How to Run Your Own Web Hosting Business: A 5-Part Series

To those of you reading this, welcome! This is going to be a short series on how to run your own web hosting business. I ran my own hosting business using the methods written in this guide, and I started with just $100 (for inspiration, see Starting with $100 & Where It Took Me). This is the informal addendum to the post, and my goal here is to explain painstakingly exactly what I did (and, what I wish I did differently).

To add a little bit of background, I ran HostMyBytes for a little over a year. Revenue was approximated at $55,000/yr when I sold it, and the brand had over 1,000 clients. I am explaining what I did, and how I did it.

I am spending a lot of time writing out this guide, so if you could take 5 minutes to share it with a friend (or potential business partner), let me know if you have a question, or just say hello in the comments section, it would mean the world to me.

Part One: Before You Start Selling

Estimated working time: 10-14 hours. Estimated waiting time: 1-2 days.

It’s going to take you a little bit of time before you start selling your product. In this part, we will take the preliminary steps to selling: beginning to establish brand credibility, choosing places to resell, setting up products, and setting up workflows. Remember that we want to keep everything as well-documented and orderly as possible, so we can allow our team to do the work as efficiently as possible with minimal questions.

The preliminaries:

  • Register a domain name. If you want to find a used domain name (recommended!), you can check GoDaddy auctions for expiring domain names. A used domain name will already be aged, meaning that your WHOIS information won’t show that it was recently registered and look like the “new kid on the block” when you bring the website online. You can use filters at the GoDaddy expiring auctions for domains that include the tag “host” or “hosting” and just read them from there.
  • Have a good logo made. You can spend $5 on Fiverr for a pretty good logo in some cases (always check reviews and portfolios though!), but just be prepared to wait a while. This is why it is one of the first things that you should do.
  • Have some sort of brand identity. Many companies fail at defining and differentiating themselves. It’s common advice, and “What makes your company different?” is a common question, but people almost always fail to give solid answers to the question. “Good support” and “great uptime” aren’t real answers. Your website should articulate what value your company adds. Once you move on from a small reseller account, you will be able to put in more specific and more useful value-adds.
  • Register on some common hosting forums. By representing your business on forums in your industry, you are providing yourself with credibility and experience. A few good ones to register for: WebHostingTalk, VPSBoard, and LowEndTalk.
    • It will prove useful to find other specific niche and targeted communities not about hosting but where you can be the “go-to” hosting presence (e.g. WarriorForum, WebsiteBabble, DigitalPoint — these forums are primarily for webmasters–but all webmasters need good web hosting).
    • Make a few good posts on each these forums. Introduce yourself. Always comport yourself in a way that is civil, professional, and demonstrates your mastery of the subject matter at hand. A good post isn’t one-line long, either, but it doesn’t need to be 500 words. Somewhere between 3 sentences and a paragraph with substantive information is enough.
  • Find a website design. Don’t spend too much money on this, because you’ll be able to get a different web design that represents your brand and value adds better. I would highly recommend AKDesigner’s template shop. Sohaib is extremely polite, and I have purchased multiple designs from him, all of which convert very well. Did I mention he has freebies, too?

It’s true, the first steps take a lot of time to get started on. There’s a fair bit of monotony, too, but remember that a bit of monotony is always better than crisis.

Now let’s look at some potential companies whose services we can resell. I provide this list of companies because I have worked with each of them, and I know they provide end-user support, which will provide you a significant leg-up on the competition by having a staff available to answer support queries 24/7 right off the bat. This meaning you don’t need to answer customer questions or solve technical problems–these companies do it for you.

  • InnoHosting (personal favorite) – InnoHosting is an excellent company and I am very fond of their service and support quality. One downfall is that they do not offer master reseller access, so you cannot sell reseller accounts off the bat. You can only sell individual cPanel accounts. Their end user support always answers within 1 hour.
  • EZPZ Hosting (second favorite) – EZPZHosting is a good company and I am fond of their owner, Dan. One pitfall is that their servers can sometimes be overloaded, but I believe that they have made strides in the past years. You can sell entire reseller accounts, and this allows a lot more potential for profit this way. Their end user support is a bit less reliable, however, and they sometimes miss tickets entirely, so following up directly can be necessary.
  • ThePrimeHost (neutral) – ThePrimeHost’s owner Darryl is an excellent resource, but their staff seems mainly outsourced. Their end user support answers within an hour, but they can take up to an additional hour to investigate a ticket.

Personally I like to use InnoHosting as they have a “quality over quantity” approach to business which I align with, but not being able to sell reseller accounts can be a pain. If you have more time to invest, you can work with EZPZ, but they may require a bit more following up in order for your customers to have the perfect experience.

Now let’s set up some packages. Being 2016, storage (even flash storage) is very cheap, as is bandwidth. As such, it is important that the packages that you offer align with reasonable expectations for the time.

Tier I: 5G S, 100G BW, 1 A – $2.55/m
Tier II: 15G S, 250 G BW, 5 A – $4.55/m
Tier III: 50G S, 500 G BW, Unlimited A – $6.55/m

Key: S – storage; BW – bandwidth; A – addon domains

Tier I: 10G S, 250G BW, 30 Accts, Overselling – $4.65/m
Tier II: 25G S, 1000 G BW, 50 Accts, Overselling – $7.65/m
Tier III: 65G S, 1500G BW, Unlimited Accts, Overselling – $11.65/m

Key: S – storage; BW – bandwidth; Accts – number of sub-accounts

Package prices can be adjusted, and we will be running promotions to get those first customers in the door. By setting the retail value higher, you are taking advantage of value based pricing — by charging more, you are able to make customers think that they are getting more, after a discount.

There have been countless tutorials on how to get hosting accounts to create automatically with WHMCS, so I am not going to attempt to re-write one. By the time you read the next post, you will be expected to have set up WHMCS for ordering and set up your end user support, as well as have tested both of these.

Disclaimer: Market conditions can change. This is a guide that I am providing for free, for those who have interest in the business; no results are guaranteed. The steps here worked for me: the variable here is YOU. Maybe you can turn it into a business, or maybe you just want to keep it as a small hobby. It’s your choice. Remember, using this exact method, I built my largest hosting company of over 1,000 customers and sold it.