I'm researching about hosting business, is there any real good profit from web hosting nowadays?

The competition is jaw dropping (big companies, little companies), hosting prices are becoming lower with little margin, etc.

I noticed several posts that are selling their business, and those who disclosed the annual revenues are ridiculously low.

Is there any real chance to get at least $40K+ annual revenue by hosting? Or is the hosting industry just "pocket money" or side money for owners?

I look forward to reading responses on this subject.

Thanks.

IMHO, there is no real profit unless you go BIG TIME and steal customers from the already big names out there.

Competition is ridiculous.

However, its not impossible to make $40K+ a year, but at the same time, don't be expecting that in your first year in the industry.

More for pocket money than anything else.

Don't waste your time unless you can target a niche market. The hosting market in general is so flooded that it's not even funny to make fun of it anymore. Any kid with a reseller account can offer hosting these days, you have to set yourself apart from all that.

I wouldnt jump ahead an start my own company atm, like tshost said, its too flooded.

It all depends. If you are a host offering a ridiculous package for $3.99 per month and you manage to acquire 5000 clients, yah you'll gross close to $20k per month but providing hardware (say 5 servers, backup machine, a couple nameservers, etc) and technical support while covering bandwidth and colo fee's... I think you'd find yourself doing it for free mostly :)

Find something you can upsell to that client base... and you can maybe pull a profit out of it...

If you do it right there is still huge markets out there. The key is picking a niche, all these crap hosts you see now are just jumping into general hosting. You need to pick a niche that has enough clients for you, provide premium services, and charge premium rates.

The only way to make good money offering $7.95 a month plans is if you are selling on volume. Lots of hosting companies can make way more if they sold on quality and focused on a specific niche.

IMHO, there is no real profit unless you go BIG TIME and steal customers from the already big names out there.
Not so.
Competition is ridiculous.
There is competition, yes.
However, its not impossible to make $40K+ a year, but at the same time, don't be expecting that in your first year in the industry.
There's plenty of opportunity out there for the right people. I'll bet there's brands that haven't been created yet, that will be very successful in the next 5 to 10 years. But it is more difficult now to build a host, than it was 5 to 7 yrs back.

Not so.

There is competition, yes.

There's plenty of opportunity out there for the right people. I'll bet there's brands that haven't been created yet, that will be very successful in the next 5 to 10 years. But it is more difficult now to build a host, than it was 5 to 7 yrs back.



Goood has spoken, very true! Specially the last response, because the industry has changed dramatically the few years I've been on it (3-4 years I think). And there have been new companies (thousands) but the number 1 cause of failure on a company is the lack of administrative skills ;)

Goood has spoken, very true! Specially the last response, because the industry has changed dramatically the few years I've been on it (3-4 years I think). And there have been new companies (thousands) but the number 1 cause of failure on a company is the lack of administrative skills ;)
Yep and marketing skill is 100x more imp now. I also think a lot of hosting companies need to shift into do hosting related stuff that has a lot of revenue possibilities, Isabel Wang and others talk about this but basically offering software as a recurring model. Either through offering hosting software online that easily lets you setup picture albums for ebay ads and more focused things like that.

A super niche focus is the only way to go.

Local small businesses is where it's at if you are starting out. You'd be surprised how many would like to get a website but have no idea how to go about doing it or who to contact.

I'm personally growing pretty slowly which I don't mind since I also work full time but if I had three full days per week to devote to seeking new local clients I could score at least 3/5 per week. Best part is, with these clients you don't have to have stupid space and bandwidth requirements.

I'm personally growing pretty slowly which I don't mind since I also work full time but if I had three full days per week to devote to seeking new local clients I could score at least 3/5 per week. Best part is, with these clients you don't have to have stupid space and bandwidth requirements.Plus you can charge way more too for the service they are getting?

There's good money in the "premium" hosting market.

the real question is how do you cost effectively advertise to compete with mutli-million dollar budgets?

luckily we are very good at getting #1 rankings in Google, having learned the ins and outs while being sub-contracted by the biggest SEO company in the world so that helps us a little, but we are always looking for low cost ways to compete with superbowl ads put on by go-daddy.

the real question is how do you cost effectively advertise to compete with mutli-million dollar budgets

Unless you have deep pockets or deep pocketed investors and the resources to handle huge influx of customer you don't compete with multi million dollar budgets.

The more important point is you don't need to compete with them and you shouldn't want to.

The more important point is you don't need to compete with them and you shouldn't want to.

Exactly. If you try and compete with a big player in the industry on price, you'll lose.

What I don't understand is why people think they have to compete on price.... Compete on something else like service, support, etc. Don't take money out of your own pocket....

The more important point is you don't need to compete with them and you shouldn't want to.

what do you recommend then?

and what exactly defines a niche market? is it enough to just offer $1 hosting? or is that not a niche, since a niche must be a subject area like ecommerce or hosting for non-profits, or hosting for programmers?

what do you recommend then?

and what exactly defines a niche market? is it enough to just offer $1 hosting? or is that not a niche, since a niche must be a subject area like ecommerce or hosting for non-profits, or hosting for programmers?Um please tell me you are kidding with the $1 hosting...

A niche is something you use to segment out a class of people who are looking for web hosting. You can do that based on who they are, what they need etc,

so you could do web hosting aimed at hospitals, small busineses in general, real estate, blogs, gamers, etc. The beauty of the internet is that this niches are actually quite big.

more ideas
web hosting for affiliate marketers
web hosting for ecommerce stores
web hosting for oscommerce and learn everything about it
hosting for genealogy sites
hosting for big families looking to stay in touch

etc

Um please tell me you are kidding with the $1 hosting...

A niche is something you use to segment out a class of people who are looking for web hosting. You can do that based on who they are, what they need etc,

so you could do web hosting aimed at hospitals, small busineses in general, real estate, blogs, gamers, etc. The beauty of the internet is that this niches are actually quite big.

more ideas
web hosting for affiliate marketers
web hosting for ecommerce stores
web hosting for oscommerce and learn everything about it
hosting for genealogy sites
hosting for big families looking to stay in touch

etc
Removed link. Please see rules. - MOD

what I most interested in is the best proven advertising method (method means steps from start to signed up customer) for private hosting companies... I'm sure if you knew you wouldn't want to share it, however...

Local advertising and personal selling. Advertise regularly so the area gets to know your business name, then when they are thinking about hosting, they'll remember you.

Local advertising and personal selling. Advertise regularly so the area gets to know your business name, then when they are thinking about hosting, they'll remember you.


my tests will local and small advertising are 0% successful, its better to do personal selling, but then you have to spend all of your time selling for a $10 account, literally you spend weeks or months to sell a small customer for the value of $25, local selling would work if you can afford a full time or part time sales force...

what do you recommend then?

and what exactly defines a niche market? is it enough to just offer $1 hosting? or is that not a niche, since a niche must be a subject area like ecommerce or hosting for non-profits, or hosting for programmers?


Think to yourself, What can I offer that others can't ?

Most likely the answer to that will be " nothing "

So then you need to think " What can I do better than others ? "

Well if your a one man show, perhaps you can offer a more personal level of support , going the extra mile. Or for local businesses you can meet them face to face ( might not be a good idea if your under 18 or not that confident in your hosting related knowledge.)

A Niche is a small market with a small ( always relevant ) amount of competition , such as providing VBulletin Forum hosting, that way you can have your server setup specifically to benefit VBulletin Forums and provide support on said forums.

That is just an exmaple, VB is quite intensive forum software and wouldn't really work for shared hosting On mass.

Although I hate to say it , If you are looking for free advice on a Forum about your business, You need perhaps question why you want to get into hosting at all ?

My advice, Get a reseller account and go for personal service and try to get local clients and friends,family etc. Promoting the fact that you work closely with your clients.

Think to yourself, What can I offer that others can't ?

Most likely the answer to that will be " nothing "

So then you need to think " What can I do better than others ? "

Well if your a one man show, perhaps you can offer a more personal level of support , going the extra mile. Or for local businesses you can meet them face to face ( might not be a good idea if your under 18 or not that confident in your hosting related knowledge.)

A Niche is a small market with a small ( always relevant ) amount of competition , such as providing VBulletin Forum hosting, that way you can have your server setup specifically to benefit VBulletin Forums and provide support on said forums.

That is just an exmaple, VB is quite intensive forum software and wouldn't really work for shared hosting On mass.

Although I hate to say it , If you are looking for free advice on a Forum about your business, You need perhaps question why you want to get into hosting at all ?

My advice, Get a reseller account and go for personal service and try to get local clients and friends,family etc. Promoting the fact that you work closely with your clients.

are you talking to me or the person who started the thread? it's always good to talk to others even if you have been doing this as long as I have (over 10 years...)

Here is no money in web hosting this days... Don't waste your time and money to start another one.

Do something NEW - that nobody else does, may be offer web building solutions or marketing services, web hosting alone will not going to give beacon anymore. All players who stay in business for 5+ years already gets their solid client base and it's will be almost impossible to impress those customers to switch.

It's like an amount of Real Estate Agents - in California it's like 10% of population has Real Estate Agent license, but only 1% of those real estate agents make any money.

If you cannot provide NEW and EXCITING competitive solution or advantage (that has great value) - don't even try ;-)

Yes there is money to be made in this industry, 40k a year is nothing if you work hard for it. The first thing is don't enter this industry if you simply want money, If you want a lifestyle attached with a love of the business and are dedicated to your customers you will make it. Like any business it takes time to build up but if you're in it for the long term it's very very rewarding.

40k a year is nothing if you work hard for it.

To get 40k a year in WebHosting it takes a LOT , oh believe me when I say to you a LOT of work. Total dedication, nights with-out sleeping, and did I mentioned a LOT of work?. Also you are gonna get a lot of frustrations, but you have to keep up!


If you cannot provide NEW and EXCITING competitive solution or advantage (that has great value) - don't even try ;-) ;) Totally agree

To get 40k a year in WebHosting it takes a LOT , oh believe me when I say to you a LOT of work. Total dedication, nights with-out sleeping, and did I mentioned a LOT of work?. Also you are gonna get a lot of frustrations, but you have to keep up!

;) Totally agreeIt doesn't take insane no sleep work per say, just a smart business plan, attention to customers and niche marketing. If you choose the right niche you can grow a company and have a life. I reached 40k and that was while I was going to school full time and traveling during off time at school.

Possible but because the market is so full right now unless you can sell an incredible amount of small packages or find a niche where you can charge more its going to be hard.

Possible but because the market is so full right now unless you can sell an incredible amount of small packages or find a niche where you can charge more its going to be hard.
Ya but that is the easy part, there is so much need for good hosting right now there are tons of customers in those niches who are willing to pay more for something in their niche or high quality hosting. Or a combined service that for example helps small businesses to get online.

It doesn't take insane no sleep work per say, just a smart business plan, attention to customers and niche marketing. If you choose the right niche you can grow a company and have a life. I reached 40k and that was while I was going to school full time and traveling during off time at school.
How many years ago was that?

How many years ago was that?
About 5 years ago was when it was started, although I think its actually easier to do it now than back then, more tools, more info and the internet is a lot bigger and more segmented.

About 5 years ago was when it was started, although I think its actually easier to do it now than back then, more tools, more info and the internet is a lot bigger and more segmented.
I think thats the root cause of the problem, its too easy to do now :)

But hey competition shall only make you better!

You can make money from web hosting! I see people do it everyday. Don't except to get rich in the first year though. I make a few extra bucks in my pocket, but the main reason for me starting ModulaHost was for something to do. I enjoy doing this kind of work.

There is not much profit out there. Infact you should be prepared to lose money for at lease the first 6 months.

There is not much profit out there. Infact you should be prepared to lose money for at lease the first 6 months.

Or longer. Like any other business in fact :)

There is not much profit out there. Infact you should be prepared to lose money for at lease the first 6 months.
Not really, sometimes you can make money from day 1. Depends on what kind of market you are targetting.

With reseller plans starting from 5-10$ per month, its not a tough job to get things going ;)

It's really easy to come into the industry. As people mentioned, a 12 year old can do it.

However, people know how to weed out bad hosts, so long as you get your s*** together, Im sure you'll be fine (just have enough income to support your company)

Hosting Business is very lucrative if you r providing your services to Clients who are not in the same business, as you can charge them according to your wish, so concentration on non-IT end user customer. It will be very effective in generating profit with hosting business, but be carefull in giving them a proper support as these clients dont give another chance.

I have found that you can only make a little spare change here and there with starting a web hosting company. You will have to work hard at it to make over 40K a year.

If you're serious on your business and doing it right, you will make good profit and growing...

Yes... I found it a nice part time thing.. You can get in full time but expect to make some losses

You can make money from web hosting! I see people do it everyday. Don't except to get rich in the first year though. I make a few extra bucks in my pocket, but the main reason for me starting ModulaHost was for something to do. I enjoy doing this kind of work.

Ditto. Have small expectations - then grow them as they get fulfilled. If it's something you don't genuinely enjoy then don't bother.

Best wishes

RavenServers

But hey competition shall only make you better!

Good point ;)

The margin on hosting is 75% or higher, so yes there is profitability in web hosting. Yes, you can make in excess of $40k/year...

Ultimately volume is the key.

The margin on hosting is 75% or higher, so yes there is profitability in web hosting. Yes, you can make in excess of $40k/year...

Ultimately volume is the key.

like I said, the key is marketing... thats why we are lucky to be so good in search engine optimization for web marketing.

I did not entered the hosting market to make easy money. I started selling hosting just because I like to do it, not for the money. I think this is also a very important aspect when you consider starting a hosting business. Only start with it when you enjoy doing it and not for making easy money which will be difficult to achieve anyway.
If you really want to earn money, combine your hosting service with designing websites for example.

One thing I woud like to know is, how do people survive when the likes of hostgator are pratically space & bandwidth away? What do you do?

One thing I woud like to know is, how do people survive when the likes of hostgator are pratically space & bandwidth away? What do you do?
Provide good support. Be there for the client. Address their needs. Build up a "personal" relationship. That builds loyalty, and the peace of mind knowing that if they need support you will be there for them is worth more to most than $10/month savings. Most couldn't care less if someone else offers gazillion GB of space or bandwidth for less. If they are happy with you, they will stay. The majority will. Word of mouth is the best advertising. My goal is to have fewer good clients than a zoo of clients. YMMV.

I did not entered the hosting market to make easy money. I started selling hosting just because I like to do it, not for the money. I think this is also a very important aspect when you consider starting a hosting business. Only start with it when you enjoy doing it and not for making easy money which will be difficult to achieve anyway.
If you really want to earn money, combine your hosting service with designing websites for example.

That's really the reason I do it. It's something to do!

I don't think it was emphasized strongly enough in the thread that the profit from hosting typically also comes from the fact that hosting leads to other avenues in business. A lot of hosts I hear get several requests for layout work, hacks, mods, and other such things from which having a varied array of services would work to one's advantage.

Start with hosting, go into perhaps domain name brokering / reselling, then contract out work to web designers and programmers for a commission and you could increase your profits considerably.

Hosting itself can be a marketing tool for larger lines of business, and still, as others have already pointed out, have a large profit margin to itself.

If you want to get in and start making money right away allot of these small hosts are looking to get out. They had to find full time jobs or they only have just enough customers to cover the cost of there server. Say a company has as little as 10 Customers paying them $10.00/Month. You could probably buy these customers from around $1200.00 you get instant recurring revenue and if you give good support those customers will stay with you for years. Repeat the model. You now have customers that you can up sell more services to. Upgrades on disk space upgrade to dedicated servers.

Selling dedicated servers is also a great way to go. There is still allot of competition but most people are upset with there dedicated provider for one reason or another. They are an easier sell than shared hosting and you have a more technical minded customer base. Also average RPU can get up in the $100's/Month instead of the $5.00 a month. I know I do not want to support a customer paying $5.00/month its ridicules.

We have several development companies who will buy a rack from us to sell there own dedicated server in. They develop sites for there customers and host the sites for them.

The Telco's of the late 90's would give hosting away as a free service with one of there more profitable services. I never cared for that model but if you have another product you are trying to move shared hosting is an easy give away.

The question is "Is Hosting Profitable today" the answer is YES! if it was not profitable there would be less of us. I agree with past post it is hard work alot of sleepless nights but it is extremely rewarding.

40K a year is a small goal and if that is what you are looking for I would suggest staying out of the market. Consider the sites you host as Real estate. Your customers will be making there living off of there websites. They are feeding there children. If you go into this business half hazard and do not provide good support and have to depend on some third party when a server has crashed you are jeopardizing more than your good Hosting name you are jeopardizing the good will of your customers and there families.