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  1. #1
    Join Date
    Apr 2005
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    257

    Making good money selling shared hosting?

    Is it even reasonably possible to make good money by selling shared hosting on the internet? The scenario I'm talking about is..say an experienced webmaster sets out to start a hosting company. He would have to spend about $500-1000 on advertisements to get in the INITIAL sales. The average customer would pay say $10 a month.

    At the best, someone could make $1000/Month if they have a 100 clients (and this is a GOOD scenario I'm talking about)... this isn't really good money. Some hosts have hardly 10-20 customers, making about $200 a month.

    After paying for server costs, ads and support techs(if you employ any)... just how much is the profit? and is it really worth the effort? Is there a real future for shared web hosts? What do you think? Discuss!
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  2. #2
    Join Date
    Dec 2004
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    Clients off the Internet: Definitely, no. Can you really compete against Joe Bob's packages offered through his $10 reseller account? Do you want to be wasting advertising money in philanthropic efforts convincing people why those hosts are "bad" and why yours (or mine, for that matter) are "good?"

    Clients locally: Definitely, yes. Most of my clients know me: and they host through me because they know I know what I am doing and can provide adequate support, more so than if they went with a random host off the Internet.

  3. #3
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    Internet clients are basically useless in terms of bringing in profits. But like tamasrepus said, local clients aren't. Many local businesses will pay $50+ per month to have their website developed, maintained, and hosted. So imagine having 100 local business clients, you would basically be making $5000+. I mean $50-$100 per month isn't expensive for a business to pay if they're getting a site designed, maintained, and hosting. Especially if they don't know much about web development. So if you want to earn decent or good money, you will have to focus more on local clients than internet people.
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  4. #4
    I think what the other posts seem to point to is the fact that customers are more reliable if they have some sort of personal connection to you. I would agree that you want 'local' clients, but I guess I would expand local to mean anyone you have personal communication with.

    Perhaps your e-mail or chat buddy in Europe or Asia has enough trust in your ability to provide a good experience. You'll notice that everyone in this board says that word of mouth is the best method of advertising. It has to do with degrees of relationship.

    If someone you talk to recommends a friend of theirs directly, they'll tell them "I know someone who provides me with really good hosting, check out ..." But if that person recommends someone to you, it is less of a connection if they say "I was recommended ... and they seem reliable so far."

    Enough of my ranting... the general idea is that you want to provide as much of a personal experience as you can (remember to keep this to what you plan to scale to! others here have warnings about providing too much support!) and make sure it is also reliable. Any Internet signup you get is more likely to stay if you do this, and all of the word of mouth from satisfied contacts will help you enormously.

  5. #5
    Join Date
    May 2004
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    Quote Originally Posted by EVILISCIOUS
    At the best, someone could make $1000/Month if they have a 100 clients (and this is a GOOD scenario I'm talking about)... this isn't really good money. Some hosts have hardly 10-20 customers, making about $200 a month.

    After paying for server costs, ads and support techs(if you employ any)... just how much is the profit? and is it really worth the effort? Is there a real future for shared web hosts? What do you think? Discuss!
    And what do you think? There is 10mln. shared hosting companies and none of them makes >200$/month? "none" i mean... do all those companies sits on few bucks benefit? comeon
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  6. #6
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    Apr 2005
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    No..some of them do make good money, but they have been in the business for a long time. But the scenario I'm talking about is starting from scratch. Sort of like an individual venture. There's a LOT of competition.
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  7. #7
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    Quote Originally Posted by EVILISCIOUS
    No..some of them do make good money, but they have been in the business for a long time. But the scenario I'm talking about is starting from scratch. Sort of like an individual venture. There's a LOT of competition.
    Yes, fact.In one sentence, its not get-rich-quick bussiness module. And everything is possible... doesnt matter, you sell matches or hosting: in both cases you can become millionaire.
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  8. #8
    Join Date
    Jul 2003
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    The real money is supporting hosting companies. Several of these companies are run by horribly inexperienced owners who routinely screw up their systems and/or cannot handle support requests. Much of this is attributed to a lack of time required to learn the basics. That's why the industry is seeing a surge in support based services such as server administration and outsourced support. As prices continue to fall the barriers to entry decrease and more inexperienced companies will enter the market.

  9. #9
    Join Date
    Apr 2001
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    542
    That's wishful thinking. If these "kiddie hosts" are only making $200/month and unable to support their clients, exactly how are they going to afford hiring outside experts and pay them for support services?

    The "support industry" is geared towards providing services for medium to large hosts that are financially stable or growing but have the possibility of leveraging their efforts buy using outside service providers.

    No different that ad companies hiring freelance designers, copywriters, etc. You won't find the smallest independents hiring outside talent - they don't have the profit margin or volume of business to afford it.

    Most small operations exist only because the owner/operator can do everything themselves (ah, make that "THINK they can do everything themselves) -- effectively hiring top-notch talent at below-market prices because their price their own services/effort too low or don't pay themselves much at all.

    Quote Originally Posted by pixelized
    The real money is supporting hosting companies. Several of these companies are run by horribly inexperienced owners who routinely screw up their systems and/or cannot handle support requests. Much of this is attributed to a lack of time required to learn the basics. That's why the industry is seeing a surge in support based services such as server administration and outsourced support. As prices continue to fall the barriers to entry decrease and more inexperienced companies will enter the market.
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  10. #10
    I really think it is either quality or quantity. You can sell 500 accounts at 5$ or ~80 at 30$. I think support is what is the most costly so I would target the 80 at 30$.

  11. #11
    Join Date
    Apr 2001
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    If only it was that simple!

    Your CPA (cost per acquisition) is not going to be elastic so you can't just interchangeable pick your sales targets versus price. at $100 CPA, selling 500 accounts at $5 could force you to bankruptcy.

    Quote Originally Posted by icywolf
    I really think it is either quality or quantity. You can sell 500 accounts at 5$ or ~80 at 30$. I think support is what is the most costly so I would target the 80 at 30$.
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  12. #12
    Join Date
    Apr 2005
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    spiv, not all "kiddie" hosts are unable to support their clients. There just doesn't seem to be enough money flowing in for everyone in the hosting business. That's my opinion. An average internet user is much more likey to buy from hostgator or lunarpages (well known companies in general), than a newly founded company.

    On the other hand, look at the casino websites which are minting thousands of dollars everyday with a mediocre number of players! And what they make everyday is almost a 90% profit. All they have to pay for is hosting and promotions. Let's not get off-topic talking about casino sites here, just giving an example.
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  13. #13
    Join Date
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    You can minimize advertising costs, and maximize client acquisitions per dollar of advertising by offering a CPS/CPA affiliate program through affiliate networks - You pay the affiliate when a referred customer signs up, though you may have to pay out more in comission upfront than the customer pays for the first month. For example, iPowerWeb pays out $100 commission per customer acquired, with the following plans:

    3 months prepaid - $30 setup, $9.95/month = $59.85 revenue upfront from customer
    6 months prepaid - $30 setup, $8.95/month = $83.7 upfront from customer
    12 month price - $7.95/month, $95.40 upfront from customer.

    I don't suggest you be that risky in the comissions you pay, but even lesser comissions per sale will entice affiliates to promote your plans.

  14. #14
    Join Date
    Apr 2001
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    542
    Actually, I was thinking of them as one example. They pay $100, but when you average in the cost for all their banner ads, print ads, and other marketing, I'm sure their CPA is easily $200 or more. Again, CPA is across all your marketing efforts and I suspect companies like them (or some of their less successful competitors) are in a churn black hole -- they have to keep spending a fortune getting new customers to replace the ones that keep leaving. It's like a pyramid scheme - it works until the "music stops" and then it is clear the cash in is not greater than the expenses/cash out.

    There is room in every market for a few leaders (e.g. Walmart); the mistake is everyone else that also thinks they can be the same kind of company (i.e. K-Mart going broke trying to compete with WalMart directly). Successful competitors find a different angle (Target does well against WalMart by appealing to more fashion conscious shoppers while being close to WalMart prices).


    Quote Originally Posted by Joshua
    You can minimize advertising costs, and maximize client acquisitions per dollar of advertising by offering a CPS/CPA affiliate program through affiliate networks - You pay the affiliate when a referred customer signs up, though you may have to pay out more in comission upfront than the customer pays for the first month. For example, iPowerWeb pays out $100 commission per customer acquired, with the following plans:

    3 months prepaid - $30 setup, $9.95/month = $59.85 revenue upfront from customer
    6 months prepaid - $30 setup, $8.95/month = $83.7 upfront from customer
    12 month price - $7.95/month, $95.40 upfront from customer.

    I don't suggest you be that risky in the comissions you pay, but even lesser comissions per sale will entice affiliates to promote your plans.
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  15. #15
    making a living off of reselling may be difficult however, you can get secondary income from it pretty well.
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  16. #16
    Join Date
    Dec 2004
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    Chicago
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    It can be done well - but marketing in such a ridiculously easy market to enter is not easy.
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  17. #17
    with $1000 of local advertising i think you would be able to pull in those initial customers who will then bring in more. For the first 6 months anything you make I suggest putting back into advertising (unless it starts to grow by itself)

  18. #18
    Join Date
    Mar 2003
    Location
    England
    Posts
    54
    I'm inclined to agree - local clients make up the core of my shared hosting business

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