Web hosting business is obviously not the easiest, but a very profitable business once you get settled. The most attractive part of this business is low initial investment, so even if you fail you don’t lose too much. On the other hand, if you have solid marketing plan and you are completely aware of your target market, you can certainly earn hefty profits from this business. This is not a short term business and if you are looking to start a web hosting company just to finance your study, I think you must go for some other option. Web hosting business takes long term commitment and lot of work, before you can actually make some money you can brag about.
A lot of technical work is required to start web hosting business, until you are using a company like resellerclub. If you are a programmer or geeky person, you can manage most of the part of this business, but on the other hand if you are just another person with aim to work at home without in depth technical skills, you will have lot of difficulty in setting up this business. In this case you will either need to spend a lot of your time in learning some essential skills or will need to hire someone to do some of the technical tasks, one time or another.
I have tried my best to write each and everything in detail in this article, and even a person with little technical skills would be able to start a web hosting business after reading this article. But please ensure to read my follow up articles on this blog if you want to get more understanding of marketing web hosting business, setting up dedicated servers or resellers etc.
How much does it cost to start a web hosting business? well, it varies depending upon your choices. Here is the breakdown of costs.
Logo will cost you only $5.5 if you hire a person from fiverr, but I would never recommend it if you don’t want to compromise on quality. I am not saying that Fiverr don’t have quality professionals, I am just saying that none of the quality designers would work for around just $5. Some of the quality designers also work on Fiverr and they will possibly charge you much higher than the basic $5 price.A fine logo will cost you at least $50 or could be much higher depending upon the person you hire. Let’s say you need just a fine logo to start with, so assume logo cost to be $49 .
You can get a domain name for around $10.99 from a company like Dynadot or you could get one for even cheaper if you get it from NameCheap etc. Why I recommend dynadot over many other domain providers? because their renewal rates are much lower than others. Obviously Dynadot is going to be cost effective solution in long run.
When choosing a reseller package, please don’t go for the cheapest option , but try reading reviews before choosing a reseller company. Some of the resellers pricing could be very low, but you may end up getting very low quality reseller hosting with very low uptime, speed etc. I would recommend you to go for Inmotion Hosting Reseller because of their great value for money. Their cheapest plan comes for around $20 per month and they offer free WHMCS as well ( Costs around $15 per month otherwise ) . Other than that they offer very competitive features, and of course it’s a very reliable hosting provider with hundreds and thousands of customers. We would assume reseller cost to be $28 per month in beginning.
WHMCS ( billing software ) comes for around $16 per month and you can get away with it if you choose Inmotion Hosting Reseller . Alternatively you can go for ClientExec software which comes cheaper than WHMCS, but there is very limited documentation available on internet related to ClientExec. On the other hand WHMCS is industry’s standard billing software with massive amount of documentation and related resources. Let’s assume WHMCS license cost to be $16 per month.
If you have web design skills and you can setup your website by yourself, you can just grab a theme from ThemeForest for around $59 and customize it according to your need. On the other hand if you need a completely custom design, you may need to pay around $2000 to a professional company or you can grab one for just $399 from here. We will assume web design cost to be $59 ( If you know how to set it up yourself )
A good live chat software comes for a high monthly cost, but in the beginning its better to use a free software such as Zopim. So let’s assume chat cost to be $0 .
Technical and Sales Support
This could turn to be the biggest expense for a hosting startup, and surely if you don’t have enough finances you can always manage most of it yourself in early days. You may need at least 3 people to manage it otherwise, if all three have skills of managing both sales and technical support. You may need to place them at three different shifts of 8 hours each, so you can provide support to your customers 24/7. Alternatively you can outsource it to companies like ServerSitters etc but still it would be very expensive option. I would suggest to handle support by yourself in the beginning and once you have enough cash you can move toward other options.
Total Minimum Cost
One Time Cost: $100 ( Web Design and Logo Design )
Yearly: $9.95 ( Domain )
Monthly: $44 ( Reseller, WHMCS )
So initial cost would be around $154 and monthly expense would be around $44.8 if you are managing support by yourself.
And these are some basic essential costs of running the business. There could be many additional costs such as management cost, marketing costs etc.
Till this time, I am sure you are clear about cost of starting a web hosting business. Let’s discuss step by step process on how you can start your web hosting company.
1. Learn about all the legalities
While some of the hosting startups completely ignore this step, but this is very crucial steps and without taking a look at it you might face penalties in long run. Consult with a lawyer experienced in online businesses and learn about all the legal technacalities before you step into this business.
2. Come Up With a Name
Before you actually start all the technical stuff, it’s always a good idea to name your hosting company before actually beginning the practical work. Forbes have written a great and comprehensive article on naming a business here.
It would be nice to endorse “host” or “hosting” in your company name because it will give an idea of what you do right after one hears your name, but it’s not necessary for sure. Your company name must be simple one and make sure it’s easy to spell and pronounce. You must use the rule of “Kiss” , hey don’t get me wrong, it simply means Keep It Simple Silly.
3. Domain Name
Once you have a couple of options to choose from, it’s the time to check the availability of domain name. Check all the options through domain availability check and see how many of them are already picked and eliminate them from your list and choose one from the remaining.
I suggest to choose a .com domain instead of .net or other extensions. Let’s say you have selected RazaHost as your company name and someone has already purchased RazaHost.com but RazaHost.net is available. Well, you can of course buy and use that domain but it won’t be a great idea because you may be giving a lot of traffic to RazaHost.com in long run once after gaining success . So make sure to choose a name with the .com domain availability, and you can book .net etc as well as an extra to protect your business in future.
4. Get a Logo
Sometimes a very simple text logo with MS paint might work, but if you are really serious about your business it’s better to invest in a professional logo design. You can get a logo design for as cheap as $5.5 from Fiverr but trust me, that won’t be great enough. Most of these Fiverr designers use stock images in there logos, there could be copyright and sunniness issues or something even quality might be very poor. But as I have mentioned earlier, this is not a rule of thumb and doesn’t apply to all of the Fiverr designers. There are many awesome designers on Fiverr and obviously you can find one with luck and research.
You can get a good logo for around $50 with over a couple of high quality samples from Photoshop Services Page ( Warning: My own company 😉 ). Or you can find one yourself by searching on google.
There are many online free logo makers such as this one but I won’t recommend using them if you are very serious about your company. Your logo would just be another stock image with text which might have been used by 1000’s of other people as well. So please, leave alone this option.
5. Plan your Business.
For some people it’s a must have thing to plan your business before you start your business, but for others it’s an optional thing. To me I think you must plan your business because it reduces your chances of failure, even if you are not going to pitch it to investors. Although it may take too much time in creating a hosting business plan, but believe me it worth it.
You can use LivePlan , a template from bPlans , can do do it from scratch or even hire a third person to do it for you. There is no comprehensive business plan template related to web hosting available on the internet at the moment. But don’t worry I am working on it and very soon it will be available to download for free.
Your plan must include at least your target market, business strategies, business introduction, finances, pricing etc.
6, Choose a Reseller Package
It’s quite expensive to purchase a VPS or a server in the beginning, so it’s better to choose a reseller plan in the beginning and get a VPS or a dedicated server once you are established. Some people think that you can’t transfer your reseller clients to your server, because all of the clients belong to the company which basically is providing the reseller plan. But it’s a complete myth and you can transfer your reseller client wherever you want, even to another reseller acount.
There are countless companies on internet providing reseller plans. But as I mentioned earlier, I would recommend you to go for Inmotion Hosting Reseller. It’s because Inmotion is a well established brand and provide good value for money. They even provide backups for your clients and free WHMCS license as well, which might add some extra burden on you otherwise.
Here are some of the factors you must consider before choosing a reseller package.
(i) . Price
Price is one of the first thing comes into mind when choosing a reseller package and most people compromise specs over price. You must look at features before looking at the price and choose a reseller which provide all of your required features at lowest price instead of compromising on specs for a bit of lower price.
Also please make sure to read the renewal pricing of reseller hosting as well. Sometimes, reseller companies give away heavy discounts on first term, but when it comes to renewal, they charge way more than you may expect. So make sure not to fall prey to discounted price and read the renewal cost as well before making a decision.
Remember not to pay for the features you don’t need. Let’s say reseller A is providing all of your required features for $30 per month and reseller B is providing all the features of reseller A and an extra feature such as dedicated IP for $40 per month. You must decide if you really need a dedicated IP and does it really worth an extra $10 per month and make a choice depending upon that decision.
(ii). Diskspace and Bandwidth
Compare bandwidth and disk space of various resellers as the first measure of choosing a reseller hosting. Ensure that reseller is providing enough space for your early clients so you may not have to worry about it in the early phases. If reseller is providing SSD storage, it’s a big plus because it can massively increase the website speed of your clients.
Ususally diskspace of around 100GB and bandwidth of around 1000GB is enough as a starter, but it can vary from person to person. Some people use all of the 100GB in less than a month and others don’t fill 20GB of diskspace in over a year. It’s completely dependent upon how many customers you are going to get and their usage patterns.
(iii). Company Credibility & Reviews
Many hosting companies come and go every year and few of them survive test of the time. It’s a good idea to read reviews about the company and check how long the company is in the business before choosing one.
Also make sure to read reviews on the company’s uptime and performance so your company may provide highest quality services to its customers.
(iv). Technical Support
What if you are trapped in a problem and you don’t know how to get out of it or the worse, your reseller provider’s technical support is not answering you? of course technical support is a very important determinant in choosing a reseller hosting provider. You can refer to various online reviews of the company to ensure they really do have great support.
Overselling basically means selling more than actually you have. Let’s say you have purchased 100GB diskspace reseller plan, and you sell package of 1GB to each of your customers. If overselling is not available, you can only have 100 customers at max at each time. You will need to upgrade your reseller plan before you can sell more hosting packages.
But if overselling is enabled, you can even sell 150 packages of 1GB each even if your reselller plan offers only 100GB. You will pay extra to your reseller plan provider later on without halting your business. You can even sell unlimited packages to your customers with overselling enabled.
It’s one of the must have things these days. Almost each and every host is marketing unlimited web hosting plans ( Although they are not unlimited actually. ) and if you offer limited packages i.e. 10GB, 20GB etc you are certainly losing a competitive edge.
This is another very important determinant in choosing a reseller hosting provider. During your web hosting business, you may need various software including cpanel & WHM, WHMCS ( Billing software ) etc. You may need to pay a hefty price if you buy them yourself, but luckily some of the reseller hosting providers, provide you with all the required software.
Almost all of the resellers provide you cPanel and WHM with your reseller accounts, but that’s not all. WHMCS or another billing plugin is very necessary for your hosting company to run, and it comes with a hefty tag, if you buy it yourself. Very few of quality resellers provide you this software at reasonable price.
Following are some of the companies which provide WHMCS as well with their hosting plans.
Inmotion Hosting ( Highly recommended )
Other than that you must look for following things in your reseller
- Marketing Tools
- Free domain reseller account
- Private Nameservers
7. Domain Reseller
Obviously with your web hosting services you must be selling domains as well. Once you have selected a hosting reseller it’s time to choose a domain reseller. Currently there are two major domain resellers in market namely Resellers Club and eNom. I would always recommend going for Resellerclub because of their lower prices and diverse range of domains. Plus eNom requires a minimum deposit of $100, while Rellers Club is pay as you go company.
8. WHMCS or Any Other Billing Software License
I am assuming that your reseller have provided at least cPanel and WHM license. But if you have choosen inMotion hosting or another reseller which provided you a free WHMCS license, just skip this step.
Basically WHMCS is a billing software and it’s mostly used software in industry. You will need a billing software in order to get your web hosting company running. Why do I recommend WHMCS? being as a major billing software you can find useful videos and documentation related to this software very easily on the internet. Plus there are many freelancers and companies, completely dedicated to WHMCS solutions, in case you might need them.
9. WHMCS Configuration
Configuring WHMCS is a bit technical task and certain configurations might be required. You will need to install it to a proper directory, configure its packages, manage automation etc. If you have experience with technical stuff, you may somehow manage to configure it even if you are doing it for the first time. But if you don’t have any technical experience, I would always recommend to hire a technical person to do it for you.
10. Setup Website
Once you have purchased each and everything related to reseller hosting, it’s time to setup your website in order to really get started. First of all you will need to install WordPress in your web hosting account.
Once you are done with it, grab a theme from Themeforest , install it, configure it and you are done. But I would recommend to go for a custom theme design, if you have a budget for it.
Once after setting up website, next task is to integrate WHMCS with your website. But don’t worry, if you have selected the right theme, WHMCS might already have been integrated into it.
11. Launch and Marketing
So, you have done with all the above steps? great! your hosting business is ready to rock n roll. Remember, starting a web hosting business is not the hardest part, but it’s managing finances and getting customers.
Although I have tried my best to cover each and everything in details, but still if I missed something or you have an queries please let me know through comments. Subscribe to this blog so you never miss upcoming valuable articles.