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  1. #1

    How to start? Dedicated servers vs Shared hosting?

    I am planning and thinking and planning and thinking...what is easier to do? buying a server and selling shared hosting, or reselling dedicated servers?

    For dedicated servers I found some really good deals, from datacenters with 10-25% discounts. I don't even know what to do.

    please advice

  2. #2
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    They are completely different markets.

    How much capital do you have? Do you understand the specied risks and circumstances for each market? etc.
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  3. #3
    I was thinking...

    for dedicated servers: I put a list with prices on my site and when someone pas, I'll order the server from the datacenter. I simply deliver it, like an intermediary, nothing more. SInce I can sell unmanaged servers, client must care about the rest.

    for shared hosting: server must be powerfull, most users ask for cPanel, fantastico, rvskins and other addons. you must have backup space, and guaranteed backups, at least basic linux knowledge for basic management. I think is a bit harder. On a shared hosting, almost any setting you modify can be good for some users and worse for others. Server must not become overloaded.

    What did you mean by "risks"?

  4. #4
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    Ah sorry, I thought you were referring to co-locating your own equipment and being a dedicated host OR being a shared host (this is what I meant by risk since of course the co-location route could be very risky for a new business start-up)

    Both methods that you outlined sound good to be honest. Shared hosting perhaps is a little more difficult in some senses though since you may have a hundred or so customers per server (compared to just one customer per server if you go down the dedicated route) - but on the other hand profit margins would probably be higher on the shared hosting route.

    To me the dedicated route that you are thinking of sounds a little less complicated and time consuming (but perhaps with lower profit margins). Just depends on how much time you have, I guess.
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  5. #5
    Why is less profitable the dedicated server way? Like I say, I got some good deals, for example 25% discount from a datacenter. A dedicated server which costs 100$ I can sell it with 75 at least. But I will sell it with 90. So I get 15$ profit, only by selling that server.

    Now let's look at shared hosting. I have to buy a server, and all the stuff I said earlier. In first month I don't expect much customers, so I must have some backup funds, because loss is the most probable. But the best case, I get in first month customers so I can covers server fees + some good profit. and after that I get an attack on server or something. So all clients are gone. Shared hoting is a bit risky, in my mind.

  6. #6
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    Keep in mind that anyone can find the same dedi deals that you can, and most customers will likely go with a company who has a reputation for good service and support over your company, especially if you're not offering anything new.

    As for shared, cpanel + billing is basically turn-key at this point, so I don't really see how you can complain about there being too much management involved. Not to mention you can always find someone willing to do some freelance administrative work for dirt cheap around these interwebz.

    It seems like if you're serious about making any money in the hosting industry today (and you don't have much to invest) you should start a bottom dollar VPS business on those cheap dedi's you're finding. Again, with control panels and billing software that is available for free or very, very cheap you can get started with little experience. That's not to say you'll serve your customers well, but merely to say that you might get some

  7. #7
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    Maybe starting with shared hosting, offering that to build up your company might be better and then you can start selling dedicated servers.
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  8. #8
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    If you want to make decent margins out of Dedicated servers then you really need to be in a position where you own your hardware rather than reselling from another provider.

    You will need more startup capital but it's going to bring a much better return in the long run.

    Anyone can rent a server and sell Shared/Reseller hosting. If you have a niché go for it, otherwise it's going to be difficult to establish a customer base over a short period.

  9. #9
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    I would suggest starting off by selling shared hosting. Gain experience in the business, build your client base and then move on to dedicated servers gradually. Starting off by reselling dedicated servers would involve a good investment upfront and with no prior experience in this business, this may not be worth the risk.
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  10. #10
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    I would start with a reseller package and sell shared hosting. Like anyone can find deals like that, i can get a good dedicated server for $50/m + discounts if i buy more over time.

    But what would you do if someone wants their money back? what if they paid via paypal and and they just did a chargeback and won the dispute, you would be out $75?

    Think about it before you start, i started my business with a reseller package for about $25/Month
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  11. #11
    Thank you all for suggestions. Btw, not anyone can get those discounts. I've been registered as a reseller to most datacenters and for some of them I have to sell first a few servers, then discount will be applied.

    @hugemarkus: maybe you started with a reseller account, but I think we're targetting different markets. You're onshore, and I am looking more for offshore hosting(don't ask why). Onshore hosting market is oversaturated.

    And regarding paypal dispute: What if I write on my terms that money-back on dedicated servers is only available on first 5 days for example?

  12. #12
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    Quote Originally Posted by Mareshal View Post
    Thank you all for suggestions. Btw, not anyone can get those discounts. I've been registered as a reseller to most datacenters and for some of them I have to sell first a few servers, then discount will be applied.

    @hugemarkus: maybe you started with a reseller account, but I think we're targetting different markets. You're onshore, and I am looking more for offshore hosting(don't ask why). Onshore hosting market is oversaturated.

    And regarding paypal dispute: What if I write on my terms that money-back on dedicated servers is only available on first 5 days for example?
    TOS will never work on paypal dispute in most case,it huge risk when selling dedicated server so better start with shared or sell server to the trusted persons only
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  13. #13
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    Quote Originally Posted by Mareshal View Post
    Thank you all for suggestions. Btw, not anyone can get those discounts. I've been registered as a reseller to most datacenters and for some of them I have to sell first a few servers, then discount will be applied.

    @hugemarkus: maybe you started with a reseller account, but I think we're targetting different markets. You're onshore, and I am looking more for offshore hosting(don't ask why). Onshore hosting market is oversaturated.

    And regarding paypal dispute: What if I write on my terms that money-back on dedicated servers is only available on first 5 days for example?
    Yes i tried offshore, but you are right it is a little different, I left it quickly since i am currently based in the US.

    Unless you are shipping something to the customer with a tracking number it will be very hard for you to win if they open a dispute, I have lost money this way, but its a risk you have to take i guess.

    Make sure you let clients know that servers will be managed or unmanaged before they buy.
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  14. #14
    Let's say I sell a server to a client. and after 10 days his server gets hacked. How can he win a paypal dispute? The server is unmanaged.

  15. #15
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    Ok, so lets say the client gets mad at you and says "I want my money back" you say no of course and say "look at the terms". Client thinks its unfair or whatever and opens a dispute claiming that "I didn't get what i paid for"

    At this point the money he paid you gets forzen and taken out of your account, and if you have less than what he paid you will have a negative balance.

    Now how do you prove to paypal that you sold him a server and that i was not faulty or whatever? There really is no way to prove that, I have tried Sure you can show logs and whatnot, but paypal does not know how servers and web hosting works and will not let you win the dispute. Therefore the dispute will stay open untill someone decides to close it and lose "their" money.

    Thats what happened to me, but now days i let clients win disputes since i don't want to deal with false bad reviews and things like that which they will sometimes threaten you with.

    Just so you know before you start.
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  16. #16
    thanks, I wasn't thinking at this. So? No paypal . LibertyReserve is a processor, AlertPay too, MoneyBookers. Payments via paypal can be made on private.

  17. #17
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    Reselling servers will get more profit, but you also get more risk. It's not easy as you think. The biggest problem I see with reselling servers is that fraud orders, and the customers leave you without noting prior, but you have to pay for the servers with the datacenter.
    Anyway, I would recommend you read more on this forum to gain more experience before starting up, or you will go nowhere and wasting money.
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  18. #18
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    Well i would offer paypal, i mean i wouldn't pick one payment processor over the other as i have not used some of the other ones.

    There are other problems that come up, can customers do chargebacks with their credit cards? i think you should research any payment processor you decide to go with.

    My suggestion is that you need to make sure that customers know exactly what they are getting and what the terms are, most customers will not know they can do a dispute like this in paypal, or atleast i would hope so.
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  19. #19
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    A lot of customers prefer Paypal, so you need to use Paypal. You must be facing with these problems. It's a part/risk of doing business.

  20. #20
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    Quote Originally Posted by VINAX View Post
    A lot of customers prefer Paypal, so you need to use Paypal. You must be facing with these problems. It's a part/risk of doing business.
    Yes exactly what i meant, there are risks and even though get fraud orders i still offer paypal and 2checkout, this is where most fraud orders come from. but i have gotten more and more used to catching these orders before i loose any money, sometimes if i see something suspicious i will give the customer a call or something to try to verify. One major thing is if the IP is from a different location than where the client is from. You will learn to catch stuff like this as you go.
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