Web Hosting Reseller (To be, or not to be?)

Written by: Peter Todorov

Web hosting is a relatively new industry and as such, has gone through lots of changes last several years. It still remains very dynamic, as web hosting providers try to reach new unexplored markets and promote their services to larger audience.

One of the latest trends in the hosting industry is offering so called web hosting reseller accounts.

What is a Web Hosting Reseller?

Being a web hosting reseller is a low cost way of entering the hosting business and start offering web hosting services. Usually a hosting company offers reseller plans with predetermined amount of web space, data transfer and certain features, you can resell to your own customers. The hosting company that provides the reseller account puts 10s of reseller accounts on 1 server (some companies put 100s of accounts on 1 server), so you and your customers have to share the server resources. You as a reseller are responsible for the end-user support and the hosting company is responsible for the hardware maintenance and server administration.

Who can be a Web Hosting Reseller?

Anybody can be a hosting reseller, considering the low entry cost and the thus the minimal risk. Some professionals can offer web hosting as added-value service on top of their main services. For example a web designer can offer his clients all-in-one package (1 stop solution) – web design + web hosting. The same is valid for web developers/webmasters. Finally you can get a hosting reseller account and you can use it all by yourself (if you are webmaster with several websites for example), there is no need to resell the resources you get with your account to anyone.

The pros of being a Web Hosting Reseller

Low initial investment – At a first glance you don’t need lots of money to start a web hosting business. You get cheap reseller account for $20/mo (there are much cheaper accounts in fact), you create an account with online payment processor like 2checkout.com or paysystems.com which will cost you $50 one-time fee, you buy a cheap design template for your site, and now you are a web host! Congratulations! But here is the hard part – How to find customers?
Offering branded web hosting services – Most hosting companies offer private label reseller accounts, which means the identity of your provider is hidden from your visitors/customers and your hosting company looks just like any other company having it’s own servers.
Having a web hosting reseller account allows you to learn – You can gain a valuable experience and learn the basics of the web hosting industry, while the hosting company is taking care of the hardware and the server administration.

The cons of being a Web Hosting Reseller

You don’t have any administrative control over the server! You have very limited control over the server through your reseller control panel. If the server is down, you’ll have to contact the provider of the hosting account for restart. If you need something setup, requiring root access, you’ll have to contact your provider again... This process can be quite slow and painful for you and especially for your customers, so make sure you choose the right hosting provider. The most important thing for you as a web hosting reseller just starting out is to give an excellent support to your customers, which means that you have to get fast and professional support from the hosting company if there is a problem you can’t deal with. If you have decided to go the reseller route vs. getting a dedicated server, do your homework; make thorough research of the provider you have chosen and make sure they can help you when you need it. It’s not uncommon situation when reseller lose a client, because of unreliable service provided by the parent hosting provider.
The ownership of the server(s) where your reseller account is can change in an instant! Yes, you heard me well; you don’t know who will be the owner of your server (where your reseller account is) tomorrow. The web hosting industry is very dynamic and it’s quite common for a hosting company to sell its customers and servers to another hosting firm. If your hosting provider, which you were happy with, decides to sell the server where your account is, you don’t have any guarantees that you will receive the same level of service from the new hosting provider.
Moving your hosting clients to different server is usually time consuming and expensive. You might have different reasons to move your clients from a reseller account to a different server. For example you have reached the point where you can afford to lease a dedicated server or the reseller account’s server is slow and unreliable. In either case moving the clients’ websites is a delicate and time-consuming task.
Overloaded servers - The reseller hosting market is very competitive and unfortunately is mostly competitive on price, not on quality and service. This means the prices are low and in order to make profit, most of the web hosting companies offering reseller accounts, have to put many, many reseller accounts on each one of their servers. This in its turn leads to low quality service for you. Consider the following situation, you buy a web hosting reseller account from a new hosting company and they’ve sold 30 reseller accounts on the server where your account is in total. Each one of this accounts allows to host unlimited domains and the server is fast because the new resellers on the server don’t have any clients yet. Lets have a look at the same server 6 months later. 25 of the resellers now have 10 domains each in their hosting accounts and the rest 5 resellers have 50 domains each (the numbers are for illustration purpose only), The total number of domains is now 500 and continues to grow daily. Unless this is a very powerful and expensive server and all of the web sites on it are just static HTML, your reseller business is in big trouble. Most hosting providers offering reseller accounts claim that they don’t overload their servers, but I have seen enough real life examples and I know overloading is a common practice among the web hosts.

Conclusion

If you are on tight budget and/or don’t have an experience in the hosting business, but you still want to enter the web hosting industry, then getting a web hosting reseller account seems like your best option. If you have money to invest and/or you have some experience in the web hosting arena, then I’ll strongly advise to get a dedicated server directly.