If you own a small web hosting company, say, 500 customers (I know that not THAT small but compared to some of the other 300,000 customer companies its small), can you make a decent living on just that or do most of you run a web hosting business in your spare time and hold other jobs?

For most people, this is part time. You won't live from 500 clients, but you would live with a few thousand clients, depending on your needs. Most businesses fail in general, so you have to put a lot of time into your business to make anything happen.

Chris

IT depends how much your clients are paying. If you are making $20-30 per month then you could live off 500 clients

Are there a lot of people out there that are willing to pay 20$ for a small amount of hosting?

What does your reasearch/business plan say?

Rus

Are there a lot of people out there that are willing to pay 20$ for a small amount of hosting?

If you provide good service, yes. There is no need to offer $1 hosting, as that market is already flooded with mediocre hosts.

Its not the "small hosting" part which they see. They want service that caters to their needs. Even at $20/month, that's still a bargain in their mind (as it should be)

Are there a lot of people out there that are willing to pay 20$ for a small amount of hosting?

A lot of people pay > $1000 for a fairly basic webdesign (heck, a LOT of people pay many times more), so relatively speaking, doesen't it make sense that they'd pay at least 2% of that per month to keep that design on line? Thats not a significant cost when you look at things relatively.

It is possible depending on how much profit you are making from these 500 clients. If you had more clients like a few thousand then you could most definetly make a living.

For most people, this is part time. You won't live from 500 clients, but you would live with a few thousand clients, depending on your needs. Most businesses fail in general, so you have to put a lot of time into your business to make anything happen.
I've read that the statistic of "most businesses" failing is inaccurate and that it is the other way around actually. This is because most of those statistics count a "failure" as many things such as name changes among some other issues, which I don't recall right now. The point that the book was making was that most businesses do succeed, how profitable they are however is a different story.

Btw, who says you can't live from 500 clients? ;)

500 clients @ $20 or $25/month isn't bad at all!

I never realized most people were doing this part time. Wow.

I never realized most people were doing this part time. Wow.

I wouldn't agree with most businesses being run part-time, yes alot do but many more have setup to do this full time.

A typical web hosting business will start off with an owner or owners running it part time and then as it gets successful they move to full time because they can sustain a living from it.
It's quite a difficult business model in terms of making enough money immediately to sustain a living, mainly because the best assets of a host are their reputation and how long they have been in business.

I'd like $12500 a month please. Where can I sign up for that? OK, after transaction fees, and server rental.. $11000pm. Yep, that'd keep me in beer (though not hot cars and fast women :( ).

I think this is a point about your business plan, can you target the higher-paying customers, and how many are you likely to get. How much will you have to spend on targetted advertising to get them? How much server will you give them to attrcat that kind of customer (probably not a lot, they want service, or support, or hand-holding, or a community)

Small business failure rates.. yes, depends on what you classify as a failure - the National Federation of Small Businesses reckons: 40% are profitable, 30% break even, 30% lose money over the businesses lifetime.

Zaitech, if you're serious about this -- I highly recommend going to see your local SCORE branch. Bunch of retired businessman who help you out a fair bit. Never used 'em myself, but friends have.

Thanks, Ill definitly look into that.

Isn't Score a strip club?

Seriously, I have less then 500 clients, yet I make a decent living and have 4 employees... although I have to admit to hitting a rough patch this year, I am confident that we will just learn and grow...

So the answer to your question is - it all depends on what market you target I suppose.

Its enough if you live in Asia.Many hosts .they live in Asia.

I never realized most people were doing this part time. Wow.

I think that by "part-time" it means also operates other sites or online ventures, not physically works 9-5 at an outside company. I can tell you that for my company (http://www.dynawebdesigns.com), our webhosting division handles around 600 clients and is by far the most time-consuming thing -- supports 2-3 salaries, work 7 days a week and LONG hours. Yes, we operate other sites too, but that in no way makes the hosting "part-time".

I think you'll find a lot of the hosts on Webhostingtalk are smaller hosts that are very much doing this part-time. You then have a smaller number of medium to larger hosts that support full and part-time salaried owners and staff.

The question as to whether people make a living is very much relative. It all depends on what kind of income you define as 'a living', and how strong your business model is, as to how many clients would support that required income.

You also have some replies from people saying they make a good living and have x employees too, from x clients serviced. Again, this tells you nothing really unless you actually know what they consider to be 'a good living' in financial terms.

A strong business model could well provide 1 or more salaries from 500 clients. It really depends on how much your return is per client, what your costs are and how much you pay in salaries.

I would expect that what some people consider 'a good income' would not meet my own opinion of the same. As an absoulute MINIMUM I would expect a business owner to be making an income of something like £2000 ($3500 to $4000) per month themselves to consider that they have a successful business model. Some people might be happy on half that. My own expectations are higher.

You also have people saying they support x employees. I would suspect that in most cases they are actually referring to either outsoiurced support, or freelance contractors. My definition of an 'employee' is someone who is directly employed under PAYE (in UK), whether that be part-time or full-time.

Yes, you can make a living on 500 customers. Can you do it on $3 a month customers...no.

--Tina

If you own a small web hosting company, say, 500 customers (I know that not THAT small but compared to some of the other 300,000 customer companies its small), can you make a decent living on just that or do most of you run a web hosting business in your spare time and hold other jobs?
In the USA, about the bare minimum you could live off of would be $30,000. In some area's you could live off less, in others, you couldn't even eat for that much, but that's about the average living expense required. So, at 50% margins for web hosting, which isn't too bad, you're average customer would have to be paying $10.00 a month.

Easily done with a proper marketing plan and a well thought out business.

In the USA, about the bare minimum you could live off of would be $30,000. In some area's you could live off less, in others, you couldn't even eat for that much, but that's about the average living expense required. So, at 50% margins for web hosting, which isn't too bad, you're average customer would have to be paying $10.00 a month.

Easily done with a proper marketing plan and a well thought out business.

Sorry, but you're a good bit off in my opinion... I know people in downtown Chicago, basically eating out every night, great 1,800 sq. ft. apartment, etc. making $24,000 a year and able to afford everything they need, pay off college loans, and still have some left over. If you say you need $30,000 a year, you're crazy, as back home in Fond du Lac, WI I am certain I could live on about $12,000 a year, and that is in a decent sized city, not the middle of nowhere..

If all you're looking to do is to make a basic living on 500 customers, it is definitely possible. Host 500 sites for $7.95 a month on two higher end boxes, $250 a month each, then added expenses for transactions fees and other related expenses and you can bring in $36,000 a year or so, easily enough to live on.

Sorry, but you're a good bit off in my opinion... I know people in downtown Chicago, basically eating out every night, great 1,800 sq. ft. apartment, etc. making $24,000 a year and able to afford everything they need, pay off college loans, and still have some left over. If you say you need $30,000 a year, you're crazy, as back home in Fond du Lac, WI I am certain I could live on about $12,000 a year, and that is in a decent sized city, not the middle of nowhere..

If all you're looking to do is to make a basic living on 500 customers, it is definitely possible. Host 500 sites for $7.95 a month on two higher end boxes, $250 a month each, then added expenses for transactions fees and other related expenses and you can bring in $36,000 a year or so, easily enough to live on.
I suppose it would be possible if you were living with your parents, but the cheapest housing your going to find, without government assitance, would be a bare minimum of $350 a month and that's going to eat $4,250 right away. Starve yourself and eat for $6 a day, you're looking at another $2,190 there. Add in other necessary living essentials and it's not looking like you're sitting too well.

Of course that's coming from the guy who can spend money without even knowing what he spent it on.

Trying to make it in the Hosting Industry as a full time job is like trying to make a living off of singing and going on tour to all your fans. I suppose you could also say it's like winning the lottery or getting struck by lightning. :)

It's everybody's dream, well except getting struck by lightning but unless you know the head of a record label, can predict the future, or know where to stand during a lightning storm your chances are slim....but don't get me wrong, it's all so very possible.

I think your analogy is not really applicable. The music industry is a lot more about connections, ***-kissing, and people networking and then having a lot of good luck.

Hosting, like many other hard-working professions, is more about being focused, having a good pland, and hard work. If you work hard at it and are aimed in the right direction, you can make it.

In the music biz, you can work really hard and still never make it. It's much more a gamble than a reward proportional to time and effort invested.

Trying to make it in the Hosting Industry as a full time job is like trying to make a living off of singing and going on tour to all your fans. I suppose you could also say it's like winning the lottery or getting struck by lightning. :)

It's everybody's dream, well except getting struck by lightning but unless you know the head of a record label, can predict the future, or know where to stand during a lightning storm your chances are slim....but don't get me wrong, it's all so very possible.

The US Government definition of "bare minimum" is here: http://aspe.hhs.gov/poverty/06poverty.shtml




Sorry, but you're a good bit off in my opinion... I know people in downtown Chicago, basically eating out every night, great 1,800 sq. ft. apartment, etc. making $24,000 a year and able to afford everything they need, pay off college loans, and still have some left over. If you say you need $30,000 a year, you're crazy, as back home in Fond du Lac, WI I am certain I could live on about $12,000 a year, and that is in a decent sized city, not the middle of nowhere..

If all you're looking to do is to make a basic living on 500 customers, it is definitely possible. Host 500 sites for $7.95 a month on two higher end boxes, $250 a month each, then added expenses for transactions fees and other related expenses and you can bring in $36,000 a year or so, easily enough to live on.

I know people in downtown Chicago, basically eating out every night, great 1,800 sq. ft. apartment, etc. making $24,000 a year and able to afford everything they need, pay off college loans, and still have some left over. If you say you need $30,000 a year, you're crazy, as back home in Fond du Lac, WI I am certain I could live on about $12,000 a year, and that is in a decent sized city, not the middle of nowhere.. I've experienced both having good income and barely making it. I don't think that needing $30,000 is "crazy" depending on where you live and especially if you have a family. The fact is that I used to be able to get by with a lot less but life has made certain things such as a medical plan a good investment - and believe me they don't come cheap. So I'm not talking about living it up, but rather what some would consider the necessities.

I'd say that at this stage of my life $30,000 is good to live on. Anything more I try to invest since I don't want to work forever:) .

I suppose it would be possible if you were living with your parents, but the cheapest housing your going to find, without government assitance, would be a bare minimum of $350 a month and that's going to eat $4,250 right away. Starve yourself and eat for $6 a day, you're looking at another $2,190 there. Add in other necessary living essentials and it's not looking like you're sitting too well.

Of course that's coming from the guy who can spend money without even knowing what he spent it on.

Bare minimum of $350 a month? Back home I can get a decent apartment for $450, two bedroom, utilities included, get a roommate, $225 a month, heck, generally the first month is free.

With your numbers you still have almost $500 a month left, of the $12k to spend on other things, more than enough to cover what else you may need...

Note: This is coming from someone who has made a living off of hosting and is used to cutting corners on living expenses, I am one cheap bastard. Even though I own the company and run things, I am the lowest paid member of the staff, because I don't need much to live on. I am doing perfectly fine, in the heart of Chicago, where things aren't cheap, for less than your $30,000 a year, and you're telling me it isn't possible to live on less than $30,000 a year??

I've experienced both having good income and barely making it. I don't think that needing $30,000 is "crazy" depending on where you live and especially if you have a family. The fact is that I used to be able to get by with a lot less but life has made certain things such as a medical plan a good investment - and believe me they don't come cheap. So I'm not talking about living it up, but rather what some would consider the necessities.

I'd say that at this stage of my life $30,000 is good to live on. Anything more I try to invest since I don't want to work forever:) .

Yes, I agree, if you have a family and are planning to get into the hosting industry to support it, you'd better have everything planned out darn well, and realize that you are taking a big risk.

I was stating that it is crazy to say a single person NEEDS $30,000 to live on, when I could EASILY live on about $20,000 a year in downtown Chicago, where things aren't cheap, or back home in Wisconsin for probably less than $12,000 a year... If anything, the statement made was a gross over-generalization.

I suppose it would be possible if you were living with your parents, but the cheapest housing your going to find, without government assitance, would be a bare minimum of $350 a month and that's going to eat $4,250 right away. Starve yourself and eat for $6 a day, you're looking at another $2,190 there. Add in other necessary living essentials and it's not looking like you're sitting too well.

Of course that's coming from the guy who can spend money without even knowing what he spent it on.

Bare minimum of 350 a month: 4,200 a year. Business owner: Writes off part of his rent (home office) as an expense. Golden.

Eating 6 dollars a day: 2,190 a year.

Remainder left over after the above two on 20,000 a year: 13,610
That's still a big chunk of change for: Transportation, clothes and other misc. expenses.

I spent a year and a half living on 21,000 CDN a year in Downtown Toronto.
Rent here isn't cheap either.

I survived and got fatter during the process. So much for the 30k requirement.

Btw, who says you can't live from 500 clients? ;)

500 clients @ $20 or $25/month isn't bad at all!

You first have to be able to charge that much a month. I agree if marketed right it is possible. But, for exanple if you sell 500 accounts at "$25 an year" you wont be able to live off it ;-)

500 clients @ $20 a month = $10,000 a month revenue. 500 clients on 4 decent servers @ $1200 a month = $8800 a month profit. Now, assuming you can do server admin and tech support yourself and hire a part-time helper monkey for a couple hundred a week...that leaves you around $8000 a month to live on.

Obviously, you're going to have to pay taxes on that and other misc. expenses, but that's still a pretty darn good full-time/work-at-home living. The trick is, getting 500 clients paying you $20 a month each. ;)

--Tina

The US Government definition of "bare minimum" is here: http://aspe.hhs.gov/poverty/06poverty.shtml
One thing we studied in Socials last year was how the US government define poverty... it's far behind the current times. Last I remember, the Canadian government defined poverty at something around $20,000 a year in a city.

I'm amazed at how cheap you can find housing. I'm preparing for when I leave the house (looking at apartments, etc) and everything here, Vancouver, is at a premium.

Another question to ask yourself... Do you think you could handle it full time? (Ignoring several posts above... and now below)

Okay...Looks like the posts that were above mine have been deleted (so I'm not ignoring the posts there now.)

Yes, it very much depends on business model and means. I think a discussion on those would make a very nice follow-up thread.

This could make a living, however it is a hard job. Just stating out can be killer. However Hosting can be very profitable and provide a nice stable income if done correctly.

Things to remember:

Don't Skimp on server hardware, and datacenter.
(I'm saying use Dual Opteron, SCSI or SAS (NOT SATA) in Raid 1 or 10)
Do nitch hosting, tailor yourself and you knolage to specific people, they pay more, and are most likely not to be as flaky as general hosting customers, that will leave next month for the unlimited space deals, etc.
Don't make promises you can't keep
Don't say you have 24/7 support if you only have one person, you, and your only online 5 hours a day, etc.
Don't use a generic template for your site, do something creative
Know Linux or hire an admin, cpanel, directadmin, plesk, whatever you use will fail at some point and you will be up sh*t creek if you do not plan ahead.
Make a solid business plan
Have a solid TOS/AUP

Just some pointers, hope it helps.

I agree with most of what you said except about hardware. My advice would be:

Give serious consideration to renting a server versus buying your own hardware and co-location. -- Both are great options, but the higher initial cost of colo (buying more equipment, software licenses, and options) to achieve a lower operating cost may not be worth it in the beginning. If you can start out with a $200 or $500/month rental for a great server rather than tying up $2500 to $5000 in hardware, that could help you in marketing and sales expenses.

In either case (colo or server rental) look deep within yourself and avoid buying or renting based on ego rather than need. Remember you are running a business, not a hobby. In almost all cases, perhaps as high as 80% to 90% of all startup hosting companies, you will have more than enough "horsepower" with a Celeron or low-end server. Don't buy a dual/quad Opeteron or Xeon, gobs of memory, superfast (and expensive) SAS or SCSI disk drives.

Time and time again we see clients that issue quotes for "ego machines" and then after they are deployed, they run less than 5% utilzation. (Save "bragging rights" for your power gaming box at home or your media center PC with that quad graphics engine and multiple monitors - that's a hobby.)

Note: I don't mean buy a cheap machine - buy (or rent) a very high quality server but don't go for the high-end. Instead, invest in a hardware raid controller with affordable SATA drives and put your extra money into a second server or a good backup service to protect your data.

The beauty of hosting is you can grow incrementally. If you spend only $2K on a server and need to buy another one in 6 months, you're saving a lot more money than spending $5K on a server that you may not fill up for a year or more and further, with a few smaller servers you have a lot more flexibility than one mega-server.

Even if you are an expert sysadmin, all servers will need a reboot once in a while so having one "god box" means EVERYTHING goes down during that reboot. OTOH, if you have a few smaller/less-expensive servers, you can have email on one server, webs on another, databases on a third, etc.



This could make a living, however it is a hard job. Just stating out can be killer. However Hosting can be very profitable and provide a nice stable income if done correctly.

Things to remember:

Don't Skimp on server hardware, and datacenter.
(I'm saying use Dual Opteron, SCSI or SAS (NOT SATA) in Raid 1 or 10)

you will have more than enough "horsepower" with a Celeron or low-end server.
Spiv, out of what you posted this is the only part I disagree on with you. I find that starting with a Pentium dual core with 1gb of ram and something like 120GB SATAs (fairly standard) running Raid1 with offsite backups is the perfect solution. Because of this, it can work a bit harder when dealing with mySQL. Once you need to cluster, this becomes your web machine and then you grab the fancy dual opteron with 4gb ram, SCSI disks, etc.

Just to tack on. If you start with too low-end a server, you may regret it. Especially these days if you choose to lease a server, an extra $30-40 won't kill you if you're starting it properly and with a good initial investment. Upgrading or switching servers involves unnecessary downtime so early in the beginning of starting a hosting company. Don't forget to optimize the box. It's amazing the performance you get out of it.... yet so few do it

I think we're actually "on the same page"

The exact definition of "mid-range" versus "overpiced high-end superserver" is probably different for everyone but I think the idea to buy "in the middle" and grow incrementally works best.

(In hindsight, I think I agree that a Cerelon is too low for a starter machine now, especially given the pricing on a decent PIV dual core. in our business, our "standard" machine is a dual core P IV, our "legacy" servers are PIII, and our high-end app-specific choice are dual Xeon or Dual Opterons.)

Spiv, out of what you posted this is the only part I disagree on with you. I find that starting with a Pentium dual core with 1gb of ram and something like 120GB SATAs (fairly standard) running Raid1 with offsite backups is the perfect solution. Because of this, it can work a bit harder when dealing with mySQL. Once you need to cluster, this becomes your web machine and then you grab the fancy dual opteron with 4gb ram, SCSI disks, etc.

Prior to us getting married my wife lived on $20k/year in one of the more "upscale" suburbs of Atlanta.

She had a 1,400sqft apartment, 2br, 2bath ($750/month), etc paid for her own car, all her own bills, etc.

Granted it wasn't from webhosting but it is certainly possible to live a rather nice lifestyle at that pay range if you drive a modest car and live in a modest apartment.

That said, I myself couldn't (willingly) go back to living on that sort of budget.

My tastes in cars, toys, homes, my son, my wife etc prohibits that. :)

Hopefully by now you have got the main point...it all boils down to what you consider "a living".

I did an on-line quote thing for homeowners insurance the other day. I got back a quote showing a replacement value of $169,000 on my home. I thought there was a huge mistake so I called them up and the person was incredulous when I explained that here you could replace this home new (it's far from it) for 1/2 that. They use national averages based on footage etc. Not the fact that property values/building costs are lower where I live.

However when I was in my 20's, single, no kids, etc. what it took to "make a living" was far different than now. Heck I never even though about health insurance, I hardly ever got sick.

So remember many of the "hosts" you see are "youngsters" (teens to early 20s) with re-seller accounts living at home eating mon & dad's groceries. It starts there and goes up to the few hosts with hundreds of servers and big staffs of support & admin people. And everywhere in between.

So can you make a living all depends on what you need for a living. But remember even if you are in a "cheap lifestyle" category like some of the previous posts...stuff happens...roomates move out without paying, rent goes up, gas goes up, insurance goes up, cars break down, etc. etc. so if you don't allow more than the bare minimums some people have mentioned you could be doing fine and "making a living" then your roomate moves out, your car breaks and needs $1,200 in repairs, and you get a notice your electric rates are going up too...and within a week you're not "making a living" any more, you're broke!:eek:

I could live off of 500 clients who all paid $6 - $8 a month. In my part of the USA prices are pretty low, but if I lived in like Europe or LA there is no way.