Starting a hosting company
- Thread starter netnub
- Start date
A few pieces of general advice from me would be:
- Learn from your mistakes.
- Have very clear policies (TOS/AUP) from the start.
- Don't launch until you're completely ready - this includes the full website, billing system, etc.
- Don't plan on being profitable immediately. Have adequate funds ready.
- If you're only in it 100% to make money, it's the wrong industry for you.
Make sure you have a solid plan in place, and as much as I don't like to say it: have an exit strategy. There's nothing worse than having a few dozen paying customers that aren't cutting it and shutting your doors while leaving them in the dark. I've seen it happen in the past, and I'm sure you can agree that there's nothing worse than completely abandoning your clients.
Also, one more piece of advice: the market is quite populated. Find a location or a niche product you can offer that other providers cannot.
$400 won't even get you a decent website. How is that going to last you three months? You going to get a cheapo dedi from OVH and make really low margin? What about your licensing costs? What billing system will you use etc. Sounds like a summer host.
What I'm thinking here is:
VPS w/ cPanel and WHMCS (Might use eleven2 reseller with free whmcs to save money for now - if eleven2: $19.99, if vps with cpanel and whmcs, rougly $30)
Dedicated Server(e3-1270v2, 32gb ram, /26, 4x 500gb ssd OR 4x 2tb (same price), 1gbit port) : $120 (+ a discount I've been offered if I sign a 3 month contract it brings it down to $89/mo)
Domain: Already have one thats been idling and expires in 2015
Solus: Don't intend to use. I created my own panel.
First, I started planning this 6 months ago. 4 months ago I paid $800 for a custom website design. I also built my own VPS management software for this about 3 1/2 months ago.
I can assure you it won't be from OVH.
I can assure you it won't be a summer host.
GVH-Jon
Banned
We started our hosting company with less than $400. More than $300 of it went to incorporation. $20 went to an EZPZ Master Reseller Account. We have NEVER had to put in ANY personal funds since.
We now have 2 shared hosting/reseller hosting servers and 1 openvz node and 1 xen ssd accelerated node.
Don't doubt progression
You just need to play your cards right.
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$400 isn't enough to cover 3 months. You're going to need WHMCS, SolusVM/Other, Colocation/Dedicated Server with additional IP addresses (plus if you go dedicated you'll most likely have to buy upgrades/the actual server if you colo), you'll need to keep money set aside for hardware replacement if you colocate, and you'll need to keep money set aside for chargebacks/disputes.
Some other costs would be renting a VPS to host your website/billing panel and another for a solusVM master, registering as a sole proprietorship or LLC, getting a PO Box.
So in total, much more than $133/month.
Some other costs would be renting a VPS to host your website/billing panel and another for a solusVM master, registering as a sole proprietorship or LLC, getting a PO Box.
So in total, much more than $133/month.
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GVH-Jon
Banned
Read my reply above
You're a rare case then, because honestly, it truly does require more than $400 if you want to jump in the VPS business.
mikho
Not to be taken seriously, ever!
Most important thing is to have the business plan.
Who will you target, who will you sell to and so on...
First edition should be a draft with what you want to do and general ideas on how to succeed, it can be changed/updated when completing the later steps.
You should start by calculating the costs for things like:
* dedicated if going for the vps market
* billing system, be it WHMCS or Hostbill or something else.
* cPanel/WHM + fantastico/installatron if you are going for shared/reseller hosting
* solus or virtpanel or something if you are going down the vps track.
With that, estimate the cost would be double that the first year (maybe two). Things will cost extra when starting up. Things lime hiring a system admin to fix something that you cant do yourself, monitoring system, things that were overlooked at the start.
When the cost have been estimated, it's time to look at the more fun part.. The income.
Setup the packages as you seem fit and put a price tag on it. Calculate on how many you need to sell to break even. Calculate on what prices you need to have to make some money on it. Is it worth it?
If it is, congratulations. You might make it in the hosting business.
On a bigger picture you do the basics calculations no matter what market you are entering. The only difference are the tools to make you rich.
Sorry for any typos, wrote this on an ipad mini and the screen isn't that responsive.
Who will you target, who will you sell to and so on...
First edition should be a draft with what you want to do and general ideas on how to succeed, it can be changed/updated when completing the later steps.
You should start by calculating the costs for things like:
* dedicated if going for the vps market
* billing system, be it WHMCS or Hostbill or something else.
* cPanel/WHM + fantastico/installatron if you are going for shared/reseller hosting
* solus or virtpanel or something if you are going down the vps track.
With that, estimate the cost would be double that the first year (maybe two). Things will cost extra when starting up. Things lime hiring a system admin to fix something that you cant do yourself, monitoring system, things that were overlooked at the start.
When the cost have been estimated, it's time to look at the more fun part.. The income.
Setup the packages as you seem fit and put a price tag on it. Calculate on how many you need to sell to break even. Calculate on what prices you need to have to make some money on it. Is it worth it?
If it is, congratulations. You might make it in the hosting business.
On a bigger picture you do the basics calculations no matter what market you are entering. The only difference are the tools to make you rich.
Sorry for any typos, wrote this on an ipad mini and the screen isn't that responsive.
Honestly, I would target local businesses in your community first. You'll be surprised by how many local businesses do not have any sort of online presence. These are businesses, even small ones, that can afford to pay you a good amount for your services.
You should offer them shared hosting with a domain name for $10/mo, or even better, $100+ for a year. You could even double that if they have no idea what they're doing and need to you to make basic edits every now and then (updating their menu, adding featured items, or other random news for them). A VPS for a 'busier' site with management for $50+/mo, that could be a 128MB RAM container. Even with a small startup cost, with a few customers you can break even.
If I were starting a new hosting company, I most certainly would avoid the low end market like a plague. It's much easier to support a fewer number of higher paying clients than it is a larger number of low paying clients.
You should offer them shared hosting with a domain name for $10/mo, or even better, $100+ for a year. You could even double that if they have no idea what they're doing and need to you to make basic edits every now and then (updating their menu, adding featured items, or other random news for them). A VPS for a 'busier' site with management for $50+/mo, that could be a 128MB RAM container. Even with a small startup cost, with a few customers you can break even.
If I were starting a new hosting company, I most certainly would avoid the low end market like a plague. It's much easier to support a fewer number of higher paying clients than it is a larger number of low paying clients.
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Dont start something based off a single community like LET/WHT. While everyone needs to be serviced (thats what she said) 99% of these communities have unreasonable prices to maintain a business. They are not unreasonable customers, prospects however startups hammer down prices, larger ones compete and the community gets the low end.
Offer sustainable prices and give discounts to the communities, dont rely on it. Dont hammer yourself to far under a break even point but if you have the extra capital then there is nothing wrong with a loss leader.
A few things here before I get negative comments:
Referencing cost should not be taken personally. There is a VERY big pool of customers where a monthly commitment of $5 is a lot, in a relative economic sense. Respect.
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365Networks
New Member
You have to note that Jon did not jump into the VPS business right away, he started himself up with reseller hosting and then building to what GVH is today. I commend him for doing such.
What I would also like to say is you should definitely start with the local market first if you are really wanting to get started, or perhaps work with a company to get a feel of the industry.
What I would also like to say is you should definitely start with the local market first if you are really wanting to get started, or perhaps work with a company to get a feel of the industry.
GVH-Jon
Banned
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.
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