Hi,

I am wondering, what would it take to create a small VPS business (unmanaged bearing in mind)

What costs would I be looking at?

Thanks.

First you need to decide on virtualization software - there are plenty of technologies out there such as OpenVZ/Virtuozzo, Xen, KVM, VMWare, HyperV, etc. Some of these software are licensed on a per VM basis, so you should include that in your costs. You would also need some management/billing software.

As for hardware, you need at least 2-3 powerful servers (Xeon CPU, lots of RAM), which is $10-15k. You would also need a shared storage (SAN) if you want VPS modes migrate across servers. You would probably need network firewalls/routers as well.

I would guess initial investments are about $30-50k if you want to make anything valuable.

Personally I would prefer OpenVZ over Xen

Yeah, Zen does not allow overselling

I would think that not being able to oversell is a good thing.

First you need to decide on virtualization software - there are plenty of technologies out there such as OpenVZ/Virtuozzo, Xen, KVM, VMWare, HyperV, etc. Some of these software are licensed on a per VM basis, so you should include that in your costs. You would also need some management/billing software.

As for hardware, you need at least 2-3 powerful servers (Xeon CPU, lots of RAM), which is $10-15k. You would also need a shared storage (SAN) if you want VPS modes migrate across servers. You would probably need network firewalls/routers as well.

I would guess initial investments are about $30-50k if you want to make anything valuable.

I'd start out by renting, not buying servers. Then you also don't have to worry about all of the network hardware either. You could rent a couple of pretty powerful machines for about $500/month.

If you want to run your own data center, you can also start by leasing the servers. We've done that with some Dell hardware. That also keeps your startup costs down. The lease should be less than $200/month with a $1 buyout at the end of the lease.

The biggest expense with an IDC is your internet hookup. You'll need at least two T1s (each from different providers, in case one goes down). That's expensive.

Rent the server or buy some 2nd Hand from EBay. There is a lot of good hardware from failed hosting providers available for a bargain.

Most important you should look for a niche and take it. The usual "me too" hosting service for John Doe is such an overcrowded place that you will need a lot of money for marketing. If you have a niche you can try viral marketing for free.

1. Pick a virtualization technology
2. Setup a deveopment system at office/home and get to know it inside out on commandline without any kind of management tools/scripts
3. Decide on a frontend for your customers e.g. HyperVM
4. Make business plan, source funds
5. Locate a decent server, get things setup
6. Advertise

While you can get some good deals for hardware on ebay, I generally find it was "good in its day", but against what you can buy now you can get much more energy efficient hardware which works out cheaper in the long run.

While you can get some good deals for hardware on ebay, I generally find it was "good in its day", but against what you can buy now you can get much more energy efficient hardware which works out cheaper in the long run.

Right. But if you want to start with a "small VPS business" i would tkae one or two second hand machines and upgrade the hardware when i'm sure that the business is what i want and that my business plan is not total wrong. In germany 70% of the small businesses never get older then 2 years.

And good 73GB/15krpm SCSI disks for a RAID5 system are a good start for virtual servers where IO transfer is what hurts most.

Rent a sever from a company is you best way for a first time vps normally they come with somthing like hypervm

Right. But if you want to start with a "small VPS business" i would tkae one or two second hand machines and upgrade the hardware when i'm sure that the business is what i want and that my business plan is not total wrong. In germany 70% of the small businesses never get older then 2 years.

And good 73GB/15krpm SCSI disks for a RAID5 system are a good start for virtual servers where IO transfer is what hurts most.

Buying decent hardware from the outset will save you money in the long-run. Sure there are some of great condition old Dell servers etc on ebay with 4x physical Xeon's etc but the power consumption will be through the roof compared to something more modern.

If you are just starting out then I agree that leasing is the way to go. Get something on a short/month to month contract and take it from there. If all goes to plan then start doing your own hardware.

RAID-5 is not ideal for VPS servers, and those disks are not going to provide adequate storage space unless you offer VPS with tiny disk allocations. The most important thing to consider is the the number of IOPS (IO Operations Per Second), not the throughput. 15K disks are great, however RAID-5 lacks this due to parity calculations. You ideally want RAID-10 for decent performance.

As for not being able to afford a new server, if you are struggling to buy a 2nd hand machine I wouldnt bother, just lease. It's a new business, you need to plan for the worst, cover your finances for several months as you wont generate a customer base overnight.

If you have a decent plan then your costs are just going to be:

- Leased Server
- Licenses for VPS Management software e.g. HyperVM
- License for billing/support system
- 3rd party ext monitoring for the server
- Somebody to cover support while you sleep.
- Transaction fees
+ I'm sure i've missed some.

Id say try leasing to get yourself started, Without mentioning any names there is a place that offers Core 2 Quad Q6600 with 2Gb Ram and 250GB HDD's for $99/month, You can up that to 8gb Ram and 500GB HDD for around an extra $50/month.

There's your first Hardware Node Sorted, $150.00 Spent

Then you need your billing/support software, I would go with WHM:CS with Version 4 Now available its a very smart choice. ($15/month)

OpenVZ/Xen & HyperVM is Free (Almost) i believe HyperVM is $0.50/per VPS License, however no initial downpayment is required.

So for $165/month You can host yourself 15 Average sized VPS Plans and turn a profit.

Even by Jumping on the band wagon and selling the same service as the rest you can score yourself a tidy profit if you keep at it and put in what it takes.

I've been doing the same research as yourself as im considering doing something similar.

Are you sure you mean leasing and not renting. Leasing means buying on credit so the financial risk is the same in case you don't have a "long-run".

And for RAID5/Harddisk. Is this your measurement or just your opinion. I agree that IOPS is important not throughput and for them you need the best average seek time. You get them with 15k disks faster then with fat current 500GB 7200rpm disks. My own experiments gave me terrible resulted for just 4 VMWare machines on a 500GB WD Disk.

And all the hundred of Gigabytes who need them if the VPS is almost unuseable. I'm seen so many bad hosting companies where VPS performance is going down when you do serious IO. So i would really like to see honest 10-30GB spaces more then the giant number marketing stuff. In fact i wait for the offer that you get one harddisk per VPS (we now start to see this VPS offers with one garanteed core). Or a small part of a solid-state-disk. Something where i can guess how the system will behave on high load.

So for $165/month You can host yourself 15 Average sized VPS Plans and turn a profit.


15 VPS on one Harddisk :confused:.

15 VPS on one Harddisk :confused:.

and a 500GB 7200rpm SATA drive at that :s ... this wont end well.

I don't see why 15 Small/Medium sized VPS's on a 500GB Disk would be an issue, If it was mine personally id Set it up with Raid 1 and have two of the disks,

500GB (Around 450gb Sellable Space) Should be ample for providing.

Im just voicing an opinion of low-cost start-up "This wont end well" Well thats right, Its a startup hint, Money is usually the reason behind wanting to start a small company, Upgrades are there for a reason ;).

Are you sure you mean leasing and not renting. Leasing means buying on credit so the financial risk is the same in case you don't have a "long-run".

In fact i wait for the offer that you get one harddisk per VPS (we now start to see this VPS offers with one garanteed core). Or a small part of a solid-state-disk. Something where i can guess how the system will behave on high load.

Sorry, Difference in the meaning of terminoligy, Yes i mean Renting (That was a shot at using a posher word that backfired huh?)

And There are providers who do "Dedicated Disk" on VPS Packages, I've seen a couple of them, it usually seems to work out cheaper that way then buying 80gb of there main drives. You would need some big (Physical Size) servers to house the drives if it was for lower-spec VPS Plans.

I would think that not being able to oversell is a good thing.

This has been debated about a zillion times, and the majority vote usually comes out overselling, when done correctly, is an acceptable business practice. If you don't like it, ask all of your utility providers + cell phone providers to cut your service.

I would say go with a HyperVM/OpenVZ combination. The startup costs of a VPS reseller business on average is a bit higher then simple shared/reseller web hosting because of the fact that usually a VPS nodes hardware is a bit more powerful then a shared/reseller server on average, simply because of the fact that you will be dividing one server/node into multiple server/virtual hosting environments.

This has been debated about a zillion times, and the majority vote usually comes out overselling, when done correctly, is an acceptable business practice. If you don't like it, ask all of your utility providers + cell phone providers to cut your service.


Exactly, but, people that don't know what overselling is, as well as people that do it without admitting to it, generally are the ones that are so horribly against overselling. I oversell (OMG, did someone just admit to it here?) and all of my servers operate at a load averaging .5.

But, for a VPS, I don't know how much of it I would personally want to oversell.

Overselling is a perfectly good business model, and as long as precautions are taken it can be great for client and host alike.

I personally am not too keen about overselling VPS's (they're already strapping the server enough generally) but, as I said, if done correctly, host and client will be happy.

Just to add, I was going to buy from one of my friends a Dell Poweredge 850. However I thought it may be a bit too old.

Hmmmm, seems a VPS with a guaranteed CORE and a small but dedicated SSD drive would be something I have not yet seen. A good niche maybe???

It has been pretty hard these days with so many market players in this space, anyway as long as you have nice selling point the rest is no concern.

Anyway as to servers, it is always better to rent the servers say one or two and get more as you grow or get own machines as you grow. But do not get a too powerful of a system and load a lot then face problem when something wrong happens. So bunch of mediums always good.

If you are looking to colo, you can easily get a nice node with 15k SAS drives in RAID10 to ensure your customers have good IO and also stock it with plenty of RAM. You can also oversell and still provide a great experience to your customers while grabbing more profit. Just don't overdo it and put 50-70 VPS on your node. You don't want super nodes with a ton of RAM and 4 CPUs and 8 hard drives because if that node experiences problems then you are going to take out a large chunk or all of your customers.

4. Make business plan, source funds

Let's make that #1

Just reading the posts on here, no one has any information on the servers they use

I was looking at a good starting point, with not much outlay of;

basic spec for hypervm, with openvz

two Quad core 2.4 Ghz 16mb cache
8 Gb Ram
2 x raid 300 Gb SAS for high I/O

or reading the post would it make much difference with 2 x sataII drives.

or can other people list there server, with in a tidy budget for new companies

Id say try leasing to get yourself started, Without mentioning any names there is a place that offers Core 2 Quad Q6600 with 2Gb Ram and 250GB HDD's for $99/month, You can up that to 8gb Ram and 500GB HDD for around an extra $50/month.

There's your first Hardware Node Sorted, $150.00 Spent

Then you need your billing/support software, I would go with WHM:CS with Version 4 Now available its a very smart choice. ($15/month)

OpenVZ/Xen & HyperVM is Free (Almost) i believe HyperVM is $0.50/per VPS License, however no initial downpayment is required.

So for $165/month You can host yourself 15 Average sized VPS Plans and turn a profit.

Even by Jumping on the band wagon and selling the same service as the rest you can score yourself a tidy profit if you keep at it and put in what it takes.

I've been doing the same research as yourself as im considering doing something similar.This is the most ridiculous I had ever read. There isn't any RAID in it. Secondly, support is not FOC. You will need to either hire or outsource the support, unless you decide to screw up your clients. Lastly, there are other factors that need to be included, like IP Address, processing/merchant fees, software licenses (HyperVM etc.), tax (make sure you are an incoporated business) and stuffs like that.

You made it sound so simple which is also what majority of the fly-by-night hosts do, and of course, their "business" went missing out of a sudden.

Just reading the posts on here, no one has any information on the servers they use

I was looking at a good starting point, with not much outlay of;

basic spec for hypervm, with openvz

two Quad core 2.4 Ghz 16mb cache
8 Gb Ram
2 x raid 300 Gb SAS for high I/O

or reading the post would it make much difference with 2 x sataII drives.

or can other people list there server, with in a tidy budget for new companiesThis server should cost roughly $300~$400, which is a bit high though.

two Quad core 2.4 Ghz 16mb cache
8 Gb Ram
2 x raid 300 Gb SAS for high I/O

or reading the post would it make much difference with 2 x sataII drives.

I would take 2 Systems with 1 Quad each/8GB each and 2xSataII RAID1. Build the server yourself and find a cheap datacenter which allows Tower Housing.

This has been debated about a zillion times, and the majority vote usually comes out overselling, when done correctly, is an acceptable business practice. If you don't like it, ask all of your utility providers + cell phone providers to cut your service.

I never said that overselling was bad perse, but I personally don't like doing it. I guess it's a moral issue for me. I understand that you can get by with overselling to an extent but I just prefer not to.

With that being said my friend and I are starting up a small VPS company because of the numerous requests we've had recently. We ordered the hardware from Newegg and will assemble, configure, and test it locally before installing it in a data center. We were holding off until we acquired more funding but the demand was to great for us to pass up so we opted for a low end server (Intel Xeon X3220, 8GB ECC DDR2, and 2x750GB SATAII) and will continue working with vendors to secure a 10-14 blade setup within the next month or 2.

Hi,

Bit of an update, I decided to take a plunge and buy a rented server from the US to provide VPS on it.

Many thanks.

I'm interested in getting into VPS hosting as well. I'm quite comfortable with Linux, but I don't know a lot about server hardware. From what I'm seeing, getting a VPS node that is reasonably fast is quite expensive. Just the (4 for RAID10) 10k/15k drives alone is quite expensive.

Is leasing the best option when starting out?
What form factor are the established providers using (1U/2U)?
Is 15 512MB VPS reasonable for a Quad Xeon (~2.5GHz) node?
Can anyone give some tips on choosing the hardware and where to get it?

Leasing is a good option only if the provider offer a fast replacement in case there are some hardware faults. They should give you a Service Level Agreement here, because a lot providers are simply lying to you.

I think that 15 VPS on your Quad Xeon is quite good.

For the disk. With the new 3rd Generation SSD it is not more expensive to have SSD RAID1 then 4x10|15K RAID10 machines. They all are around 5-6 Euro per GByte. I would go with the SSD right now they are much much faster.

how about windows vps ?

how about windows vps ?

Windows is a virus program - kidding :D

John

and a 500GB 7200rpm SATA drive at that :s ... this wont end well.

You will definatly need a 15k SAS and I would advise 3 of them (Raided). I made a mistake with my first VPS venture by going with a single 1 TB Drive (and the drive failed after 3 months)