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MannDude

Starting a VPS business with $10,000. How would you spend it?

63 posts in this topic

Dammit, now I can't stop running numbers :-)

OVH Xeon D-120 with 5x6TB, setup maybe 24 x 1TB and sell them for $10-15 each...hmmm...

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10 minutes ago, raindog308 said:

Dammit, now I can't stop running numbers :-)

OVH Xeon D-120 with 5x6TB, setup maybe 24 x 1TB and sell them for $10-15 each...hmmm...

There's plenty of competition from large players at that price (and below). Hetzner's new storage boxes are 1TB/€7.90, 2TB/€9.90,  TransIP's big storage starts at 2TB/€10...and then there's Time4VPS at 1TB/€1.99 and 2TB/€3.99 (with biennial payment).  For €10 I can get 1TB of object storage in OVH's Public Cloud that's replicated in 3 DC's.

That OVH Xeon D-120 has software RAID.  Your customers would hate you if you offered storage VPS on something with SW RAID. I'd choose this one with HW RAID instead, 12 x 4TB for €219.99, https://www.online.net/en/dedicated-server/dedibox-st48

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Hubic

Dropbox/OwnCloud competitor but not really meant for server backups which is why they limit the speeds.

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There is a demand for storage and there are big arse plans out there, but they aren't VPS in nature.  They are backup in nature with proprietary clients.

I prefer using dedicateds for backup and storage but if I was looking for a virtualized or shared backup/storage solution I probably wouldn't look for a pure VPS.  I'd probably choose OpenStack object storage over a regular VPS.  For a backup only solution something like Hetzner's storage boxes would be more convenient than maintaining a VPS. 

 

 

 

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I said" That OVH Xeon D-120 has software RAID.  Your customers would hate you if you offered storage VPS on something with SW RAID. I'd choose this one with HW RAID instead, 12 x 4TB for €219.99, https://www.online.net/en/dedicated-server/dedibox-st48 "

Hetzner has a 15 x 6TB storage server with HW RAID for 249 (E5-1650v2 w/128GB RAM, 100TB traffic at guaranteed 1Gbps )

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4 hours ago, DomainBop said:

That OVH Xeon D-120 has software RAID.  Your customers would hate you if you offered storage VPS on something with SW RAID.

So in all seriousness and admitting my ignorance, I ask why.

The D120 has 4c/8t of 2.2Ghz Xeon.  Not a monster but assuming the box was doing very little else besides network and RAID md, is that not enough horsepower to drive RAID10?  Ultimately, there will never be more than 80MB/sec or so (assuming 1gbps port) though probably tons of small writes.

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3 hours ago, raindog308 said:

very little else besides network and RAID md, is that not enough horsepower to drive RAID10?

I think if you want to do big storage cheap, you have to use RAID6 or else you're spending almost 2x as much on drives.  RAID6 needs a lot of computation (complicated error correction codes) so if it's for VPS, you probably better use HW raid to offload that computation.  If it's for ftp or object store, maybe you can use software raid. 

I'm not convinced what Time4vps is doing is sustainable at scale, but maybe it's small enough and underutilized enough that it's not killing them.  Very high discounts for 2-year plans are usually not a good sign in the VPS biz, even building in speculative planning for decreased hdd prices during the 2-year term.  ZXPlay might be a little more realistic, at $7 for an 800GB KVM if I remember right, somewhat less for OpenVZ which is able to support some disk space overselling.

Hetzner sells its BX space for 4 euro/TB in its 10GB plan and I've been told those very big hosts pay much less for drives (in 100K+ quantity) than regular people pay.  I know (from old job) that you don't get much discount if you're only buying 1000 drives at a time.

Anyway Hetzner's pricing seems just barely doable if you've got lots of capital so you can stand a quite long payoff cycle for the hardware, and you expect you can keep it near-fully utilized for several years without price cuts (long term customers buy at current prices and aren't motivated to switch as slightly cheaper stuff becomes available elsewhere).  Seems hard for a small, cash-strapped host to compete with this on price.

Hubic gets reasonable speed from inside the OVH network.  I bought a cheap VPS hosted at OVH in France with the idea of using it as a Hubic proxy, but never got around to using it for that.  The Hetzner BX plans seem pretty good to me, and I get around 50 MB/sec transfer to it from my Hetzner dedi, if that matters to anyone.

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$10k is plenty to start VPS business. Start with 1 or 2 high quality servers and some good network equipment, and then license the software that you need....

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Keep this in mind when launching a cloud service

Magnus Hult

I recently had the opportunity to deliver a keynote at WorldHostingDays, a popular hosting industry event, so I decided to speak about the business and marketing aspects of launching a new product online. Our product of choice would be a cloud service, but this advice applies to almost any kind of hosting venture or web service.

What follows is a summary of that talk. Although much of what I’m about to say may seem obvious to grizzled hosting industry veterans, hopefully there are some useful tidbits and reminders in here for everyone. We all know how easy it is to get swept away in the day-to-day concerns of running a business, and forget the basics sometimes. With that said, let’s move on!

Why take the leap?

The cloud market seems to be insatiable; it is a 20 billion dollar business and growing rapidly. There are still uncountable servers hidden in closets and storage rooms just waiting to be lifted into the cloud, and hardware is more powerful and affordable than ever. Sure, the Amazons and Microsofts of the world are taking their fair share but there is always room for niche players, local and regional companies, and there is certainly room for more innovation.

In addition to the business case there is a pretty attractive practical backdrop to this story: it has never been easier to launch a cloud product. There are numerous mature platforms and products out there to help you on your way, Atomia combined with Openstack being my obvious recommendation. After all, as the CEO of Atomia I’m allowed to be a little bit partial. redface.png

Consider launching a new brand

Let’s say you have a shared hosting business today and your finger is on the trigger for a cloud launch; my bet is that you have some concerns. Your customers associate your brand with web hosting and domain names, you already have a spread of products, and you just launched a new email service. It’s only natural that you are worried that additional services could make your product too complex, in turn hurting a product that “already works.”

However, with a new set of products come new possibilities. The obvious option available to you is to not tack it onto your existing hosting service, but launch something new. Launching a new brand gives you a fresh start and adds minimum risk to your existing brand. It gives you the possibility to pick a new message to a new target audience.

In essence, free yourself of your legacy while making sure it stays intact. Launch a new brand and do everything that you would have done if you would do it all over again.

Bonus: You can still leverage your existing customer base, offering them this new service, and hit the ground running.

Narrow is good

The value of picking your target audience and starting off with a simple, highly focused product line-up cannot be stressed enough. You are exploring a new set of tools and you want to rethink what you offer to your customers. With this in mind, launching too much from the start will only complicate things.

Start of with a minimal set of features and let it grow. For example, selling just simple VPSs is fine as long as you have a second course to follow up with. Aside from the obvious fact that you will most likely have to tweak your product as it gains a user base (i.e. meets reality), don’t forget that you also need something to market in six months.

Trivial to you is not trivial to your customer

Hosting and cloud is all about moving complexity away from the customer to you. Everyone wants a website with 100% uptime but no one wants to have to do the hard work that that requires. While you take redundant connectivity, backup power and cool backup solutions for granted, your customer does not.

Investing in and marketing the fundamentals never gets old. Your hosting service can never be too fast, too secure or too reliable.

If you look around you’ll notice that the marketing message from some of the most successful companies in the hosting industry is really basic. Find the key triggers for your intended customers and make sure that they know that you have gotten the basics right; don’t assume that they know what is obvious to you as a hosting industry professional.

Complicated on the inside, simple on the outside

Nobody wants to manually connect MX records to email, hence selling everything in a preconfigured package is a rather successful product. This is also true for cloud services and products. Find whatever way you can to remove manual labour and complexity away from your customer and you will reap the benefits.

Automation and bundling of services is your friend.

Great support is a massive selling point

Aim for great support and deliver on it. Enough said.

Orders, invoices and payments

Everyone knows that having a smooth sign-up and ordering process is key. However, how well your invoices and payments are handled and presented is often forgotten or neglected. You have to go the whole nine yards!

Here are some simple tips:
 

  • Keep your service and product offering clear and simple. This makes invoices and payments easier as well.
  • Remember that every email and interaction with your customer is a part of their experience and therefore part of your marketing.
  • Put time and effort into structure, layout and design of documents such as invoices, receipts and reminders. In contrast to newsletters and other marketing material, all your customers will actually read these emails.
  • Aggregate as much as possible to minimize the amount of transactions between you and your customers.
  • Finally, find out how your customers want to pay and try to balance that against how you prefer to get paid. Credit cards might be the smoothest way for you, but does your market segment really prefer this method or do you need to offer a second alternative?



Was this all an exercise in stating the obvious?

In essence, yes. However, a lot of companies we meet and see don’t do these things, so we figured it might be useful to remind ourselves and others about the obvious. We interact with a lot of service providers and what I’ve listed in this article are common success and failure factors.

Getting the basics right and really focusing on the core needs of the customer will never go out of style.

 

http://www.atomia.com/2015/12/10/business-of-launching-a-cloud-hosting-service/

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Initially, I would go smart, instead of investing in any hardware or dedicated server, I will try to cut down deals with existing hosting companies and get some pricing on the table. Next, I will build my website, set up a billing system.

Cost to build a website: None (For Me) for others, you might end up investing around $500-1,500
Cost of billing system; WHMCS: $15/month

Now that leaves you a very healthy budget for marketing/support that is approximately around $935 - $8500 on the table. (I will consider $1500 as the max)

Depending upon your technical skills, if you are good with technicals, you can save on the ticket/staff/support but if you are not very technical then I would work with few Indian Support Companies and work out on Cost Per Ticket basis initially where I would negotiate the pricing per ticket resolution to around $1-10/ticket depending upon the difficulty. I will make sure to pay a special premium so that I can brag about the response time and add that into my marketing asset.

Since the support is on per use basis, that leaves me with the same amount of money on the table that I would invest into marketing. I would hire couple of VA from one of the freelancing website for $200-300/m and I will train them for about a month. 

Now, I am left with $600 less on the 2x VA and $15 less on WHMCS. Money left: $7900

I will invest that $7900 into ads on various forums to drive in some quick traffic and setup on marketing campaigns, again, this depends upon how technical you are and if you are aware of how digital marketing works. I will be spreading that $7900 budget over 3-5 months initially to see what kind of results I am getting per month. 

Rest the conversion depends upon Lead Caputuring, Following Up and your overall marketing strategy.

I am sure, this strategy can really help you build a small hosting company that would profit you around $2-3k per month at the very least with that kind of initial investment in about 6 months top.

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I would start with one or 2 server worth 200-300 usd. There are many cheap dedicated server provide who provides Leaseweb server at very low cost. So, server+support staff cost will be around 400-500 usd/month. You must sell cheap vps/hosting to get client. Later you can increase the price to keep good profit.

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50 minutes ago, Euservr said:

I would start with one or 2 server worth 200-300 usd. There are many cheap dedicated server provide who provides Leaseweb server at very low cost. So, server+support staff cost will be around 400-500 usd/month. You must sell cheap vps/hosting to get client. Later you can increase the price to keep good profit.

Except that logic doesn't work in markets with extremely low barrier to entry, and there is practically none in the hosting industry.  

 

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15 minutes ago, raindog308 said:

Except that logic doesn't work in markets with extremely low barrier to entry, and there is practically none in the hosting industry.  

 

I had started my hosting business with 1000usd monthly budget. Now it has been 2 years and i am still in business.

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10 minutes ago, Euservr said:

I had started my hosting business with 1000usd monthly budget. Now it has been 2 years and i am still in business.

Great!  And how much have you raised prices on your unmanaged, lowend services?

I ask because from what I've seen, the vast majority of customers will leave and go to the next guy who offers the exact same thing at a slightly lower price.

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7 hours ago, raindog308 said:

Great!  And how much have you raised prices on your unmanaged, lowend services?

I ask because from what I've seen, the vast majority of customers will leave and go to the next guy who offers the exact same thing at a slightly lower price.

Your customer base "comprised of enterprise businesses and individuals that are serious about their web presences" won't leave if you start out by giving your enterprise E3's away for free and then raise your prices to $19.99 because no one in their right mind can match your low $19.99 price!  The key is to always be the cheapest while "focusing on quality" and "providing your clients with a premium hosting experience that no other company can provide."  If you follow this strategy then you too can become "a 100% profitable company with your own dedicated staff (non outsourced) with absolutely no debt to any of your current upstreams" 

disclaimer: portions of this post have been liberally plagiarized from the about us page of some kid in New Hampshire.  

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9 hours ago, Euservr said:

I had started my hosting business with 1000usd monthly budget. Now it has been 2 years and i am still in business.

I started with $400 10 years ago next month, so you have not accomplished much yet.  This business rolls with the same cycles as the general world economies.  Let me know what you are doing after the next recession.

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57 minutes ago, mitgib said:

I started with $400 10 years ago next month, so you have not accomplished much yet.  This business rolls with the same cycles as the general world economies.  Let me know what you are doing after the next recession.

Started with about $200 budget initially about 7 years ago, survived and grew massively. 
 

In the end, its all about your marketing strategy and your willingness to grow your business.

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13 hours ago, raindog308 said:

Except that logic doesn't work in markets with extremely low barrier to entry, and there is practically none in the hosting industry.  

 

Barrier is really information / knowledge...  I blame the morons spinning up 2 hours invested companies and I blame customers dumb as a can of paint who do no research and buy the lowest price in the room.

Panels and how-to docs have lowered the baseline barrier.  Companies operating at baseline know-how just suck horrendously.   This is part of why you see backlash against VPS right now, notably the cheap low-end variety.  Customers aren't entirely stupid.  They pay attention for 5 minutes and figure out half the companies over there have knowledge base that is pathetic.

All things are not usually equal. Price should be a consideration, but after vetting your options and basing decisions on more sound criteria (i.e. online reviews, BBB search, do they have actual About Us info, do they have real policy documents, can you find others actually using said company, etc.).

14 hours ago, Euservr said:

I would start with one or 2 server worth 200-300 usd. There are many cheap dedicated server provide who provides Leaseweb server at very low cost. So, server+support staff cost will be around 400-500 usd/month. You must sell cheap vps/hosting to get client. Later you can increase the price to keep good profit.

So support workers = $100-200 a month?!?!!  Maybe in India or some place exploiting the economies of local poverty / lesser inflation.  It isn't a problem per se with the ratio of staff dollars vs. others, it's just minimal and oversimplistic financial view.  When starting there is ZERO reason to have staff.  The owner / founder(s) should be working every aspect of the shop.  Meaning if anything that money should go to such.

 

2 hours ago, PowerUpHosting-Udit said:

In the end, its all about your marketing strategy and your willingness to grow your business.

I agree.  I am biased and this my competency / practice / business in this industry.  Strategy alone isn't enough.  Good for organization and scheduling when working with others, but that's about it.  

Marketing needs to be on same page as ownership and work fairly well with the support / actual workers to align things properly.  Otherwise you get lunatics like GVH who legit sold some products at a loss and shuffled other income to patch up the holes.  You also get as in that place, massively oversold infrastructure.  Talking where servers have more containers in them than average mouth has bacteria.  That happens because of greed but also because enough biz minded but criminally insane owners have no regard for the practical limits of hardware and are driving sales to their wallet purely.  Administrators in such shops are routinely ignored and the place eventually fails in spectacular, albeit, overdue fashion.

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Well either have a big budget, or just don't invest figures like 10k. You should rather invest more money in advertising instead of acquiring servers.

In short; Buy WHMCS license, and a couple of onshore and offshore ddos protected servers. Develop a custom website with sleek design, and start monetizing your company.

Top forum's stickies, SEO and SMO could do wonders.

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On 7/9/2015 at 8:51 PM, KuJoe said:

Take $1500 and buy a server, set aside $2500 for 12 months colocation, $316 for 12 months licenses, ~$500 for web design/branding/plugins, $### for registering an LLC. (cost depends on location), put the rest away for a rainy day and unexpected costs.

 

Ta da! A VPS-Provider-In-A-Box! Just don't expect to be the next Linode or anything.

He's pretty much on point. Put a lot towards marketing, that's going to be vital. 

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I would not buy any servers, just make a nice looking website, increase marketing/SEO/advertising on it, and when customers come, make sure you have a few reseller accounts on bigger providers on which you will buy the dedicated server and resell it as VPS. But seriously, 10.000 usd is a low amount that doesn't do any justice for you and most likely will get you nowhere.

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If you have Sys Admin skills then you can start with 5000 $ if not you have to pay someone for Administrating your infrastructure, also is not needed to buy any hardware, you can rent dedicated servers.

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