Starting a hosting company

[shovenose]

Thanks

If you really want to get into the VPS business right away you could resell other provider's virtual servers, that way it's a pay-as-you-go and you don't have to put in any investment.

Or maybe it's just the larger ones overcharging? Honestly, if you're charging around the $200/mo range for a Xeon E3 series server when low end startups can charge $90/mo for the same configuration, then there's obviously something wrong.

This isn't directly relevant, however I rented a SingleHop server with an E3, 32GB RAM, it ended up being like $600/month. And their network was bad, and while the support was good and the sales guy I talked to was absolutely awesome, it wasn't worth the price. So I got a refund and cancelled it.

CaliHop is much cheaper and better. 1/3-1/2 the price.

 

[GVH-Jon]

This isn't directly relevant, however I rented a SingleHop server with an E3, 32GB RAM, it ended up being like $600/month. And their network was bad, and while the support was good and the sales guy I talked to was absolutely awesome, it wasn't worth the price. So I got a refund and cancelled it.

CaliHop is much cheaper and better. 1/3-1/2 the price.

If you have the money to pay those prices then you're better off buying a server and colocating.

I've never heard of CaliHop but they look promising.. If we eventually expand to the west coast though I'd be looking to purchase dedicated servers only in ColoCrossing owned datacenters, nowhere else

 

[SPINIKR-RO]

Leasing has much more benefits if your talking about a low amount of servers or no large starting capital.

Would you rather spend $6-7k on 3 servers and pay a higher colo rate plus have spare parts and a reserve for remote hands.. or pay a fair leasing cost. Your going to be in the same position if you buy & colo a few servers because you just cut a huge chunk out of the bank and are selling $3 gig ram deals to try and not go bankrupt, at which point you are again at a break even and no room for expansion.

Hostgator leased until they sold for over 100mil. 

You can play it out in different ways and make it work, but dont go around saying that one is better off buying hardware + colo just because they are looking at $x for a server lease.

If the money is available and you think you can ROI after 3 months then colo is optional.

 

[GVH-Jon]

Leasing has much more benefits if your talking about a low amount of servers or no large starting capital.

Would you rather spend $6-7k on 3 servers and pay a higher colo rate plus have spare parts and a reserve for remote hands.. or pay a fair leasing cost. Your going to be in the same position if you buy & colo a few servers because you just cut a huge chunk out of the bank and are selling $3 gig ram deals to try and not go bankrupt, at which point you are again at a break even and no room for expansion.

I don't think 3 servers would be anywhere close to $6-7k, and you could always go refurbished (not that I recommend doing that.. but if you're selling $3 gig ram deals then why not since clients won't expect much) ...

 

[Tyler Salwierz]

I don't think 3 servers would be anywhere close to $6-7k, and you could always go refurbished (not that I recommend doing that.. but if you're selling $3 gig ram deals then why not since clients won't expect much) ...

3 1U servers can cost 6-7k easily.

 

[GVH-Jon]

3 1U servers can cost 6-7k easily.

More likely if we're talking about the setups that you use.

 

[Tyler Salwierz]

More likely if we're talking about the setups that you use.

Keep in mind that even a E3 with 32GB ram and a good raid card with standard drives will still cost a pretty penny.

 

[drmike]

@GVN-Jon, kudos mate.

Reseller option is a fair one so long as your provider is legit and responsive.  

As far as the server cost $90 vs. $200.  Let's say some companies are giving stuff away to lure companies they might think are non-viable. 

You flop on the invoices, these mob types will offer you a deal and move in, take your customers and screw you wife.   Don't get cozy with cheap, because most of them are cheap for reason.

Low prices are what destroyed LET/LEB.  From the provider level.

 

[netnub]

I've rangled up $600, should have about $1000 within a week.

 

[BlackoutIsHere]

Keep in mind that even a E3 with 32GB ram and a good raid card with standard drives will still cost a pretty penny.

This is true, serious gear isn't cheap. If you cheap out at the beginning you will pay for it later one way or another.

 

[drmike]

Lots of folks are talking about rentals to get started or RTOs.  That can work, but you are stuck with that provider for maybe multiple years.  If anything happens, your business is going to take a beating.

RTO/lease/low end model is all about giving away the bait and beating you with the hands on you probably will use like a crack addict.  This pans out for experienced folks who don't need hand holding, but newbies get crushed with costs, delays and things out of their control or above their knowledge base.

If you are a newb, the reselling model is much better idea.  Still very risky though.

Best to first get real admin time in on all details of platform you are using, with billing and other systems too.

 

[GVH-Jon]

@GVN-Jon, kudos mate.

Reseller option is a fair one so long as your provider is legit and responsive.  

As far as the server cost $90 vs. $200.  Let's say some companies are giving stuff away to lure companies they might think are non-viable. 

You flop on the invoices, these mob types will offer you a deal and move in, take your customers and screw you wife.   Don't get cozy with cheap, because most of them are cheap for reason.

Low prices are what destroyed LET/LEB.  From the provider level.

You can't always judge a provider by it's pricing. For example, RamNode is able to offer cheap pricing because of their monster E7 server configurations and servermania is able to offer cheap pricing because they colocate a large amount of servers and probably have their own racks.

 

[Tyler Salwierz]

You can't always judge a provider by it's pricing. For example, RamNode is able to offer cheap pricing because of their monster E7 server configurations and servermania is able to offer cheap pricing because they colocate a large amount of servers and probably have their own racks.

E7?

We can offer cheap pricing because we own all of our hardware and network.

 

[Nick_A]

Our E5s are monsters, but I think it's more that we own our hardware/network etc that keeps our costs and prices down.

 

[drmike]

You can't always judge a provider by it's pricing. For example, RamNode is able to offer cheap pricing because of their monster E7 server configurations and servermania is able to offer cheap pricing because they colocate a large amount of servers and probably have their own racks.

Well in your example you are talking about the VPS seller.  I agree with you on that.

Exactly what I was saying really.  Beware of dedicated RTO companies and long term lease/rentals if you want to be a provider.

Preferred to own your gear when and where you can.  

When I think about the top companies in the low end segment I think of:

BuyVM

RamNode

Hostigation

Prometeus

Almost certain every one of those companies owns their gear.

 

[drmike]

I don't think 3 servers would be anywhere close to $6-7k, and you could always go refurbished (not that I recommend doing that.. but if you're selling $3 gig ram deals then why not since clients won't expect much) ...

Depends on size of server + RAM + drives + controller.  One server could cost that much.

Most people aren't renting servers that pricey though.

Refurbs are totally fine.   Snobbery to ignore them.     Mind you, new drives are recommended.  A good cleaning of internals and bench testing everything first for a burn in.

 

[Fritz]

What do you think about branding, is it necessary?

I think most do that.

And also sending newsletter periodically regarding discount / promotion will that also help?

 

[blergh]

This market is oversaturated and filled with crap, unless you can scrape up a quiet hefty sum of money for the initial buy-in investments i would say that you should stay out of it.

 

[prometeus]

I think that you need to start with some valued service such as specialized/managed hosting. Focus on some software / platform and offer services and help on those.

With vps unmanaged prices going low and low you need thousands of sales, which in turn require investments.

Take your time

 

[Hassan]

This isn't directly relevant, however I rented a SingleHop server with an E3, 32GB RAM, it ended up being like $600/month. And their network was bad, and while the support was good and the sales guy I talked to was absolutely awesome, it wasn't worth the price. So I got a refund and cancelled it.

CaliHop is much cheaper and better. 1/3-1/2 the price.

+1 for Calihop, we currently host OVZ out of there, support is awesome and the network is great.