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



## MannDude (Jul 8, 2015)

Let's say you had $10,000 to start fresh. Not a small budget, but certainly not a large budget either, though acceptable enough to get started in the industry properly. You have to use this $10,000 and nothing else to start a VPS brand or web-hosting service.

How would you utilize this to get started?


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## VPN.SH (Jul 8, 2015)

Interesting topic idea. I'll come back and edit this after dinner, looking forward to seeing some other responses!


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## lunanode (Jul 8, 2015)

buying hardware is out the window with just $10k

so leasing would be the logical choice.

If targeting lowend market, with the fierce competition and low profit margin, estimated time to deadpool: 1 year, if not sooner

best to just lease a 2 dedicated servers from reputable provider, setup redundancy(mirroring, drbd or something) then see if possible to acquiring local businesses as clients. Then maybe in a year or 2 with enough money saved to purchase dedis from ebay and collocate the equipment. If can't acquire local businesses as clients to  yield larger profit margin, then quit while still have some money left from the 10k.


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## Tyler (Jul 8, 2015)

lunanode said:


> buying hardware is out the window with just $10k


I'd beg to differ. eBay has some amazing deals for server hardware - you just need to know where to look.

A full write-up coming to a store near you...


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## Hxxx (Jul 8, 2015)

@drmike come here man, do your stuff.


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## Aldryic C'boas (Jul 8, 2015)

Give it to Fran.


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## drmike (Jul 8, 2015)

Hxxx said:


> @drmike come here man, do your stuff.


What do I have to do with this?


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## Hxxx (Jul 8, 2015)

drmike said:


> What do I have to do with this?


You are always calculating, seeing the future, your wisdom is much needed on how to start a vps company with 10K and not only with servers, include legal fees as well. You are certainly good in this.


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## drmike (Jul 8, 2015)

Hxxx said:


> You are always calculating, seeing the future, your wisdom is much needed on how to start a vps company with 10K and not only with servers, include legal fees as well. You are certainly good in this.


Meh, I'm busy, I'll leave that up to you.  I need apprentices.


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## KuJoe (Jul 8, 2015)

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.


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## William (Jul 9, 2015)

Don't even need full 10k:

Buy a storage box at 5k

WHMCS etc. at let's say 500$ (purchased license + updates for a year)

Colo at 100$/month (1,2k/yr) with IPs

LLC/LTD at 250$ setup and 100$/yr

Sell storage VPS at 7EUR/TB and bam, business.


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## HalfEatenPie (Jul 9, 2015)

William said:


> Don't even need full 10k:
> 
> Buy a storage box at 5k
> 
> ...


Don't forget.

$2950 for the "all you can eat ice cream sandwich" bar in the office.


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## Francisco (Jul 9, 2015)

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.


Honestly I wouldn't even touch the VPS side of things. As I've told others, if they want to get their feet wet in hosting that they should start with a reseller account and make that profitable. Most resellers are pretty affordable so the amount of time/effort required to break even is low.

Shared already had its floor fall out so prices are pretty well settled. For instance, a user could take one of our $2/month plans, sell 20 x 1GB space shared plans for $5/year - $10/year and make $100/year - $200/year return on $20/year of investment. With VPS you have licensing costs, high server costs, IP costs, etc, all affecting your potential pricing.

The VPS market hasn't fallen through the floor yet (I know, expect things to get uglier before they get better), so if you aren't an established brand you're in trouble. Check out the VikingLayer or whatever brand that drserver bought. Their pricing was *$7/month for 4GB RAM* and according to the owner, they were barely covering hosting costs, nevermind covering his time invested.

Francisco


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## Coastercraze (Jul 9, 2015)

- Decide on a name and buy the domain

- Design a site

- Buy / rent software needed

- Form an LLC

- Find another company which offers resale of services and resell it. (Can also get a reseller account to start out with).

- Hire some staff or the ugly O word outsource your helpdesk.

- Identify and target something you're good with

- Advertise accordingly

- Build some reputation.

- Expand when ready / as needed.

- Set approximately 6 months worth of expenses aside just in case.


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## Scopehosts (Jul 10, 2015)

Firstly i would structure my expenditures involved with Webhosting business

 

1) Buy a 3-5 years old premium domain worth 2000$

2) Custom Responsive Website Design - 500$ one time

3) WHMCS One Time License - 250$ + 99$/year for early Support service

4) Server Provider with WHMCS plugin or API 

5) Small Configured Managed Server to host website - 99$/mo (990$ annual)

6) CDN Service worth 15$/mo ( 180$ annual )

7) Hire a genuine SEO/SMM Company for On-line marketing worth spending - 2000$ ( Which will boost the company sales at least after 45-90days )

8) Register a company with total expenses of 350$

 

 

BASIC NEEDS SETUP OF BUSINESS: 6369$

 

Left with Core requirements for business

 

1) Just lease three E3 - E5 Server Machines with 32GB or 64GB RAM`s with good amount HDD`s mounted with RAID10 worth 200$/month on each server - total 600$/mo on most prefered location.

2) Implement Solusvm or Proxmox VM controllers with OpenVZ and Xen Virtualization Installed - Costing again - approx 50$/mo.

3) Hire a professional to do all above chores worth 150$/mo ( 50$ each server )

 

Monthly Recurring Expenditures: 800$/mo. 

 

Now I`am left with : 2831$

 

This amount can be used as safe funds to retain business at least for additional 4 months in case of no business turns up.


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## Hxxx (Jul 10, 2015)

Business Plan is the key. If you can't be different than what is already established, and i mean better, dont start one. Go get a job at mcdonalds, you will earn more.


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## DomainBop (Jul 10, 2015)

> 1) Buy a 3-5 years old premium domain worth 2000$
> 
> 7) Hire a genuine SEO/SMM Company for On-line marketing worth spending - 2000$ ( Which will boost the company sales at least after 45-90days )



Nothing like wasting 40% of your startup funds, and the money would be wasted since the rest of the business plan screams host in a box with nothing to differentiate it from the competition. (_and as an end user, the last time I bought from a host because they had a great domain name or ranked on the first page of google for a keyword was...NEVER_)

 




> 5) Small Configured Managed Server to host website - 99$/mo (990$ annual)



Why does a web host need a managed server to host their own website?

 




> 3) Hire a professional to do all above chores worth 150$/mo ( 50$ each server )



"Professionals" don't work for $150 a month.  There is a reason data centers charge $100-$200 per hour for remote hands.





Hxxx said:


> Business Plan is the key. If you can't be different than what is already established, and i mean better, dont start one. Go get a job at mcdonalds, you will earn more.



Best advice.


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## Scopehosts (Jul 10, 2015)

My business point of view related to the starting up webhosting business with not much of technical knowledge and start getting some with the experience on starting web hosting services. 

 

Hiring a professional i meant to say a server management company which takes atleast 50$ per server maintenanace work .

 

 I`am just sales support personal in web hosting company dont have much knowledge of core technical things. Probably i need to hire some 3rd party services for handling servers rather than spend time on R & D.

 

 This is just a imaginry thing i would do in case i had 10000$ and wanting to start a VPS or web hosting company.


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## sleddog (Jul 10, 2015)

Anyone looked at WHT VPS Offers lately?  30-40 new offers every 24 hours (not including the sticky ones).

How can a new startup with a measly $10k expect to compete in that chaos, and make a profit?

If I had $10k (of someone else's money) and 3 months free time, I'd start a VPS Matching Service --a service which matched clients with providers. And I don't mean lowend clients; rather, small business clients that don't have in-house expertise and are lost in the chaos of techspeak and market buzzwords.

Evaluate the client's needs, and develop a shortlist of recommendations. Remain independent of providers (i.e. no referal benefits, no VPS-provider advertising). Revenues are fees-for-service charged to the client with a variety of service options.


```
Startup Budget (3 Months)

Expenses       1,000
Consultation   3,000
Salary (me)    6,000
```


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## MannDude (Jul 10, 2015)

sleddog said:


> Anyone looked at WHT VPS Offers lately?  30-40 new offers every 24 hours (not including the sticky ones).
> 
> How can a new startup with a measly $10k expect to compete in that chaos, and make a profit?


Well, if you start a new company and think all you need to do is post offers on WHT/vpsB/LE* then you're already going at it wrong.

Since I never responded, let me introduce my plan.


Acquire server hardware, collocate.
Take care of licensing. Buy owned licenses where econimcal.
Then, target my *LOCAL MARKET* heavily. That is where the money is. Small local businesses who, for some reason, have no online presence. They're everywhere. Don't believe me? Walk down Main Street in your town and write down the name of all the little shops and stores you pass. Go home and Google them. Many may have a Facebook page now but that's it, and even then, many do not. So, offer them a service at a rate of mid to high $xxx/yr or $50+/mo for items such as fully managed shared hosting. If they email changes to their restrauant menu, you publish these changes to their site. If they have a new lunch special, you add it to their site and Facebook page. Things like that.

The money is in the local market. If I were to start something new, I'd not sit around and try to look attractive in a sea of hosts who are virtually no different than the others. $10,000 is too small of a budget to really 'stand out' unless you're buying a reseller account and spending the rest on marketing. But it's plenty to begin to attract local and regional businesses who can be sold on the idea they're losing business by _not_ having a website. They can be easily sold on the idea, "Well, the restaurant next door shows up in Google when you search for "[town name] restaurants" however you have no website or online presence so people coming from out of town do not know about your store."

Anyhow, that's what I'd do. Local business sites are often low traffic, low load, business owners are those who typically have the money and can afford to pay like $50/mo for a relatively 'hands free' service that they do not need to maintain. You can easily set up their site with a number of pre-made templates and input data and photos of their store in an afternoon. The update maintenance should be easy as well. Just have a very clear pricing structure tier that indicates what you will and will not do for the price they pay, and if they want extra, can upgrade them to the next tier. Additional services such as office visits can be packaged in or added as an extra cost for setting up their webmail accounts in cPanel and configuring whatever desktop client they're using on their PC at home or in their office to receive such email as well. Lots of things that we all know how to do is a foreign concept to most.

You won't ever have to login to WHT and try to have your offer seen by people who will probably abuse it or turn out to be fraudulent anyway.


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## Hxxx (Jul 11, 2015)

MannDude said:


> Well, if you start a new company and think all you need to do is post offers on WHT/vpsB/LE* then you're already going at it wrong.
> 
> Since I never responded, let me introduce my plan.
> 
> ...


Good luck with that. People often confuse web pages with facebook pages. People often mistake hosting for godaddy. Go and try to make actual sales from those small shops, I guaranteed is not as easy as is written here, much less stable to depend on small shops who in reality dont give a .. about websites. 

Even if you walk out with a sale, you will see lot of late payments or none. 

My recommendation is to focus with real established companies whose product depend or can "REALLY" get benefit of eCommerce.

And to finalize , Web Design is Dead. If you want a secure business shift into mobile app development and web applications. That's where the future is.


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## WWW Hosting Services (Jul 11, 2015)

With only 10K USD, I'd spend it very wisely. Leasing of course. 1K at minimum would be initially spent on advertising and marketing after the launch of the company. First of all, the site design. Some would be spent on licensing and of course a server. The rest would be saved to pay for the server fees and any other costs in the future, before the company is making profits, I.E: the first few months usually.


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## sleddog (Jul 11, 2015)

MannDude said:


> Well, if you start a new company and think all you need to do is post offers on WHT/vpsB/LE* then you're already going at it wrong.


That is not what I meant. The quantity of new offers posted on a daily basis on WHT gives evidence of how crowded the VPS hosting field already is. And undoubtably there are many, many more hosts that do not use WHT.

Anyone starting a new business is advised to do market research regarding the potential demand for their product, and research of the existing competition. Examining WHT is one means of market research.



> Anyhow, that's what I'd do. Local business sites are often low traffic, low load, business owners are those who typically have the money and can afford to pay like $50/mo for a relatively 'hands free' service that they do not need to maintain.


You've come very close to describing what I do. Some points...

The market is not only small business, there's great potential in the non-profit sector also. Non-profits (working in fields such economic development, tourism, etc.) often embark on funded projects, and often there is a communications/technology side to those projects.

Some clients *want* to maintain what you've developed for them. So you need to provide an appropriate platform, and train them to use it. You've evolved from a creator of templated websites to a technology enabler. You need to plan what your platform is going to be (standardized for all clients, and probably not Wordpress or Drupal) and how you're going to deliver training.

Tiers and pricing structures look great in business plans, but sometimes don't fit the real world. You've got to be flexible. At the end of the day you've got to make the client *happy.* Happy clients are long-term clients. And those happy clients communicate and socialize with other potential clients in your local market....


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## Tyler (Jul 11, 2015)

WWW Hosting Services said:


> With only 10K USD, I'd spend it very wisely. Leasing of course.


You consider leasing to be spending money very wisely?  :unsure:

Leasing you get no equity on your servers. It's a bill you have to pay each and every month with nothing to show for it, except for being able to access the server for another month. The guarantees of replaceable hardware are really not worth the premium you pay when choosing to lease a server. There are about a thousand other reasons that leasing a server is a bad idea, but I'm not going to go into it as it could easily merit its own thread.


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## Aldryic C'boas (Jul 11, 2015)

WWW Hosting Services said:


> With only 10K USD, I'd spend it very wisely. Leasing of course.


...you contradict yourself.


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## KuJoe (Jul 11, 2015)

I agree with what others are saying. Leasing is the WORST thing you can do if you only have $10k to your name and are starting a VPS company in 2015, unless you like to see what bankruptcy looks like and you're on a "race to the bottom" in terms of credit score.


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## pcan (Jul 11, 2015)

WWW Hosting Services said:


> With only 10K USD, I'd spend it very wisely. Leasing of course.


The lease/own choice isn't so obvious. It relates to fiscal policies and to cost of capital acquisition. As general rule, leased equipment is more expensive.

Leasing is like a credit card: easy to get, convenient to use, but hardly the cheapest way to borrow money.


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## Bruce (Jul 13, 2015)

pcan said:


> The lease/own choice isn't so obvious. It relates to fiscal policies and to cost of capital acquisition. As general rule, leased equipment is more expensive.
> 
> Leasing is like a credit card: easy to get, convenient to use, but hardly the cheapest way to borrow money.


more important to focus on business creation rather than cost differences between leased / owned / rented.

at the low end of the market the big differences in margin come from stuff like IP costs. focussing purely on cost per GB of RAM isn't the solution.


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## Tyler (Jul 15, 2015)

Bruce said:


> more important to focus on business creation rather than cost differences between leased / owned / rented.
> 
> at the low end of the market the big differences in margin come from stuff like IP costs. focussing purely on cost per GB of RAM isn't the solution.


While the truth is that there _are_ matters more important than the cost differences between leased, rented, and owned (especially in the beginning stages of a business), we should not diminish the significance of such costs.

Hardware costs continue to be significant for hosting firms of all sizes, due to the fact that they are a renewed service (i.e. a bad choice will continue to follow you) and the fact that hardware depreciates each year.

This choice becomes even more important when there is a significant amount of hardware at play, say 15 nodes or more. 

Regarding other costs, IP costs should be some of the lowest costs. A provider paying anywhere close to 10% of the retail ~$1/IP/mo is outrageous. Also, isn't the retail price for IPs continuing to go north anyway?

Let's also look at some of the matters more important than the pure cost differences. Most of these are human matters.


What datacenter will you use?
How will you find a location that will help you set yourself apart?
What is the contingency plan?
Who handles finances?
Who handles support?
Who handles marketing?
Who handles legal matters?


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## Hermes Hosting (Aug 17, 2015)

Buy a permanent WHMCS license

Rent 2 a dedicated server for 2 years

Stickies on forums for as long as possible.

save the rest.


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## VisionGroup (Oct 9, 2015)

dont do it!

in a industry like web hosting and vps hosting you need a major point of difference, otherwise your just another provider... trust me i face it everyday running an IT business....


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## Premiumn (Oct 10, 2015)

I built a web hosting company from just with less than $20 first time investment and it grew quiet successfully. After about 18 months, i had over 150 customers/services.

I do not own it anymore, but you dont really need a lot of money to start an online business as long as you have a good plan and a way to differentiate yourself from the others.

If you do not run the company with 100% honesty, then you are essentially doomed.

Thats my 2 cents.


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## VATruica (Oct 10, 2015)

Francisco said:


> Honestly I wouldn't even touch the VPS side of things. As I've told others, if they want to get their feet wet in hosting that they should start with a reseller account and make that profitable. Most resellers are pretty affordable so the amount of time/effort required to break even is low.
> 
> Shared already had its floor fall out so prices are pretty well settled. For instance, a user could take one of our $2/month plans, sell 20 x 1GB space shared plans for $5/year - $10/year and make $100/year - $200/year return on $20/year of investment. With VPS you have licensing costs, high server costs, IP costs, etc, all affecting your potential pricing.



Agreed. Using a reseller will eliminate the headaches associated with what you enumerated there, of course including technical work around setting up and maintaining a VPS, especially if there is not prior experience with that. It also makes it easy to form a customer base.


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## HN-Matt (Oct 10, 2015)

If you don't mind wading through all the classist shit talk re: not owning your own hardware or ARIN database Real Estate (the horror!) and think you can somehow 'add value' by way of monthly rental payments, then a reseller account is for you!


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## FlokiNET (Oct 13, 2015)

More than money you will need patience and time! You can have the best hardware, but if no one knows. Invest in some time to post some of your offers and prices ( they need to be great for the start), in forums, Web-hosting directories.. it might take a while for the flow to start, so patience!

About investment, definitely, get a WHMCS (or blesta..) and a re-seller package from another company. You can get a great server for 100 usd/mo and install 20-60 VPS on it, depending on the specs of the the virtual machines, great for starts.. Get one of those machines ( or even lower-end, since you can transfer the VPS'es after to another machine) for like 2-3 great locations around the world ( cheap traffic, low energy cost ) with a re-seller package and start it!

I would also advise to enter in contact with a lawyer to create solid grounds 

good luck!


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## MannDude (Oct 14, 2015)

Good answers and input everyone. Anyone else have anything else to add?


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## sterile (Nov 29, 2015)

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.



This guys plan is spot on.


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## BalkanVPS (Jan 6, 2016)

First of all renting servers if all goes well buying a server and later collocating.and saving 50% for Advertising


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## raindog308 (Jan 11, 2016)

William said:


> Don't even need full 10k:
> 
> 
> Buy a storage box at 5k
> ...



This sparked an idea in my head, and so I ran some numbers.


7EUR a TB would be great, but let's say you wanted to sell storage for $10/TB.  Is that profitable?  Maybe if you build the box yourself.


Here is what I came up with if you don't:


OVH E5, 64GB RAM (overkill), 12x6TB drives, I subtracted 2 for redundancy (didn't get that deep into config, just guessing) and ended up with 60TB capacity for $439/mo.  Just pulling it off their site.


You'll lose some in filesystem formatting, etc but let's say you get 58 accounts on that box at $10/mo, so your revenue is $580/mo.


Oh wait, you need IPs...well, let's say this is ipv6 only.  It's 2016 and it's just for backups, so maybe that's OK.


Subtract some cash for WHMCS or whatever, a control panel, etc.  Maybe you clear $100/mo.


Unfortunately, it doesn't scale because you're full and if you add another, you need to fill it up to make $100/mo.  You wouldn't need WHMCS again but you get my point.  And when it's not full, you're losing, so the margin just isn't there.


Then again, OVH does support up to 36 drives in one box...


The real problems with this are


- OVH support sucks.  Ran some website numbers with QPS and others and it just does not work.  Keep in mind someone like BuyVM is charging $30/mo/TB, Backupsy is $40/mo/TB, @KuJoe is also at $40/mo/TB, etc.  


- Although I figured SAS drives, IOPS might still kill you.  I trust @Francisco to put a good box together, but even with a pro like that, sometimes I've had awful performance on his storage boxes, and at Hostigation's old backup plans, too.  Just way too many people running rysnc nonstop I guess.


- You need to be 90% full to break even.


$20/TB/mo might be more reasonable, but would lack the "wow" factor that offering $10/TB/mo would.  You'd break even at 80% full.  Even the cheapest Azure pricing, for example, is .024/GB/mo, or $24/mo.


And if you set it at $20/TB, you may well find there aren't 60 people in the world who want that storage.


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## drmike (Jan 11, 2016)

$7/TB won't work in legitimate shop.


Will have to be a bunch of servers in a cluster with a distributed set up.  So things are going to either cost dearly or perform like crap.


Fails will be spectacular also.


Can probably do something with crap archive large TB drives and refurb white labels to lower build cost.. Good luck when shit breaks... rm -rf won't be any faster on loss.


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.. Or you have utter garbage like OVH's Hubic which is just slow to unusable from my testing.  10TB for 5 euros a month.. sounds nice.... try it and go meh.


Yeah if anything, oddly storage VPS stuff is level or increasing in price.  I remember when Backupsy was discounting.  That sure died didn't it?  Still there and all, but now pay for storage isn't cheap like it was.


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## raindog308 (Jan 11, 2016)

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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## DomainBop (Jan 11, 2016)

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



> Hubic



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



> 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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## DomainBop (Jan 11, 2016)

> 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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## raindog308 (Jan 11, 2016)

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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## willie (Jan 12, 2016)

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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## itnycsilicon (Jan 21, 2016)

$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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## fm7 (Jan 27, 2016)

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. 

*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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## PowerUpHosting-Udit (Feb 3, 2016)

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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## Euservr (Feb 6, 2016)

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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## raindog308 (Feb 6, 2016)

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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## Euservr (Feb 6, 2016)

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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## raindog308 (Feb 6, 2016)

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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## DomainBop (Feb 6, 2016)

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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## mitgib (Feb 6, 2016)

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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## PowerUpHosting-Udit (Feb 6, 2016)

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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## drmike (Feb 7, 2016)

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.).



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.



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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## VPSclub (Feb 12, 2016)

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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## Hosterbox (Apr 20, 2016)

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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## DedidamNET (Apr 24, 2016)

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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## cristipuc (Apr 25, 2016)

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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## HostSlick (Jul 30, 2016)

I wouldnt even spend the complete 10.000$. Maybe 5.000$ as the market is over saturrated and the chance of making it back soon not that big.


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## Nogics Technologies (Oct 1, 2016)

First of all keep 60% of the initial capital for marketing and promotions as the same is the most vital part of any business.


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## WSH_DNYT (Dec 12, 2016)

Buy a  /24 network to start with,


10k almost does not get you there.


I would buy my own IP addresses, this keeps you independent from providers


/24 are ~3.5k


Now you can colocate but have to buy you servers, buy spars, either be onsite or have somebody that you can pay.
Remote hands in DC can be expensive.
Colocate will give you the choice to buy bandwidth with the Datacenter or buy your own from providers


Or you can lease you to start with (1) or (2) servers. You will need to find a provider that can and will announce your IP addresses and will provide you with 
- Redundant Power
- Redundant Uplinks to their network


$$$ for Marketing is important as well


You need to outline the pros and cons for yourself...


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