hosted by liquidweb


Go Back   Web Hosting Talk : Web Hosting Main Forums : Web Hosting Talk Tutorials : Web Hosting Tutorials : Reality Check: If you're about to start a webhosting provider...
Reply

Forum Jump

Reality Check: If you're about to start a webhosting provider...

Reply Post New Thread In Web Hosting Tutorials Subscription
 
Send news tip View All Posts Thread Tools Search this Thread Display Modes
  #1  
Old 01-24-2006, 03:07 AM
David David is offline
& Goliath
 
Join Date: Oct 2003
Location: Chattanooga
Posts: 8,884

Reality Check: If you're about to start a webhosting provider...


Today I'm going to teach you a quick lesson about what the hosting industry ISN'T.

First off let's get started with what you're currently charging clients:
Feel free to read the other 'related thread' available at (you'll get the amount you're charging clients from this): http://www.webhostingtalk.com/showthread.php?t=480472

All right. Now that you've performed that you know you're making absolutely nothing and this ISN'T the getrich quick scheme you originally intended.

So you're averaging around 1 cent per hour, per client (just an assumption -- anyone from 2 dollars up to 7 is about 1 cent per hour per client or less). Not too great?

Just think of how many clients you're going to need to make a decent wage at that.
Let's pretend for a moment that you consider 10 dollars an hour a decent wage (which I don't, but it's what I happen to make).

You now need a total of: 1,000 clients to generate your 10 dollars per hour (USD, I'd hope) excluding all of your expenses (and you know all about those if you run a provider: bandwidth, electricity, cage space or rackspace, licensing out the wazoo, phones, office (Even mommy charges you rent for that basement you're in kiddo) and the list just goes on.. and on.. and on.)

Suddenly you have two choices. You either solo your entire operation and setup a sick monitoring system, wake up at random hours to answer random calls/tickets or.. you hire.

I'm afraid that batch of cookies your Mom baked upstairs isn't going to cover support costs.
You're suddenly now neckdeep in doo-doo. You have to increase your clientbase to make this affordable and make a decent living. Suddenly you need 4,000 clients.. to make 40 an hour (not including expenses, don't forget that part ) because you want 20 for yourself and 10 an hour per tech!

You greedy, greedy man.
Now let's go a bit further.. you now have 4,000 clients to support with a 1-2 man team (that is if you can hire someone at 10 bucks an hour, don't outsource it'll only cause problems like higher profits ).

Now let's halt for a moment and do some math.
Let's just use an example..

Let's say there was a guy.. his name was You.
He had two choices: He could charge 5 dollars a month for hosting or charge 10.

He did some calculations, made his company named Fauxhost and got started: He decided he'd charge 5 because he'd end up getting 50% more sales!

Wow?! Call the press! 50% more sales all because of a ... (wait a minute..) because of a 50% decrease in price.

Now we're getting somewhere. Let's say You decided to go with that 10 dollars a month pricing scheme. Suddenly he'd be getting 50% less sales (1 a day instead of 2, 5 a day instead of 10, whatever it may be..) but he'd also have 50% less clients to support.. yet magically he would make the same amount of money!

Wow! Look at that..

Okay, so it's not magic. My point is (if you can call it a point) raise you're bottom-of-the-barrel prices before considering launching your host. :p

Note: What are you doing in an industry where you make 1 cent per hour from each client? You're a masochist, just like me!

Requirements for this industry:

1. You have to love providing support - in fact you have to THRIVE on it. If you're going to become a leader in the industry you're going to need to learn to professionally interact with your clientbase. That doesn't just mean 'fixed' messages every ticket you receive. Provide your clients with some quality or they'll go elsewhere, make them feel special: even for that 1 cent an hour.

2. Don't think this is the industry that you're going to get rich quick in overnight. If you want to get rich quick take that reseller account or server you have and start sending 419 scam e-mails. Don't waste your time attempting to fight on these margins if you don't have the guts to stick with it. We don't want to hear about 'You host dissappeared h0mey!'.

3. You're going to have to take some time and really build a business plan. You have to plan for those rainy days when no sales arrive. Do NOT build a hosting company on the idea that you will 'always get enough yearly sales to cover your expenses' -- rainy days SHALL arrive and you'll go down like a titanic and your existing clientbase might just not have it in them to renew.

Now with all that said.. even at 1 cent per hour (or 10 cents, or 60 cents..) the hosting industry is one where if you thrive on customer service, feedback, management.. you can make it out there. It's quite profittable and is a 'service industry' - which means as long as there are people needing websites there will be hosts! It's not what I would consider a 'luxury' (ipod sales drop when a depression hits, hosting sales not so much, toilet paper even less: got it? good Note: Which reminds me I need toilet paper, may I use your last month's budget?).

Feel free to add your own tips and tricks. Mines sort of just a quickly thrown together 'rant'.

I'm bored, can you tell? Nor can I proofread/write!
Enjoy your evening!

__________________
David
Fused


Last edited by David; 01-24-2006 at 03:13 AM.
Reply With Quote


Sponsored Links
  #2  
Old 01-28-2006, 06:44 AM
Uncle Bob Uncle Bob is offline
Junior Guru Wannabe
 
Join Date: Jan 2006
Location: Nut Land
Posts: 50
Lol, enjoyable read .

Reply With Quote
  #3  
Old 01-29-2006, 03:26 PM
mrbister mrbister is offline
Web Hosting Master
 
Join Date: Apr 2003
Location: Sweden
Posts: 1,059
Agree with above poster.
Thanks for taking your time a write it

__________________
-Mr Bister

Reply With Quote
Sponsored Links
  #4  
Old 02-03-2006, 09:00 PM
Ron799 Ron799 is offline
New Member
 
Join Date: Feb 2006
Posts: 4
This is great advise for someone who is just coming into the industry....This is what it all about, learning and having fun at the same time if that is possable.

By the way...back to my point...Thankyou for article

Reply With Quote
  #5  
Old 02-15-2006, 11:47 AM
webhosting-templates webhosting-templates is online now
Junior Guru Wannabe
 
Join Date: Jan 2006
Location: UK
Posts: 38
thats a really cool and somewhat enjoyable n very informative research effort.
Good work

Reply With Quote
  #6  
Old 02-18-2006, 08:37 PM
thomase thomase is offline
Web Hosting Master
 
Join Date: May 2005
Location: Woking, England
Posts: 1,396
Also, charging $5 rather than $10 will limit your upgrading ability later on. If you need to upgrade your server, hire staff, etc, When you're barely getting enough to pay for toilet paper then you'll have no chance at improving your service!

__________________
Web Handyman - Website and Internet Marketing Service

Reply With Quote
  #7  
Old 02-27-2006, 04:00 PM
Nastro Nastro is offline
Newbie
 
Join Date: Jan 2006
Posts: 9
Fabulous read. Learn more and more by the minute. Thanks.

__________________
You live and you learn.

Reply With Quote
  #8  
Old 03-02-2006, 05:47 PM
dgarbus dgarbus is offline
Aspiring Evangelist
 
Join Date: Aug 2003
Posts: 373
Great posts - very informative, this should help a lot of people.

Reply With Quote
  #9  
Old 03-15-2006, 10:07 PM
FreePowerBoards FreePowerBoards is offline
Junior Guru Wannabe
 
Join Date: Jul 2005
Location: Maine, USA
Posts: 73
A must read for all new hosts (and most current). Nice job.

Can you put an emoticon of little kids being slapped?

__________________

Get a message board, pay nothing!
Currently serving over 136,000 members. (live counter on main page)
www.FreePowerBoards.com


Reply With Quote
  #10  
Old 03-16-2006, 02:47 PM
UK_Guy12345 UK_Guy12345 is offline
Junior Guru Wannabe
 
Join Date: Jan 2006
Posts: 45
Thank you!

I have been thinking of going into this business and even started designing a website for it and registred a domain I had the same thoughts as you, im gonna be earning peanuts and spending hours every day on the PC.

My plan is simple. Charge a bit more than usual BUT provide quality support i.e response times of under 12 hours guaranteed! Am I thinking right?

Reply With Quote
  #11  
Old 03-16-2006, 02:50 PM
David David is offline
& Goliath
 
Join Date: Oct 2003
Location: Chattanooga
Posts: 8,884
Quote:
Originally Posted by UK_Guy12345
Thank you!

I have been thinking of going into this business and even started designing a website for it and registred a domain I had the same thoughts as you, im gonna be earning peanuts and spending hours every day on the PC.

My plan is simple. Charge a bit more than usual BUT provide quality support i.e response times of under 12 hours guaranteed! Am I thinking right?
Well it certainly doesn't sound like a bad plan: depending on the pricing your charging just ensure that you provide quality support to your clients and I'm certain things will work out

If needed get yourself a blackberry, that way you can guarantee something under 1 hour or less if the clients are really paying a high premium.

__________________
David
Fused

Reply With Quote
  #12  
Old 03-16-2006, 03:36 PM
UK_Guy12345 UK_Guy12345 is offline
Junior Guru Wannabe
 
Join Date: Jan 2006
Posts: 45
Quote:
Originally Posted by David
Well it certainly doesn't sound like a bad plan: depending on the pricing your charging just ensure that you provide quality support to your clients and I'm certain things will work out

If needed get yourself a blackberry, that way you can guarantee something under 1 hour or less if the clients are really paying a high premium.
Well I work from home anyway so blackberry isn't needed but yeah in future might consider it.

My plan is something like this.

- Invest approx $150 per server per month(decent quality/spec server with plenty of bandwidth)
- Have packages ranging from $10-$20 with good bandwidth and space and support
- Limit the number of customers per server to 30 so assuming I get average $15 per customer thats $450 per month - $150 = $300 per month
- Invest another $150 from the $300 into one more server and carry on.

This way I grow slowly and also can manage number of customers I get. Just one question. 30 customers per server is ok? Is it too less or to much?

My aim is to provide a near 1-1 support experience so that involves supporting customers with their sites, suggesting improvements and generally maintaining the servers. Any thoughts on this?

Reply With Quote
  #13  
Old 03-16-2006, 03:39 PM
David David is offline
& Goliath
 
Join Date: Oct 2003
Location: Chattanooga
Posts: 8,884
Quote:
Originally Posted by UK_Guy12345
Well I work from home anyway so blackberry isn't needed but yeah in future might consider it.

My plan is something like this.

- Invest approx $150 per server per month(decent quality/spec server with plenty of bandwidth)
- Have packages ranging from $10-$20 with good bandwidth and space and support
- Limit the number of customers per server to 30 so assuming I get average $15 per customer thats $450 per month - $150 = $300 per month
- Invest another $150 from the $300 into one more server and carry on.

This way I grow slowly and also can manage number of customers I get. Just one question. 30 customers per server is ok? Is it too less or to much?

My aim is to provide a near 1-1 support experience so that involves supporting customers with their sites, suggesting improvements and generally maintaining the servers. Any thoughts on this?
30 clients per server seems a bit low: With the majority of clients 100ish should be fine. If you keep the # too low suddenly you'll have 50 servers to manage and not enough time in the day to keep up on it.

Aim a bit higher, as long as you keep a constant watch you'll know when it's time to get another server. Proactively migrating users around (with appropriate DNS modification ahead of time) depending on their size can really prolong the need for additional servers in the fleet as well, so it's something to consider.

__________________
David
Fused

Reply With Quote
  #14  
Old 03-16-2006, 03:47 PM
UK_Guy12345 UK_Guy12345 is offline
Junior Guru Wannabe
 
Join Date: Jan 2006
Posts: 45
Quote:
Originally Posted by David
30 clients per server seems a bit low: With the majority of clients 100ish should be fine. If you keep the # too low suddenly you'll have 50 servers to manage and not enough time in the day to keep up on it.

Aim a bit higher, as long as you keep a constant watch you'll know when it's time to get another server. Proactively migrating users around (with appropriate DNS modification ahead of time) depending on their size can really prolong the need for additional servers in the fleet as well, so it's something to consider.
100 customers? That's alot indeed unless I only aim to host very small customer sites.

My thinking was to give customers ample resources to host their sites. So if someone has an active site not suitable for most shared hosters I can host them due to the lower numbers on the server competing for resources.

Ofcourse, I could host 100 customers with a much powerful server but the initial investment would be much higher than my planned $150. Something in the region of $300 and more, I would estimate.

Although your point about managing more servers is important. I guess I can be flexible with the customer numbers per server depending on what sites are being hosted

Reply With Quote
  #15  
Old 03-16-2006, 03:51 PM
David David is offline
& Goliath
 
Join Date: Oct 2003
Location: Chattanooga
Posts: 8,884
Quote:
Originally Posted by UK_Guy12345
100 customers? That's alot indeed unless I only aim to host very small customer sites.

My thinking was to give customers ample resources to host their sites. So if someone has an active site not suitable for most shared hosters I can host them due to the lower numbers on the server competing for resources.

Ofcourse, I could host 100 customers with a much powerful server but the initial investment would be much higher than my planned $150. Something in the region of $300 and more, I would estimate.

Although your point about managing more servers is important. I guess I can be flexible with the customer numbers per server depending on what sites are being hosted
True, it would mainly depend on the server quality. I only use dual cpu systems (opterons/xeons) which is why I state around 100. The majority of the sites on my servers avg. 60ish concurrent users and we never go over load 1. Which is why 100ish is where I aim per box, although generally 250 or so wouldn't have any ill performance effects whatsoever.

__________________
David
Fused

Reply With Quote
Reply

Related posts from TheWhir.com
Title Type Date Posted
Web Hosting Sales and Promos Roundup - January 3, 2014 Web Hosting News 2014-05-23 15:42:34
WebHosting.coop Set to Prove a Democratically-Run, Shared Web Hosting Cooperative Can Work Web Hosting News 2013-12-17 12:48:54
Web Hosting Sales and Promos Roundup – September 27, 2013 Web Hosting News 2014-05-23 15:42:46
Web Hosting Sales and Promos Roundup – January 11, 2013 Web Hosting News 2014-05-23 15:43:23
Web Hosting Sales and Promos Roundup – August 24, 2012 Web Hosting News 2014-05-23 15:43:43


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes
Postbit Selector

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump
Login:
Log in with your username and password
Username:
Password:



Forgot Password?
Advertisement:
Web Hosting News:



 

X

Welcome to WebHostingTalk.com

Create your username to jump into the discussion!

WebHostingTalk.com is the largest, most influentual web hosting community on the Internet. Join us by filling in the form below.


(4 digit year)

Already a member?