Is the Web Hosting Business Profitable? You Bet! Here’s How.

Is the Web Hosting Business Profitable? 

We’ve all heard it before: “Don’t quit your day job.” It was never meant to be literal in the case of Web Hosting businesses, but given everything that can go wrong, from disappearing clients, to busted backups, to software vulnerabilities, to a dozen other things. It certainly can’t be considered a joke either.

Yet, there are those who have done it successfully, and you know what? They’re laughing all the way to the bank!

In this post, we will look at the Web Hosting Business where you could literally “quit your day job,” why it should be profitable if you do everything right, and take a look at what can happen when you don’t.

Just how profitable is the Web Hosting Business?

The number of Web Hosting companies that are truly profitable is very small, but for those companies who are profiting significantly, which typically means generating six figures or more per year, the answer to this question is not only do they exist, there are plenty of them, and they get bigger every year.

Industry insiders explain that while it’s possible to be profitable with as few as 10 client sites on a Shared Hosting platform (or even fewer with some workload automation), the majority of profitable companies fall somewhere in the range of 50 and 200 client sites (and anywhere from 5 to 25 employees).

Of course, the more client sites you have, the more cash flow you’ll have, assuming your sales are high enough.

So if you think you can get 100 paying customers to sign up today, your profitability is going to scale with all of their business too.

If that customer base grows significantly because of word of mouth, repeat customers, etc., you are going to make more money.

But it’s worth mentioning that the number of clients should not only be tied to how much money you want to make.

Because there are other factors as well.

Sales volume is typically linked closely to customer expectations, which can vary depending on your target market and services offered.

For example, someone selling cheap Shared Hosting plans is going to have a different customer experience expectation than someone offering Managed Hosting for enterprise clients.

Industry insiders also say there are some factors that are always in play when it comes to determining client expectations.

These include: service level agreements (SLAs) and expected uptime performance metrics.

The more clients you have, the more uptime and better performance you should expect.

The bottom line is if your sales numbers aren’t high enough to meet expectations regarding service level agreements and uptime metrics, your company will likely go out of business, no matter how profitable it may be otherwise.

But in order to achieve these sales numbers, you need a high enough profit margin that you can continue to reinvest in your company until it reaches critical mass and achieves profitability.

The Web Hosting Business and expected sales volume. It’s all about setting goals.

We won’t go into the exact details of how much money you need to invest and for how long, because this will vary from company to company depending on many factors including: target market, service offerings, and so on. But, we’ll save that discussion for another time.

However, this is a good place to mention something else industry insiders say about setting sales goals, which is they are typically set too low by most people who want to start their own Web Hosting companies, typically because it’s an easy number to grow into without thinking it through.

For example, if your goal is to generate $20,000 per month in sales within the first year, and for whatever reason this doesn’t happen because of market conditions or poor business decisions, you need to have a plan to deal with that.

And just increasing prices by 10% isn’t going to be enough.

And so most people don’t bother to plan and think things through. They just want to get started, and start making money.

But with no plan in place for what happens if the numbers aren’t where they should be, it becomes very difficult if not impossible to achieve these goals, and most companies fail because of this lack of planning.

However, going big isn’t the only way to get into a profitable Web Hosting business. In fact, the vast majority of Web Hosting businesses aren’t big at all.

These “small” Web Hosting businesses are making tidy profits for themselves as well. Many are doing so from the comforts of their own homes, as we’ll see below.

How to start a Web Hosting Business from home and earn money.

If you are looking to start something that gives good returns in less time then a Web Hosting business is the best option for you.

You don’t need any experience or qualifications (only basic knowledge about computers and the internet).

Also, this is one of the few businesses where you can work from home and there is no time restriction.

You can start working as soon as you have a computer with internet connection.

Now let’s look at how to start a Web Hosting business.

There are various ways through which you can start a Web Hosting Business from home:

1) Become a Reseller of some popular Web Hosting companies.

2) Start your own Web Hosting company (If you don’t want to become a Reseller).

3) Become an Affiliate of some Web Hosting company and promote their Web Hosting services.

Now let’s discuss the pros and cons of each model:

1) The Reseller Business:

If you are starting a Web Hosting business from home then the best option is to become a Reseller of some popular Web Hosting companies.

The Reseller business is a common and easy way to start a Web Hosting business from home.

In this model, you will be providing Web Hosting services by becoming a Reseller or affiliate of some popular Web Hosting company.

In other words, you will be promoting the services of those Web Hosting companies and earning commission from those companies.

The best part is that you don’t need to create any websites for this business as it’s not required with this model.

You can resell any Web Hosting company’s services and plans, but there are some popular companies which everyone wants to become a Reseller of.

Those popular Hosting companies provide very good service and an attractive affiliate program like Bluehost, Hostgator, SiteGround, etc.

Now let’s talk about the commissions:

This is one of the best ways to start a Web Hosting business from home if you want to earn money fast.

You will get paid for your customers on a monthly basis. Commissions vary from company to company, but it’s around 40-60% of the total revenue depending upon the Hosting plan you are reselling.

So if someone is paying $5 per month for shared Web Hosting then you will be getting commission upto $3 per month i.e. 60%.

There are no monthly or annual commitments so you can stop reselling at any time without any obligation.

2) Start your own Web Hosting company:

If you don’t want to become a Reseller then the best way is to start your own Web Hosting company.

With this model, you will be providing Web Hosting services directly to your clients and earning commission from that company.

Similar to Reseller business, this model also doesn’t require you to create any websites for your business, but rather promotes the services of some popular Web Hosting companies.

There are many popular Web Hosting companies available for this model such as Godaddy, Bluehost, SiteGround, etc.

Now let’s talk about the commissions:

The commissions vary from company to company, but it’s usually around 30% of the total revenue.

So if someone is paying $5 per month for shared Web Hosting then you will be getting commission upto $1.50 per month i.e. 30%.

There are no monthly or annual commitments so you can stop working with any company at any time without any obligation.

3) Become an Affiliate for some Web Hosting companies and promote their Web Hosting services:

This is the most popular and easy way to start a Web Hosting business from home.

With this model, you’ll be promoting the services of some popular Web Hosting companies, again, such as Bluehost, Godaddy, Hostgator, SiteGround, etc.

Now let’s talk about the commissions:

The commissions again, vary from company to company, but it’s usually around 20%-30% of the total revenue.

So if someone is paying $5 per month for shared Web Hosting then you will be getting commission upto $1.00 per month i.e. 20%.

There are no monthly or annual commitments so you can stop promoting any company at any time without any obligation.

Remember: If you are starting a Web Hosting Business from home then don’t forget to have a look at affiliate marketing, as it’s the best way to start a Web Hosting business from home.

However, if you still want to become Reseller for some reason, then also remember to choose the best Hosting company with a good commission.

How to sell Web Hosting.

Like every other business, offering Web Hosting is a great way to make money online. But it requires patience and knowledge to build a successful Web Hosting company.

Before starting the journey of building your own Web Hosting Company, you need to decide how much money you can invest and what things you should consider before starting a new venture:

1. Types of Hosting you want to provide.

2. Costs of starting a Hosting company.

3. Who are your competitors?

4. Do you have any past experience with this type of business or not?

5. Is Internet marketing part of your plan?

Before starting this journey, first read about some of the most popular Web Hosting companies out there and do your homework.

Then select the type of Hosting company you want to have as per your budget, knowledge and experience.

The two most popular types of Web Hosting companies that people get into are: Reseller and VPS/Dedicated Hosting.

You can decide on this later when you have enough information and know your budget to start off with.

1. Reseller Hosting:

Reseller Web Hosting is also known as white label Reseller Hosting because it allows you to sell Hosting services to other people/companies under your own brand (logo).

It’s when other small companies buy the products of a larger company and then sell them onto their clients with their own company’s brand on them just changing the packaging.

It is important to mention here that Reseller Hosting doesn’t mean you own several servers with different IP addresses. It means you are buying Hosting services from a Company and selling it to clients under your own brand name.

Benefits of Reseller Hosting:

1. You will not have to invest anything in hardware or software, all things needed for your clients will be provided by the host.

2. You don’t need to do any technical work, you can sell it easily by using a billing account software through a simple website.

3. You don’t need to hire new employees for this business because you are outsourcing all work, like data center management, server management etc.

Disadvantages of Reseller Hosting:

1. Your clients will have a single point of contact i.e. you, not the host which is providing the servers and other technical support to your client’s websites/clients.

So if any problem arises, you’ll need to resolve them by contacting the host directly, instead of solving their problems directly yourself.

This may create lag time, which is why you need to choose a very reliable Hosting partner with good communication and turnaround time for requests.

2. You’ll need to share your clients’ website statistics with the host.

3. Your clients will have a single point of abuse i.e., you, not the Hosting company where their servers are located in that country or city.

This is because you take on all the responsibilities by selling their Hosting services under your brand name.

2. VPS/Dedicated Hosting:

If you want complete control over your Web Hosting company and don’t want to depend on any Hosting companies completely, then go for Virtual Private Server or Dedicated Server.

With VPS Hosting, you will have a virtualized server to work with. It’s just like having your own physical server, but it has been shared with other customers in the form of Virtual Private Servers.

However, with a Dedicated Server, you aren’t sharing the physical machine at all with any others. You have complete control over its resources.

But you also take on the full responsibility of running it as well. So more than likely, you will need to pay someone to maintain the physical machine also.

Benefits of VPS/Dedicated Hosting:

1. You can manage every aspect of your Hosting business because you are providing complete root access to your clients.

2. You have complete control over the server and all Web Hosting related settings.

3. You can manage bandwidth, disk space usage etc to fulfill customer’s requirement.

Disadvantages of VPS/Dedicated Hosting:

1. Hardware maintenance is very costly because you are managing the entire server by yourself.

2. You need to hire new employees to provide technical help to your customers because server management and other related tasks are your responsibility.

3. You will have a single point of contact i.e. you, not the host which is providing servers and other technical support to your client’s websites/clients.

So in case of any problems, you’ll need to resolve it with your client, not the Hosting company where your servers are located.

Is the Web Hosting Business Profitable? Conclusion.

The Web Hosting Business can be extremely profitable. How profitable is determined by the type of Hosting company you wish to build.

I have seen a lot of Web Hosting Companies built on WordPress for example, which is a very scalable platform for growth.

If you are looking for that great idea for a scalable online business, you should look at starting your own Web Hosting Company.

It can either be as a standalone entity or an added service to your own Web Development Business.