I’ve been reading with an avid interest and even pondered seriously about going into the “managed/unmanaged server resale” business.

I’ve conversed with a couple of knowledgeable resellers here on WHT (very few, but worthy nonetheless), as to the money they make.

To cite an example, there is a reseller (I’ve got his/her permission here to write, without mentioning his/her name) who has resold about 285 servers. That’s a lot of servers. 60% of them are unmanaged, rest are managed.

This particular reseller makes (on an average) $25/month per server. That equates to $7,125 per month. Consider they do this full-time with three employees and other ancillary costs that are deducted from the above amount. I don’t see how the $7,125 would make all the ends meet ---- (pardon the nomenclature) comfortably! Not that this is not a nice amount, but the headaches alone of managing 285 servers would be straining (no?). This is just one example. There were more.

Anyhow, coming to my point, or perhaps to rephrase correctly, my question! Do people really make decent money by being resellers of dedicated servers? One would imagine that a reseller would have to break a decent enough number (50?, 75?, 100?) servers before it becomes worthwhile. Is there really such a huge demand for dedicated severs out there? One would be selling quite a few of them per week in order to make numbers look good.

I guess its just conniving of me to think that people are working on such small margins in the dedicated server world. Okay, perhaps conniving is too harsh a world, maybe it’s the flip-side of the industry (the reseller industry) that I do not understand.

We on the other hand – make serious money through services that are a derivative of complex hosting solutions, where the cost of the dedicated server (if one can imagine) for the client literally becomes a secondary issue. Non-significant.

I’d be interested to learn about others experience with regards to the reseller (dedicated) server market, or your comments to my post above.

I personally have no experience in this. From what I understand from talking to people it helps alot if you are close to the datacenter you are going to house in. So that if A problem arises it can be taken care of quickly. Also you can get a cage and do your own servers or as you said resell the providers servers, this depends on many variables though. Such as: how much of a discount are you getting. are you getting enough of a discount where you can keep your prices resonable. The datacenter is the most important part however. They need to be dependable because it is your name on the line.

Hope this was somewhat what you were looking for.

-Jim

I would be very surprised if they were only making $25 per month per server -this would not even cover the cost of the data centre ,i believe whoever you were talking too didnt give you the full scope of their finances ,if he was really making such little amount of money how would he still be in business?

I think if you read the original post he implied that the person was a dedicated server RESELLER presumably making $25 on each server above what he is charged by the data centre. This down still seam to be a relativly small margin.

Jona

if he's a RESELLER why does he also have to look after the support of the servers etc?

is he reselling the data centre or the actual servers? If he's reselling the data centre you would not term him as a reseller as nearly all the companies here have their equipment in a data centre.

If he is reselling the servers its unusal for him to have to look after the monitoring managment of the servers aswell.

Abit more information might help give a better understanding.

But in reply to the orginal post yes you can make money selling dedicated servers im afraid your friend just seems to be doing something wrong.

Sposs,

He's reselling the servers with "managed" services bundled in on some of the servers being sold. Like I cited, 60% of the servers are managed, rest are unmanaged.

The $25 (average) this person make is the gross profit so to speak. LIke I said, I'm ignorant as far as the low cost dedicated server market. There like too much competition, and making those small gains seems like not worth the effort, but then again, I think I am missing something - surely there is money otherwise that's why everyone is jumping into this business.

Faisal

Well a standard unmanaged dedicated wont get you any decent profit, however, throw on the management package, then you are looking at some work-able numbers, especially in the local market.

You think server providers are actually making more money than $25/month? Resellers are likely MORE profitable.

I just began seeing this issue myself in the last month or so. I'm paying the same amount for 4 dedicated servers, resold to customers, as I am for the 8 servers I have co-located.

I'm now going to actually invest, buy some servers, and start co-locating my customers dedicated servers.

We didn't start to offer dedicated servers until after about 2 years. Now a good chunk of our business is managed dedicated servers. Over time your resellers will grow and need dedicated solutions so if you offer managed solutions, you get to keep the client forever. Some clients will get projects needing dedicated servers and some clients will have sites that get insanely popular and need a dedicated server. These kind of clients have no server admin knowledge so they need someone experienced and someone they can trust to manage the server.

I can't understand why someone would want the stress of reselling unmanaged servers. You'll still get lots of admin support requests - for $25/mo? Mucg better to provide a full service and mark up the cost by at least $100. Then it becomes worthwhile.

Another issue is fraud. If you sell cheap servers and pimp it hard, you're going to get hit with fraud. I think we've only sold about 5 servers to clients that were not already HN clients. By focusing on a service for our clients we cut down on fraud. We still get fraudulent server orders all the time. But for our prices, if there is no pre-sales then it's almost guaranteed to be fraud. We ask for identification verification, none comes, we refund within 48 hours.

Our managed servers account for 1/6 of our revenue these days so it's a viable business option for sure.