Thinking of Starting a Proxy Web Host - Need Input
I'm thinking that soon (not now, but in the next year or two), I will open up a proxy web host. However, since I am completely new to this, I am asking for lots of input on different things.
I am thinking that for startup, I will get a VPS with these resources:
75 GB Disk Space
3 TB Monthly Transfer
4 GB Guaranteed (8 GB Burst RAM)
1 CPU Core Guaranteed (Burst to 4 Cores)
Hardware RAID 10
CentOS 5 Operating System
4 IP Addresses
Unlimited Domains and User Accounts
FREE Virtuozzo Power Panel
FREE nightly backups
No set-up fee $199 monthly
This will be a fully managed VPS by a very reputable company, and I will have root access, auto-reboot during failure, and 24/7 support.
However, there will also be a lot of costs involved, and this is what I calculated (for the first month, it may increase):
Server - $200 (At the beginning, this will increase).
WHMCS License - $281.85 (I plan on using the renewable license for the first two months, and if I stick with it, then I'll buy a full license).
Design - Free or $30 (I may make it myself, but if not, I can get a good design for fairly cheap).
Logo - $20 (I can't make logos :p)
Advertising - $100 (I plan on doing a lot of free advertising, I may or may not participate in AdWords or other programs).
Support - ??? (I'm leaving this for last because I honestly don't know how much it will cost. I want ticket support, as well as live support using a chat system and MSN and AIM. I can support for several hours a day, but I know that's not enough. If anybody can help me out with this, it would be great).
Miscellaneous Fees - ??? (When life gives you problems).
So that leaves me with $431.85 + $200/month + ??? as the costs.
Now, this server will has 3000GB of bandwidth. To play it safe, I will only offer 2000GB of bandwidth, so that other resources like CPU don't have issues during peak times.
So, my largest plan (high bandwidth for less proportionally) will probably be 200GB. Now, if I only offering this, then it would be 10 customers/VPS. A good price for 200GB would probably be $29.95/month (correct me if I'm wrong). So in a worst case scenario (since the cheaper plans will cost slightly more/GB), I would be making $299.50 - 5% fees of PayPal (estimate) so that would be $284.52. After just server costs, that leaves me with $84 per month, and that's not a lot, especially since I still need to break even.
The smallest plan, would probably be 50GB for $8.95. That means I can have 40 accounts, giving me a revenue of $358. After fees, that would be $340, leaving me with $140 for costs outside of the VPS, and I would break even a lot quicker.
Another thing, I really don't know about staff contracts and stuff. I know some hosts that have no contract for staff, and simply say 'You're hired' and pay them on a weekly basis via PayPal. I think I may need Terms of Agreement/Contract for my staff, what they can and can't do, and outlining payment agreements and that stuff. Although I'm not sure.
And then I'm definitely not providing my staff with health benefits or anything, since it's a simple online part-time job. And this kind of ties with legal, in case something happens between me and staff, or possibly members.
I'm also curious how it works if I end up going out of business. I can't just go offline with all of my clients, I would need to warn them ahead of time, right? How about the ones that pay in advance...
Either way, I've kind of outlined my plans above, some of it may look very ignorant, and that is probably cause I am. I know somebody who really doesn't know too much about hosting, yet he's doing well with 'CreativHost.com'. I'm reading everything I can find about web hosts.
If you have no experience with the hosting industry I would recommend to start off small and growing from there. Offering proxy hosting isn't an easy task, in fact it is a very risky business as users can use your service for fraudulent/phishing purposes which will come back at you and you would have to deal with abuse issues, legal issues etc. Plus on top of this you will have a huge bandwidth bill where you must be able to afford by setting your service prices at the appropriate margins and so on.
Start off with web hosting or even reseller hosting and once you have your foot in the industry and are familiar with it, grow from there.
Thanks Jason for the comments. I'm not actually planning on starting this any time soon, but I will be sure to be informed about it all. I personally own several proxies, and as long as I have a solid TOS and comply with authorities, I should not be facing any issues.
Another reason I want to go into the proxy business is because the competition is exponentially less for it, and I have a lot of influence in a lot of popular proxy forums, therefore getting clients shouldn't be too hard (keeping them may be another story).
@sinohosting, most people that buy shared hosting are beginners and honestly don't run big proxies. As the proxies get bigger, they move on to VPS and Dedicated Servers. I may or may not start offering those, but that will be a later expansion.