Results 1 to 25 of 31
-
08-30-2009, 02:05 AM #1Newbie
- Join Date
- Jul 2005
- Posts
- 23
Is the VPS business really that profitable?
Hello,
I am wondering if the profit margins are exceptionally larger in the VPS business.
A provider I was looking to purchase a VPS from has told me each of their machines have the following spec:
CPU: 2 x quad-core 2.5Ghz, total of 8 cores
RAM: 16GB
Disk: 2 x 320GB (RAID1)
Very roughly, the cost of such (decent) hardware is approx $5K (say 5K Euro for those in Europe).
They say:
Divided by 64, each share gives you:
CPU: 1/8 core
RAM: 256MB
Disk: 5GB
Now, without taking all other costs into account (bandwidth, rack space, power, work, remote hands, support, billing, MARKETING, etc), it comes down to approximately $78 per VPS.
Lets say we ask for a pretty reasonable price of $13 per VPS per month, we paid for the hardware alone in six months. Double this for all the overhead, we paid for it in 12 months.
So can one really expect a return on investment for a VPS business within a year? does this scale or am I missing something here?
It sounds like it's much easier to turn a profit on a VPS business, than on a dedicated hosting business. Is this assumption correct?
Thanks!
-
08-30-2009, 02:11 AM #2AKA "Faze"
- Join Date
- Mar 2007
- Location
- Washington State
- Posts
- 1,088
Your logic is mostly correct, but a lot more can go wrong with VPS than with dedicated. You have to know what you are doing, and how to troubleshoot.
FazeWire Web Services.
|| We have provided great prices and better support since 2006. Located in Seattle, WA!
|| -----------------
|| Shared Hosting - VPS - Dedicated Servers - Colocation - Software Licenses
-
08-30-2009, 02:51 AM #3Web Hosting Master
- Join Date
- Apr 2009
- Location
- inside wht
- Posts
- 746
yes that is true. You must need good technical support over the VPS technology that you using . Otherwise it will make troubles to you
24x7 PROACTIVE SERVER MANAGEMENT | OUTSOURCED WEB HOSTING SUPPORT
Sales : sales @ syslint.com | Call us : (+91)9447607799 | Are you looking for DevOps Admins ?
-
08-30-2009, 03:36 AM #4Web Hosting Master
- Join Date
- Feb 2002
- Posts
- 1,138
You could always ask more for the VPS and do larger accounts so you put less on the server, 64 VPS on one server seems a lot to me.
-
08-30-2009, 03:53 AM #5Newbie
- Join Date
- Jul 2005
- Posts
- 23
As each VPS user uses resources in a different way, a smart operator would automatically determine each VPS' characteristics (heavy on memory, IO, network, storage) and move the VPS transparently to a different server where these resources are abundant, thus making optimal use of hardware.
There should be no reason not to put 64 VPS, or more, on a single server, assuming you manage to balance our their resource usage according to what is still available on the physical server.
-
08-30-2009, 04:48 AM #6Web Hosting Evangelist
- Join Date
- Sep 2004
- Location
- Cluj-Napoca, Romania
- Posts
- 504
When the VPS business scales up and you have the proper connections costs can go down a lot. Like having massive discounts on hardware once you buy X servers per month.
On the other hand I think hosting is one of the few industries where people expect to get profit in just a few months.
You can also build a small hotel or a factory and expect to become profitable in 10-20 years. How's that for an alternative?
-
08-30-2009, 05:07 AM #7Newbie
- Join Date
- Jul 2005
- Posts
- 23
To be perfectly honest, I was just asking out of curiosity. I don't think hosting in general is such a great business. Each and their own, of course.
Thanks for the comments so far.
-
08-30-2009, 05:08 AM #8Web Hosting Master
- Join Date
- Oct 2008
- Location
- Singapore
- Posts
- 4,685
The disk space is really low.
A decent hardware like this will cost around USD$2500-3000. However, a cheaper one (without ECC RAM, RAID edition drives, hardware RAID etc.) should cost about USD$2000-$2500.
I will advise you to stay away from that host, as the machine is oversold. Yes, I know 256x64=16384, but other softwares like the hypervisor needs resources for them to work, including disk space.
As I had mentioned, the hardware isn't that expensive...
Of course.
The other way round.
You invest less in the VPS business, hence lesser revenue. You invest more in the dedicated business, hence higher revenue. All the revenue comes after the hardware had paid for itself. However, there are host who choose to rent dedicated servers to sell VPS, which they can turn a profit margin easier.
-
08-30-2009, 05:09 AM #9Web Hosting Master
- Join Date
- Oct 2008
- Location
- Singapore
- Posts
- 4,685
However, in the end, the most important factor is still knowledge in the area. VPS business can be as troublesome as the dedicated business.
-
08-30-2009, 06:03 AM #10Web Hosting Master
- Join Date
- May 2004
- Location
- Toronto, Canada
- Posts
- 643
I Second LaptopFreak,
Servers do not cost $5k, a decent configuration can cost you about $2k. Mostly the RAM and CPU makes the biggest price difference.
Sometimes if you balance your VPS correctly, you can even make a single Quad Core server profitable with VPS.
Hussain█ Hussain Baig - 1-866-954-6747
█ Toronto based VPS - Dedicated Servers - Colocation
█ VPS Fusion - Providing scalable and reliable hosting solutions.
-
08-30-2009, 06:19 AM #11Web Hosting Evangelist
- Join Date
- Aug 2008
- Location
- UK, Major Cities
- Posts
- 501
That server wouldn't cost $5k, I could build it for $1-2k pretty easily, which makes a big difference to what your saying.
A lot of VPS companies oversell which is where most of their profit comes from. No one would put 64 VPS's on a server like that, more like 20-30 oversold about double. In the end, it works out.- Colin Dunn | Systems Administrator
I think CentOS is a pretty cool guy. eh runs mah server and doesnt afraid of anything...
^ That sig/meme is so old, I just don't have the heart to change it. I hope the cool kids around still get it... 2008 was a good year!
-
08-30-2009, 06:38 AM #12Newbie
- Join Date
- Jul 2005
- Posts
- 23
You guys are right, my $5K figure was an over the top, and it makes a huge difference.
From my experience it is not worth skimping on quality when building a server; a good motherboard, good brand ECC RAM, good quality chassis and PSU, good disks are a must.
Comparing prices between different vendors can save at least a few hundred dollars per server too, so that's important.
-
08-30-2009, 06:39 AM #13Web Hosting Master
- Join Date
- Jun 2003
- Location
- London, UK
- Posts
- 1,765
A decent server like a Dell R710, suitable for hosting VPS will cost in the region of $5k. We're talking RAID10, SAS drives and lots of RAM and CPU.
People can do things differently, but then there is only one type of provider that people complain about regularly in the VPS forum on WHT... the cheap ones.Darren Lingham - Stablepoint Hosting
Stablepoint - Cloud Web Hosting without compromise
We provide industry-leading cPanel™ web hosting in 80+ global cities.
-
08-30-2009, 07:09 AM #14Web Hosting Master
- Join Date
- Oct 2008
- Location
- Singapore
- Posts
- 4,685
-
08-30-2009, 07:41 AM #15Web Hosting Master
- Join Date
- Jun 2003
- Location
- London, UK
- Posts
- 1,765
One of the biggest limitations of server performance is disk i/o and quality hardware presumes SAS drives. Standard 7200 RPM SATA is not suitable for the majority of servers, and I'm honestly surprised at the number of companies/people that persist using them when in a lot of application related to hosting, the performance difference is staggering.
Darren Lingham - Stablepoint Hosting
Stablepoint - Cloud Web Hosting without compromise
We provide industry-leading cPanel™ web hosting in 80+ global cities.
-
08-30-2009, 08:49 AM #16Web Hosting Evangelist
- Join Date
- Aug 2008
- Location
- UK, Major Cities
- Posts
- 501
- Colin Dunn | Systems Administrator
I think CentOS is a pretty cool guy. eh runs mah server and doesnt afraid of anything...
^ That sig/meme is so old, I just don't have the heart to change it. I hope the cool kids around still get it... 2008 was a good year!
-
08-30-2009, 11:14 AM #17Newbie
- Join Date
- Jul 2005
- Posts
- 23
Its going a bit off topic, but what really is the difference in performance between say a Seagate Barracuda enterprise (ES) drive with a SATA interface, and one with a SAS interface?
I doubt there's any performance difference at all, mostly because the disk can't even get anywhere close to the limits of SATA II.
It's probably the exact same mechanical components, just with a different controller.
-
08-30-2009, 11:44 AM #18Web Hosting Master
- Join Date
- Jun 2003
- Location
- London, UK
- Posts
- 1,765
Darren Lingham - Stablepoint Hosting
Stablepoint - Cloud Web Hosting without compromise
We provide industry-leading cPanel™ web hosting in 80+ global cities.
-
08-30-2009, 06:27 PM #19Web Hosting Master
- Join Date
- May 2004
- Location
- Toronto, Canada
- Posts
- 643
Dell Servers like Dell R710 are over priced. I can build a server with even better specs for half the price.
Dell R710 From Dell Website - Most Basic Config:
- Intel® Xeon® E5520, 2.26Ghz, 8M Cache, Turbo, HT, 1066MHz Max Mem
- Single Processor Only
- 6GB Memory (3x2GB), 1333MHz Dual Ranked UDIMMs for 1 Processor, Optimized
- No Operating System
- SAS 6/iR Integrated, x8 Chassis
- No RAID for SAS 6/iR Controllers
- 73GB 10K RPM Serial-Attach SCSI 2.5" Hot Plug Hard Drive
- Energy Smart Power Supply, Non-Redundant, 570W
PRICE: $4,667 USD
Server you put together yourself from example NewEgg.com:
- DUAL Intel® Xeon® E5520 - 2x$384=$768
- 2 x Dynatron G199 70mm 2 Ball CPU Cooler - 2x $26.99 = $53.98
- 24 GB ECC RAM - $521.94
- A Decent Supermicro Board (SUPERMICRO MBD-X8DAi-O ) - $379.99
- A Decent Server Chassis: SUPERMICRO CSE-825TQ-R700LPV Silver 2U Rackmount Server Case 700W Redundant - $579.99
- 2x HITACHI Ultrastar 15K300 HUS153073VL3800 (0B22136) 73GB 15000 RPM SCSI Ultra320 80pin 3.5" Internal Hard Drive - 2x$139.99=$279.98
- A Good Raid Controller - 3ware 9690SA-4I-KIT PCI Express SATA - $339
This configuration: $2922.88 USD
These parts I put together is just an example. I am not saying that these are the best. But it gives you an idea.
People can do things differently, but then there is only one type of provider that people complain about regularly in the VPS forum on WHT... the cheap ones.Last edited by vpsfusion; 08-30-2009 at 06:32 PM.
█ Hussain Baig - 1-866-954-6747
█ Toronto based VPS - Dedicated Servers - Colocation
█ VPS Fusion - Providing scalable and reliable hosting solutions.
-
08-30-2009, 11:10 PM #20Web Hosting Guru
- Join Date
- Jul 2002
- Location
- The Big Easy -New Orleans
- Posts
- 341
Lagniappe Internet L.L.C. - Wholesale Reseller and VPS Hosting.
Lagniappe (lan-yap) - An extra or unexpected gift or benefit.
HostEntrepreneur - Hosting news, reviews, tips, tricks, help and the occassional rant
-
08-30-2009, 11:32 PM #21Web Hosting Master
- Join Date
- May 2004
- Location
- Toronto, Canada
- Posts
- 643
█ Hussain Baig - 1-866-954-6747
█ Toronto based VPS - Dedicated Servers - Colocation
█ VPS Fusion - Providing scalable and reliable hosting solutions.
-
09-01-2009, 03:56 AM #22Web Hosting Master
- Join Date
- Jun 2003
- Location
- London, UK
- Posts
- 1,765
As said we would normally go for dual quads, 32GB RAM+ and 6-8 SAS disks... but then you don't pay the list price, just like nobody pays the list price for a Cisco switch.
Darren Lingham - Stablepoint Hosting
Stablepoint - Cloud Web Hosting without compromise
We provide industry-leading cPanel™ web hosting in 80+ global cities.
-
09-01-2009, 06:12 AM #23Web Hosting Master
- Join Date
- Apr 2007
- Posts
- 3,531
Shared hosting is defiantly more profitable.
But we enjoy doing VPS hosting more and we are more experienced with it.
Works out well for us.BotWars.io - Code the AI of your Battle Bot!
-
09-01-2009, 08:47 AM #24Master of the Truth
- Join Date
- Mar 2006
- Location
- Reston, VA
- Posts
- 3,131
Yellow Fiber Networks
http://www.yellowfiber.net : Managed Solutions - Colocation - Network Services IPv4/IPv6
Ashburn/Denver/NYC/Dallas/Chicago Markets Served zak@yellowfiber.net
-
09-01-2009, 08:48 AM #25Master of the Truth
- Join Date
- Mar 2006
- Location
- Reston, VA
- Posts
- 3,131
Yellow Fiber Networks
http://www.yellowfiber.net : Managed Solutions - Colocation - Network Services IPv4/IPv6
Ashburn/Denver/NYC/Dallas/Chicago Markets Served zak@yellowfiber.net
Similar Threads
-
Profitable Business Together
By designer123 in forum Employment / Job OffersReplies: 1Last Post: 03-11-2008, 02:19 PM -
UK Established/Profitable Business For Sale
By UKCompanySale in forum Other Web Hosting Related OffersReplies: 2Last Post: 12-29-2004, 10:42 AM -
Selling a profitable hosting business
By munachi in forum Running a Web Hosting BusinessReplies: 18Last Post: 05-13-2004, 11:25 AM -
Profitable Hosting Business for Sale
By Subhadip in forum Other Offers & RequestsReplies: 13Last Post: 03-20-2004, 07:03 AM -
Is running a forum is a profitable business?
By willowdale in forum Web HostingReplies: 8Last Post: 01-19-2004, 01:36 PM