Web Hosting: How to Stand Out from the Norm

Zeal Web Hosting · #1 07-11-2006, 05:39 AM

Web Hosting: How to Stand Out from the Norm

(Wrote this in my spare time to help upcoming web hosts do things right. You can see a list of very useful websites I recommend at the bottom of the article.)

With hundreds of low quality web hosts flooding the market, finding a genuine web hosting company can be quite a challenge. After all, an authentic business needs to be well thought out, well executed, and also consist of a lot of hard work on the owner’s part. Unfortunately, many of these companies rarely possess these qualities.

The reason why so many under qualified web hosts are on the internet today is because anyone can create a host. Since there can be very few start up fees, starting your own web hosting company can be very alluring. However, these amateur companies do not even compare to the real ones with an actual budget. What many people do not realize is that starting a web hosting company is a long term project. If you are looking to make a quick buck and relax on the couch while doing it, web hosting is the wrong market to be in. In order to create an authentic hosting service and enjoy it, you need to be willing to dedicate yourself and put forth the effort to make it successful. From the moment you start to create a host, you should be thinking about how you will be able to show excellence with quality support. With that said I would like to talk about the steps that should be taken to plan a web hosting company.

The first step to creating a great web host is to plan everything out. This should take more than a few days, since starting a company requires a lot of organization and effort. Nonetheless, rushing the process will only give you a headache in the long run.

Although many webmasters feel the need to worry about domain names and pricing first, it is actually smarter to begin with questions. What will make your web host unique? What will you do to make it stand out from other web hosts currently competing for clients? No matter how determined you are, you have to be able to answer that question. In order to create a service that will keep clients coming to your doorstep, you need to come up with something exclusive. Even if it is something small, there has to be something unique that will automatically make your web host stand out. If you are unsure of which path to take, try finding a niche that would work well for you. Analyze other competitor’s services and find out what they are missing. This may help you pinpoint what customers are dying to have. After all, strategizing is what determines your success as a web host.

Questions don’t stop there. It is crucial to ask yourself why you are starting a web hosting company in the first place. Are you unemployed? A motivated teenage entrepreneur? No matter who you are, you can create a great service as long as you have vast resources and knowledge. It is important to always do things the correct way, even if you have to have your parents cosign for an LLC. This will ensure that you are protecting yourself and of course your personal assets.

Before you start purchasing tools to start your company, you need to make a list of the expenses and what requirements are essential. If there is a resource that you don’t really need, it is smart to hold off in order to save money. Remember detailed planning is key.

Here is a very well thought out, almost complete list of expenses you should be thinking about:
(Remember when you are considering your purchases, quality is better from the start. You may regret not going with a certain more expensive option when your first starting out because it could hurt your business in the future and also prove to be harder and more expensive to upgrade later in time. Of course it all depends on your budget.)

-Domains: With thousands of options out there, it is difficult to pick the right ones. You first need to ask yourself whether or not you will register just the .com? Or the .net and .org also? You also may want to consider registering typos and word variations. With affordable domain registration companies, it is easy to save your money and not have to take out a loan! After all, it is only a small yearly expense and will be worth it in the long run registering multiple domains.

-The Design/ Logo: These are two very important factors which should have both time and money invested into them. Your design and logo are two major reflections of how you portray your company and image. You do not want something cheap and thrown together.

-Programming: When hiring a programmer, make sure they are taking everything into consideration. This includes web standards, SEO, making the web site compliant in all browsers and resolutions, using valid XHTML and CSS. All of these attributes are very important for the sake of your web sites ease of use, ease of navigation and loading times.

-Content: There are many different options for this. While many people write their own content, other owners do not have the time or skills to do so. Hiring a writer may be a smart idea if you are on a time crunch. Users need to be able to quickly identify what your web site is about and what your services are. Having content with too much filler, not the right information and maybe broken English, does not help at all.

-A TOS, AUP and PP: These are all very important legal documents that cannot be ignored. It is almost always necessary to hire a lawyer so they can help you with the professional lingo. If that option is too expensive there are some greats web sites (listed at the bottom of this article) to help you, and provide a cheaper solution.

-Support: This is another time to ask yourself questions. What will you be doing for support? Purchasing live chat software? A forum, phone line or video demos? There are also other options which include just using email addresses and a contact form. However, these ideas are not recommended as they are very impersonal. Support is very important in today’s web hosting market. Everyone is trying to offer 24/7/365 support but realistically, many hosts cannot live up to that offer. Don’t let it be a broken promise, be realistic. Will you need to hire actual support staff?

-Your Hosting: What will host your site and what will host your customers? Dedicated, VPS, a reseller account? If you have a smaller budget to start with, it is recommended that you use a reseller account. Starting with a dedicated server or a VPS can be an expensive initial investment and requires knowledge to be able to run successfully. You will want to consider whether or not you want your actual hosting site to be on the same server as your clients are hosted on. If your server goes down, how will your clients contact you?

-Other crucial options include an SSL, a control panel, and any other software you may need to handle billing and taking orders. You might also want to consider having another company doing backups for you. Backups are very important and can be crucial if anything is to ever go wrong, which is likely to happen at some point in your company’s life.

-Once the important factors are finished, it is time for the fun part. Advertising is not only going to generate revenue for your company, but it also is going to get your company’s name out there. Therefore, creating a marketing budget may be a great investment. This could include banners which would appear on another popular website or host. In return, it will give you many interested visitors.

Most importantly, you need to keep track of your expenses. Add up your monthly and yearly costs and keep them separate. Also keep your advertising budget separate from your start up costs, or else it will just end up being a jumble of numbers. Although worrying about advertising is not necessary just yet, it is smart to keep a certain amount of money to the side for it. Doing all of this should also help you get prepared to practice good accounting. That doesn’t mean just using spreadsheets for clients and billing. You need to have software capable of allowing you to fully organize your accounting. If you do not you will certainly regret that decision later in time when you have over 1000 clients all on a spreadsheet and you want to transfer them to Modernbill as has happened to other hosts.

The next factor you should be thinking of is a domain name, but not only a domain, a brand. You need to be able to picture the brand. It should contain something unique, recognizable, and catchy. After all, a dull name will only leave people running for the door. I would suggest not going with something like “thebestwebhostingchoice.com” or anything along those lines. It is important to keep it short and simple, so the visitor can remember it easily. Think of a word that evokes a feeling, sit down with a piece of paper and a pen, and brainstorm ideas until you come up with a brand that you are completely happy with.

So you’ve picked your domain and your brand. You should register your domain in order to secure your original idea. The last thing you want is for someone to take your name! Next you’re going to have to find a good designer to create the template for your website and a designer for your logo. Perhaps both can be done by the same person. However, it is necessary to select people who are great in their own field. By choosing two people, you may get a better result. You will also need to hire a programmer. Once the web site is complete with every part implemented, you are ready for launch.

There are many other things you need to consider about your site which have yet to be covered. The most important thing to do is create a price scheme for your web hosting plans. This step is a major factor in determining your profit and success. Determining what your prices would work best at should not be too much of a challenge now since you have done the planning. Before diving in, think about how expensive you want it to be. The lower cost web hosts usually get more customers but of course make less money. On the other hand, higher costs may get fewer customers but would generate more money. I would suggest being a higher cost host because quality is key and having less customers may be easier to manage. This would allow you to not only make money but also allow you to provide better support and service. To determine what your pricing should be, first figure out how much disk space and bandwidth you have to offer. Now remember your monthly costs and your yearly costs. Your monthly expense should probably just be the server or whichever hosting provider type you’re using. Your yearly costs will most likely be your domains and the SSL. First make your yearly costs into a monthly cost by dividing it by twelve and then add it to your other monthly costs. This number tells you the exact amount you will need to bring in each month in order to break even. It is essential to base your pricing around how much you need to make each month and then add to that how much profit you want to make. Determine how long it will take you to pay off your initial start up costs with the amount of profit you added.

Here is an example:

I have 1000mb of disk space and 50 GB of bandwidth to offer. My reseller hosting costs only $5.00 a month and my 5 domains, my .com, .net and .org and two other variations, along with my SSL come out to $120 a year. My total monthly cost is $15.00 (5+120/12=15). Therefore, that means that to break even each month, I need take in $15.00. I should price my disk space at .01cent/MB and my bandwidth at .10cents/GB, assuming that I have sold what I have to offer (.01x1000=10, .10x50=5). Let’s say I wanted to profit $15.00 a month. I would make disk space cost .02cents/MB and bandwidth .20cents/GB (.02x1000=20, .20x50=10). I then would sell five packages of 200MB of disk space and 10GB of bandwidth at $6.00 per package. Let’s say my initial start up cost was $90.00. This would mean that it would take me six months to all together break even including my initial start up costs, monthly costs and yearly costs if I decided to profit $15.00 a month. You could instead profit $30.00 a month and so on. It is solely up to you. But knowing these figures, how much it is costing you, and how long it will take to pay off your expenses, is very helpful.

I hope this article helps you on your way to becoming a successful quality web host. If you only take one thing away it was a success. Thank you!

Very useful sites I recommend:
(These are not affiliate links, but instead the web sites I find give the best quality and service.)

For domain registration:
http://www.namecheap.com

For checking domain availability:
http://iwebtool.com/instant

For web design and logo services:
http://www.jusworldwide.com

For the TOS, AUP and PP:
http://www.hostlegal.com

Support helpdesk:
http://www.intellodesk.com

Control panel:
http://www.cpanel.net

SSL:
http://www.ev1servers.com

Banners:
http://www.bannersmall.com
http://20dollarbanners.com

Press releases:
http://www.pressadvance.com/press_release.php

SEO services:
http://seostyle.com

Checking your website for optimization:
http://websiteoptimization.com
http://validator.w3.org/

visio · #2 08-03-2006, 07:22 PM

Thanks so much for this article. Web hosting is NOT a get rich quich thing!

ServersAndDomains · #3 08-07-2006, 11:15 PM

You wrote a good article. Regarding standing out from the Norm. Here's a little different method for you that is much more profitable.

My cost is $120 per month for up to 5000 websites, each with 1000 MB of disk space and 20 GB of data transfer. That is a total of 5000 GB of disk space and 100,000 GB of data transfer. That's a relatively expensive startup cost, but...

Say I sell a bundle of 10 websites for $30 per year. I need to sell at least 4 bundles per month to break even at $120/mo. But because I've got something different, where 10 websites is a full 10 GB of disk space and 200 GB of data transfer for just $30 per year, instead of 200 MB and 10 GB of transfer for just 1 website at $6.00 per month, I have a product that is much more attractive to resellers with lots of websites. I could sell just 2 per week, (that say 8 per month) and then I'm making around $120 profit per month, not just $30 as in your example.

Based on your example above, your cost for the same 80 GB of disk space I just sold, would be $400 per month. If you wanted to compete with me, you can't. Your cost is 208 X higher than mine.

The difference is that, with cPanel reseller plans your cost is much higher per website and per GB. So you have to sell smaller packages for more money to make a profit, but these days you can't compete with hosts that oversell by crazy amounts. The way we do it, our cost is a Flat Fee of $120/mo for up to 5000 websites. I can offer 10 GB of space for 10 websites for just $30 per year. That's $0.25 per month per website as compared to $6 per month per website. If I ever get to host 5000 websites, my cost is only $0.03 per website. So at $0.25/$0.03, that's an 8X markup, not a 2X markup. My goal is to fill it up as quickly as possible and it's working.

Anyway, that's my 2 cents. If you want to see how it's done, let me know.

boonchuan · #4 08-07-2006, 11:21 PM

I do not think this is going to last

Quote:
My cost is $120 per month for up to 5000 websites, each with 1000 MB of disk space and 20 GB of data transfer. That is a total of 5000 GB of disk space and 100,000 GB of data transfer. That's a relatively expensive startup cost, but...

5TB space and 100TB bandwidth is far too cheap at $120, I do not think your provider can last long in the first place. It would be safer to consider a different business model, a model base on such overselling would be very dangerous even for survival , not to say standing out from the norm.

ServersAndDomains · #5 08-08-2006, 09:46 AM

On the contrary. My provider has been around for more than 9 years and this model has been around since 2003. The iBiz NOC is a huge place. I've been there more than once. They have hundreds and hundreds of dedicated servers in their server farm and can add more anytime they need to.

The iBizPanel distributes the load across ALL of these servers, so as they need more space, they simply add more servers to the farm. Really, it's no different than the overselling that other hosts do, but they do it in a way that is much more profitable in the immediate short term. In the long term, attrition keeps the client base recycling and the huge profits from hundreds of resellers paying them $150/mo gives them plenty of margin to add more servers as needed. We discount the cost to our resellers to only $120/mo. To give them an advantage and a reason to host with us and not our supplier.

The difference is that this 5 TB of disk space is divided into individual websites with 500 MB for files and 500 MB for email. So you can't sell a customer a 5 GB website, that's not allowed. But most of us host a bunch of smaller websites around 50 - 500 MB anyway, so it works out great for most applications.

Also, the fact that we sell it for $120/mo right from the start makes the revenue jumps very large, when compared to selling packages on cPanel for $5/mo. Every new reseller we get adds $50-$120 to our monthly revenue, from day 1. Every new hosting customer pays us a minimum of $30 and doesn't increase our cost one cent.

On a month to month basis, if iBiz has to add more servers to the farm, that's no problem at all because they own them. They don't lease them like us resellers do. Owning your own equipment and running your own NOC, costs much less for server space than paying monthly server leases.

I've spoken with the CEO of iBiz on many occassions. In fact, the iBizPanel is a direct result of a meeting we had back in 2001, where I told him we needed a fully automated hosting platform that does automatic setups, automatic billing and from which we could sell any service we wanted to offer. 2 years later, they had the iBizPanel beta release and it's been improving ever since.

We've been selling iBizPanel Flat Fee Reseller plans for 3 years now. We have dozens of resellers signed up and nobody has yet to host the full 5000 websites. But a few hundred websites per reseller is typical.

So, your concerns are noted but are really of no concern. By the time anyone fills up that many websites, the profit made is far and above what it would cost to add more servers.

Compared to overselling on cPanel, where you can hardly make any profit at all. The iBiz business model is FAR SUPERIOR and the profit margin actually makes it safer than going with one of these fly-by-night cPanel hosts that offers you an entire servers worth of space for $6.95.

When I first heard the deal, I was skeptical too. But after using it for 3 years I found that it is the most profitable part of my business yet. You're missing out if you don't try it.

It is a sound business model and my hats off to the folks at iBiz for coming up with it!

Would it be more attractive if I only offered 500 websites for $120/mo? Your cost would then be $0.25 per website and it would still be cheaper than cPanel.

What do you say about hosts that offer "Unlimited Domains"? Obviously, that's a crock. Shared IP numbers can't support unlimited domains and neither can a single web server. If you really want to host a lot of websites, then www.myibizpanel.com is the way to go. You get hundreds of servers to host on, so your sites are distributed, load balanced, cheap and reliable. The reliability of these websites is better than 99.95% and most of our sites have had 100% uptime for YEARS!

pinayhost · #6 09-04-2006, 10:36 AM

thank you zeal webhosting for this.. i am still doing my research and i think i have learned a lot today just by reading these thread.

gemini_bwoy · #7 09-08-2006, 10:48 PM

Thank you Zeal Web Hosting, for an informative article

I am re-reading it now, to ensure I got everything

Mike J · #8 09-19-2006, 08:11 PM

For new web hosting companies, I found the free version of Interaction very nice for live chat. Other free tools such as Jabber or MSN messenger are a plus too.

bannersworld · #9 09-21-2006, 11:38 PM

Very nice post! Well written!

Thank you,
Robert Morrise

LightTPD · #10 10-09-2006, 03:12 PM

Thanks Mike J for the link, I'm using Interaction Chat as we speak (the Professional edition), I'm loving it

Shock Hosts · #11 10-12-2006, 02:23 AM

This is really good, even though I didn't expect it to be. I already have multiple companies established, but I find this interesting, and helpful.

Thanks heaps lad.