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The affiliate model has the lowest risk but also the lowest profitability. You simply choose your preferred host, sign up for their affiliate program and each client you refer to them you receive a percentage of the sale. You or your client then will deal directly with the hosting company for support or billing.
Pros:
Cons:
The reseller model allows you to add more profitability without the need of server management. You simply buy a block of websites that you pay monthly for and resell them to your clients at whatever profit you see best fit.
Pros:
Cons:
The server model provides the highest profitability but also requires a vast knowledge of servers and resources to maintain them. The server model can range from going through a hosting company for a dedicated or virtual private server or renting / buying your own equipment at a data center. Many growing businesses end up up in this model without a host that is the right fit or the proper knowledge. This will typically result in disaster through hacked websites or data loss so proceed with caution.
Pros:
Cons:
Be sure to thoroughly do your homework to find a host and model that is a good fit for your skillset. It will take you far less time to do thorough research now rather than switch models or hosts later. Also remember that more than anything with hosting you get what you pay for.
Hosting can be an excellent additional passive revenue stream for your business. If it is done properly and expectations are realistically set with your client you can have a successful hosting program. If not expect angry clients and lots of stress.
What other tips or experiences have you had?
*Please refrain from bashing hosts. Comments will be moderated.
Hi, I’m Gabe, an entrepreneur and owner of Savvy Panda a Joomla Web Design & Inbound Marketing firm in Milwaukee, WI. I also own jInbound and Master Inbound. I am the editor of the Business Matters section of the Joomla! Community Magazine and am a Co-Founder of Joomla! Day Midwest and the Milwaukee Joomla! Users Group.
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Great post, very informative. Personally I find it's better to concentrate on one area and do it well. The 'jack of all trades master on none' scenario.
Reselling is a huge burden with very little profit for a sole web designer developer. I can't see why anyone would choose that route.
I say choose a great web host and stick with them, they will look after you and your clients. Then you can concentrate on designing, building and maintaining websites.
@Mark - In other words don't resell hosting by itself in the usual Ponzi scheme fashion; resell hosting as part of designing, building, securing, optimizing, and maintaining clients' sites.
This type of reselling is fine for freelancers, small firms and agencies -- they'll always be pushed into it by client demand. Providing some type of high touch managed hosting, support, and other services in an ongoing relationship with clients often makes sense, especially for those clients really need a self-hosted instance of Joomla and other applications but lack the staff, budget, time, and/or expertise to handle technical matters themselves. I think this will remain true even after cloud-based application hosting like phpfog becomes ubiquitous and eclipses traditional shared hosting in the mass market.
You can always sell on value if you are willing to limit growth to a client base you can handle. The profitability will follow from the prices you set. Define your capacity, stick within those limits, and sell it on that basis. Small size and individual care is a core competency. Relevant chapters in "Rework" come to mind: "Why grow?" "Embrace constraint." "Sound like you."
was thinking a lot regarding this topic, so thanks for bringing it up here. You certainly have a good writing style i like, so will be subscribing to your blog.
That is an excellent article and one that we all deal with. In the end of the day it is excellent passive income, does keep you in touch with the client on a yearly basis. I would say you get what you pay for in hosting. Purchasing any sort of un-managed service moves you from being a web developer to a hosting company. Is that what you set out to do. Maybe not. My rule of thumb is fully managed not cheap and an end game hoster.
Thanks Sean. You bring up another great point that it keeps you in touch with your client on a yearly basis at minimum. I hadn't considered this and it's another great advantage.
