Hi guys,

I was wondering how much profit should you make per one dedicated server. Lets say you rent a dual xeon for $220/month how much profit can you make annually from that server. If you lets say sell reseller accounts at what point should you stop putting reseller users on the server even if the load is still very low. How much annual income should you be making from a server like that before considering this server full?

I would appreciate some input from your experience.

It depends on how much you charge.

--Tina

It depends on how much you charge.

--Tina

Lets take for example hostgator, I will be offering reseller plans for $24.95. What is the bulk amount of anual income that you would go to?

Lets take for example hostgator, I will be offering reseller plans for $24.95. What is the bulk amount of anual income that you would go to?

You would be in the negative by about $25 per month - and that doesn't include the expenses of things like support, software licenses, taxes, etc.

--Tina

I've been trying to put together possible hosting plans/prices, but it seems impossible to even come close to beat all those overselling hosts without overselling. Think only way is to charge more but offer something extra on top of the hosting. Now what that extra thing is, I have not fully thought out yet.

Instead of trying to join the overselling game, why not beat them?

There are two kinds of client in this industry: The one that buys from the host with the most gigabytes of space and bandwidth, and the one who buys from the little host that maintains their servers properly, doesn't oversell and has enough time to make their services personal.

It can sometimes be hard being that little guy, but generally you always have to start off small in hosting and work your way to the top. It's not easy, but it is very rewarding :)

We aim for 7,000 - 10,000 per month profit per server.

- John C.

We aim for 7,000 - 10,000 per month profit per server.

- John C.


hmm, are you sure that it is for a monthly income per server, it is very high. For yearly income it seems to be in bulk park where I have imagined.

hmm, are you sure that it is for a monthly income per server, it is very high. For yearly income it seems to be in bulk park where I have imagined.

Yes, he's definitely talking about monthly revenue.

--Tina

How many accounts do you host per server? We are hosting 50-75 accounts per server doing 500-1000 euros / server. I visitr your website and we have almost the same plans/prices.

How many accounts do you host per server? We are hosting 50-75 accounts per server doing 500-1000 euros / server. I visitr your website and we have almost the same plans/prices.
Unless he is gouging clients or overselling like mad, there is no way he can do 10,000 (dollars or euros) per server per month.

Unless he is gouging clients or overselling like mad, there is no way he can do 10,000 (dollars or euros) per server per month.
You'd be surprised...

I wish I made anything near that per server though lol :P

You'd be surprised...

I wish I made anything near that per server though lol :P
Given what I've personally seen and experienced these last 2 years in the industry, nothing would surprise me anymore. Well, I may be surprised if hookers and pimps started getting involved in hosting. I can see the ads now: "Free night with Cindi if you sign up for a yearly contract!". I would be concerned about the "up-time" though :rolleyes:

Unless he is gouging clients or overselling like mad, there is no way he can do 10,000 (dollars or euros) per server per month.We aim for 150-200 clients per server (hardware RAID with SAS, Quad Core, 4 GB RAM), and we average about $50/month per client, so that's how we make the math work. :)

- John C.

During the last 2 months we open 75 accounts on our latest server. The server load average during the day is: 0.17, 0.22, 0.23 and during the night less than 0.10. We expect after 6-7 months to have a load average of 0.50 during day, as the customers add more domains and use more resources. The server will be able to handle traffic bursts if a website runs a campaign or they show it on TV.

We could easily add 3 or 4 times the accounts we currently have per server but sooner or later we would have complains and dissatisfied customers. Even with 250 account I can't understand how someone can do 7000-10000 / server and I am sure these that can do it will not tell us their secret :D

We aim for 150-200 clients per server (hardware RAID with SAS, Quad Core, 4 GB RAM), and we average about $50/month per client, so that's how we make the math work. :)

- John C.
I have searched your prior posts and you seem to be legit. Good for you, bro. To quote you:


We compete globally and charge $50-$200 per month for shared hosting with less than 2 GB of space and less than 50 GB of bandwidth. And we host thousands of clients....


I would like to see your site though. What is it?

We aim for 150-200 clients per server (hardware RAID with SAS, Quad Core, 4 GB RAM), and we average about $50/month per client, so that's how we make the math work. :)

- John C.

What a $50/month plan includes?

What a $50/month plan includes?
Look at my post above you. It has part of the answer.

Sorry I miss that post.

We aim for 150-200 clients per server (hardware RAID with SAS, Quad Core, 4 GB RAM), and we average about $50/month per client, so that's how we make the math work. :)
Yeah but that's not "profit" per server and would be revenue per server. You could calculate your profit per server from after tax profits divided by your number of servers.

That's still a lot of revenue/mth per server. :)

May be he provides something special for his clients.:D

Yeah but that's not "profit" per server and would be revenue per server. You could calculate your profit per server from after tax profits divided by your number of servers.

That's still a lot of revenue/mth per server. :)True, it's not pure profit. I should have said revenue to be more clear. Haven't run the numbers on profit after taking out expenses, employee wages, etc... but I'm sure it's less than revenue. :D

- John C.

I can see the ads now: "Free night with Cindi if you sign up for a yearly contract!". I would be concerned about the "up-time" though :rolleyes:

Hmm, why would you be worried about up-time :blush: , they are people too and can perform normal duties too like any webhost ;)

True, it's not pure profit. I should have said revenue to be more clear. Haven't run the numbers on profit after taking out expenses, employee wages, etc... but I'm sure it's less than revenue. :D
Just a tad :D but I'm sure it's still healthy. :)

We prefer not to calculate revenue by month anymore, we go by year now since we don't even offer month-to-month. It's either 3, 6, 12, 24month plans. But we average 40k/year revenue per server. This is for shared-hosting NOT reseller hosting-which generates far more revenue per server.

Hard fixed cost per server is very nominal @ $265/mo (Server, Colo, cPanel Lic, Fantastico Lic, RVSiteBuilder Lic) We buy our servers & cPanel lic upfront in cash but we flow the cost over 40months lifespan giving us lower monthly operating expenses closer to $170/mo per server.

come one guys, a two page thread and no one even answer the question??

dont hold it back, so how much profit will roughly get for each server ? :D

come one guys, a two page thread and no one even answer the question??

dont hold it back, so how much profit will roughly get for each server ? :D


Anywhere from -$200 to $20,000 per month.

--Tina

Anywhere from -$200 to $20,000 per month.

How long did it take you to break even? and how long to the higher end of that number? :)

How long did it take you to break even? and how long to the higher end of that number? :)


I didn't say that those were our numbers. My point is that you can't expect to apply our numbers to your business model. If you are simply asking out of curiousity, then its really none of your business. :)

--Tina

The really simple answer is that it depends on your business model.

If you're selling $1 a month hosting then it may reach $200 if you pack the server with clients and choose the cheapest server and providers you can find.

If you want to make the $20,000 a month per server then start off by choosing quality providers and charge a premium price, such as $50 a month like JohnCrowley does. People will pay for reliability.

Profit per server depends on how you account for costs, particularly expenses. Do you use absorption costing for overhead expenses (SG&A), or activity-based costing? Are you only looking at gross profit, or instead net profit or operating profit?

Our operating profit margin in 2007 was 49%. Net profit was a bit lower due to currency fluctuations (the USD in particular). We're in the SaaS business.

Profit per server can be all over the place. You may have some hosts who sell a low-end server below cost as a loss-leader simply for advertising. I worked with one host over a year ago who would only markup low-end servers by 4% so he could recover processing costs and then break even. Of course on higher-end, high bandwidth, or custom configured dedicated servers the markup can be very high.

The markup also depends on the type of services that are being offered by a host. Managed services are going to cost more than un-managed services.

There are also add-on items, such as control panels, hardware, monitoring, backup storage, etc. where money can be made.

I'm sure it's frustrating for long-time hosts to see post like this. Trying to get that "magic formula" for making a living in web hosting. There is no magic formula, and if you try to compete on price alone, you have no choice but to overload your servers to try to make a decent profit. In the long run though, this won't work, and will upset more of your customers than you'd care to know.

Find a niche - a market you can identify with - then charge "real dollars" for hosting. You will find that people who are serious about their businesses and online presence will pay $50-$100/month or more to ensure they stay online.

Ask yourself these questions:

1. Would you rather charge $1/month for hosting, put 2000 customers on each server, then spend your life putting out fires as your servers get overloaded and customers start complaining? (You'll bring in $2,000/month per server, as long as all customers stay with you - which likely wouldn't be for long)

OR

2. Would you rather charge a decent amount for hosting (say $40/month or more), put only 50 customers on each server, and have happier customers that won't leave? (You'll get the same $2,000/month per server revenue, and your customers are more likely to stay with you)

Remember - People who are serious bout their businesses will not look for a new hosting company unless they are having problems with their existing host... even if they're paying $40 /month or more.

For local clients - we go year by year so its approx. $5,000 to $20,000

We keep 250 to 300 clients on 1 server [ Local clients does not require more specs. ]

I can honestly say that no single server in our entire pool makes the same profit as any other. It all depends on client type, load, etc.

Just curious, what type of machines, disk space, and bandwidth do you guys got for the ones that put 100's of clients per server? I'm putting plans together for my future host and I can only fit maybe 40ish per server and thats a low end package.

JohnCrowley: I think there is no way to put 150-200 reseller accounts on server even with RAID, SAS, a lot of RAM, etc.

oops, wrong thread! Had too many tabs open!

I find it frustrating to see these kinds of questions. I currently have a semi-successful hosting company and one of my clients has over 500 sites on a bulk account and the server doesn't show any strain. It took me a while to figure out on my own what I could sell on that server and have it be fair to all customers. When I see someone asking for the magic number as far as what a server can handle it rings of "Please tell me your secrets so I can do the same as you." It took me a while to figure things out and rather than having someone tell me how to do things I dove in and gained the experience necessary to run a company like this. You need to learn for yourself how to estimate when a server is at capacity. You also need to note that every server is going to be different because every customer is different in their use of resources.

I think this is the best advice that a person can offer. You really can't determine how much profit you're going to get from a server until that server has reached its limit.

Specks

If you can make 7k-10k per server ... hats off to you.. but selling $50 per account is quite a challenge now a days.

Would love to hear from biggies like Hostgator , though I am not sure if they will disclose that here.

I'd host with any one without negative comments behind them, and can respond to a ticket within 2 hours (shared / reseller).

I would however, hold back on the money. I wouldn't mind paying the average, but I certainly wouldn't pay below the average - that's for sure. If I paid more, I'd expect more service, resources or features.

JohnCrowley: I think there is no way to put 150-200 reseller accounts on server even with RAID, SAS, a lot of RAM, etc.I agree. I wasn't referring to reseller accounts, I was referring to individual shared hosting accounts.

- John C.

If you can make 7k-10k per server ... hats off to you.. but selling $50 per account is quite a challenge now a days.Sure, it's a challenge, but who said hosting was easy? :)

- John C.

Ask yourself these questions:

1. Would you rather charge $1/month for hosting, put 2000 customers on each server, then spend your life putting out fires as your servers get overloaded and customers start complaining? (You'll bring in $2,000/month per server, as long as all customers stay with you - which likely wouldn't be for long)

OR

2. Would you rather charge a decent amount for hosting (say $40/month or more), put only 50 customers on each server, and have happier customers that won't leave? (You'll get the same $2,000/month per server revenue, and your customers are more likely to stay with you)


Everyone here talks about they'd rather have less customers paying more. But something that is not factored in here is with more customers your word of mouth increases as well. You need a balance here. If you're charging $1/month you need to expect a larger amount of new customers a month compared to the guy who's doing $50/month accounts.

So basically in the ideal situation you need to find the optimal price point that maximizes profit and also factors in growth. There is no point charging $100/month to customers if you're not growing at all.

I think I worded this right if not I hope someone with any business sense knows what I am talking about.

Everyone here talks about they'd rather have less customers paying more. But something that is not factored in here is with more customers your word of mouth increases as well. You need a balance here. If you're charging $1/month you need to expect a larger amount of new customers a month compared to the guy who's doing $50/month accounts.

So basically in the ideal situation you need to find the optimal price point that maximizes profit and also factors in growth. There is no point charging $100/month to customers if you're not growing at all.

I think I worded this right if not I hope someone with any business sense knows what I am talking about.

I'd rather have word of mouth from a customer paying $50/mo than $1/mo. Prices begets the quality of customer. Charging $1/mo tends to attract customers who tend to not follow rules (ie. spammers, phishers, etc ...). The more serious customer will tend to refer like minded customers. So while you may not get as many referrals from a $50 customer, you will get better quality referrals. Bear in mind that this would not always be the case.

I'd rather have word of mouth from a customer paying $50/mo than $1/mo. Prices begets the quality of customer. Charging $1/mo tends to attract customers who tend to not follow rules (ie. spammers, phishers, etc ...). The more serious customer will tend to refer like minded customers. So while you may not get as many referrals from a $50 customer, you will get better quality referrals. Bear in mind that this would not always be the case.

I used it as an example since the person I quoted used it.

lets say $10/mo instead of $1/mo. The point is you need an optimal number. You want a good margin but you also need some sort of growth. If I'm coming into hosting and I need a customer base I'm not going to come in charging $50/month for plans and expect growth unless I also have an insane marketing budget or some sort of niche.

Everyone here talks about they'd rather have less customers paying more. But something that is not factored in here is with more customers your word of mouth increases as well. You need a balance here. If you're charging $1/month you need to expect a larger amount of new customers a month compared to the guy who's doing $50/month accounts.

So basically in the ideal situation you need to find the optimal price point that maximizes profit and also factors in growth. There is no point charging $100/month to customers if you're not growing at all.

I think I worded this right if not I hope someone with any business sense knows what I am talking about.

I totally agree with this. It's not easy and it's a constant balancing act, but you don't want to charge so much that you stall growth and you don't want to charge too little so that you can't keep up with the growth.

The best way that I've found to "balance" this is to market to a niche group. Find out what that niche market it willing to bear and price your services right around that point.

I want quality customers who expect to pay for what they get rather than customers that want to get everything while paying very little. It's a compromise all around.