience with PC building and systems administration.

Good luck!

I'm at the same stage as Micky, and I've got a question about billing. How do I set up something to bill my customers every month? I'm undecided whether to go the merchant account route or sign up with Revecom.com who provide payment services for service providers (you might want to look at them Micky)

Most merch. account software that you lease/buy has options of billing clients every month. Revecom is another way to do it (provides repeat billing as well).

Thank you for the responses. I have made considerable progress.

I have narrowed my choice down to three different companies. I am monitoring their sites for down-time, etc. prior to making my choice.

I am stuck on one issue...registering domains for my clients. As I understand it, Alabanza has this incorporated in their software. How would a reseller do this, since they do not have access to that?

For example, John Doe wants to order register a new domain along with a web hosting package. I charge $20.00 for domain registration and I register domains at 000domains. The hosting package chosen is $15.00.

I would charge their account $35.00 (it would be done at sign-up through a company like Revecom or InstaBill).

When I register their domain at 000domains, I have to make a account for them. No problem. It would also have to be paid with my credit card because I can not charge them for it twice.

So how do I register the domain in their name, pay for it with my credit card, and make it so that they do not have any access to the billing information used to open the account?

Guess you can tell I am used to the days where you register a domain, and pay for it 30 days later. :)

Thanks.

Micky

aaaargh I need to think about this too! Have you got enough cash to get an OpenSRS account?

I thought about doing that, but I if I get the majority of people transferring a domain, then I would have credits up there for nothing. :(

I was hoping that there was another way.

Micky

Anyone using OpenSRS? Are they good? I try to contact their sale via email early this week, but no response from them yet. Is there any other company offer OpenSRS similar service? BTW, I am a reseller (newbie) and what OpenSRS plan (Quickstart / Full Access) will suit me better? Any advise...

Micky, Alabanza does not actually incorporate domain registration into the order form - it's only an indication that the domain the account is set up under needs to be registered (or transferred). Some people may use automatic registration of new domains at Bulk Register through the Alabanza automation, but that's a bit sticky, as automated registration of that manner will use the account defaults and be registered in the name of the host, and not the actual owner. We take the notices as people sign up and do manual registrations, to ensure that the domain is in the client's name and not ours. Like your example, this charge is through our account, since the client has already paid the domreg fee.

In your specific example, you have a choice: either don't charge through your gateway for domreg, and then take the client info over to your registrar and set it up manually, or go ahead and set it up under your name and be responsible for making any changes that the client might request down the road. The latter option is not really that bad, and involves a bit less work than the first.

OpenSRS should be okay to use for domain registrations (they're a part of Tucows)... They seem pretty popular - I wonder why :D
I once bought a domain which was registered at OpenSRS and I can tell you: They have a great user interface. It's simple and easy to use; you don't have to wait for anyone to update the records - they're updated instantly :)
If you don't want to pay $ 250 before you're able to register a domain, you might want to take a look at http://www.domainzero.com :)

http://www.enom.com/ do a reseller deal at $10 per domain including full DNS management through a web interface.
They supply API's etc to link to your site.
Its not been well publicised.

At the moment I just use Joker.com and do the registrations manually. I only sell new domains to less than 1 in 10 clients anyway, so its no big deal.

I would only need an automated system if I was running a domain business, and that's quite different to running a web hosting business.

I don't think any of us would be able to compete with the discount name registrars given that the lowest you could expect to pay for a domain at wholesale is about 7 dollars.

Gordon

Thanks for the reply.

I was banking on the fact that not many people would be registering new domains...the majority would be transferring domains. This is why I did not want to open an OpenSRS account so the credits would just sit there.

I would most definitely prefer to do it manually.

I thought about not charging on on my site, then going directly over, but then I would have to input their credit card info and I do not want responsibility for that.

Again, thanks for the replies!

I just forgot to mention that with the RCU's that you buy from OpenSRS you're able to earn a bit more by letting your customers transfer their domain from ie Net.Sol. to you (/OpenSRS) and then charge them a couple of bucks more than you paid for the RCU's.

OpenSRS has been quite easy for us to deal with and they do have a great interface as well. While it is true you do need to come up with $250 to start of with we found the registrations went quite quickly and we were also able to make up some of the $250 by charging more for the domain registrations/transfers. As for the differences between the quickstart versus full program the main difference is that the quickstart program allows you to register domains immediately through a control panel while you are getting your interface set up. So far we have been happy (still working on the scripts) with OpenSRS and they have been in general quite responsive. The control panel allows you to track your domain transfers so you can tell your customers where they are in the process. This seems to help as people do not understand why the transfer process takes so long and why it is so important to have direct control over the domain name. Course now we have been seeing domain name specials for $5.99 per year advertised which is below our cost!!!!!

MadMax82
Qui desiderat pacem, praeparet bellum

Originally posted by MadMax82

As for the differences between the quickstart versus full program the main difference is that the quickstart program allows you to register domains immediately through a control panel while you are getting your interface set up.

Course now we have been seeing domain name specials for $5.99 per year advertised which is below our cost!!!!!


Thx MadMax82!!! Are you using the $250 quickstart plan now? You have mentioned that OpenSRS will provide control panel for immediately registration. How about Full-Access? Also, you said you are working on script? Why? Why not using OpenSRS control panel?

Yes, I see some offer $5.99 domain per year!!! How come they can make this offer?

The quickstart program requires a $500 deposit to get started and it allows you to immediately register names while you are installing the scripts. They have a fairly complex CGI script that automates the whole process (cool script but a bit of a pain to install for a newbie!). The $250 deposit gets you going with the full implementation which means ya have to get the scripts running to register names. One other issue is that they only take deposits of at least $250 to buy credits. So you will need some cash to make the system work long term. Course we sell the registrations for at least $15 so you can continue to make deposits.

As for the $5.99 guys they do seem to work (we tried one to see what would happen) but they are often not as fast. I think you can work a deal with registrars.com for the $5.99 deal if you can promise them a big volume (think 100 registrations a month or so). So overall we are staying with OpenSRS for the time being but if the $5.99 deal continues to work then we will have to change.

Sorry I did not address the control panel. It allows you to manage all of your domains and review transactions sorta like a merchant account but it does not allow you to make bulk registrations you have to type each one by hand. This is because they want you to use the CGI scripts as soon as possible. I hope this helps!