Reseller Hosting Demystified

I’ve seen the following situation arise again and again during the past several years:

  1. A great web designer or developer builds up a portfolio of customers that provide them with good referral business

  2. Each time the designer completes a project, they recommend a web hosting company they like for the customer to use.

  3. The customer takes the recommendation and pays anywhere from $10-50 per month for web hosting.

Now, there’s nothing wrong with this scenario. The customer is happy and the web designer moves onto the next design project. However, what many designers have yet to realize is that they could be making recurring income every single month from that same customer by offering to host the website themselves. In fact, once a popular designer accrues a modest-sized customer base, the web hosting component of their monthly revenue can easily outpace the design revenue. The best part of the web hosting revenue is that the customer needs this service month in and month out—regardless of future design needs.

So how does a web designer easily set up a system to host customer websites without setting up a complicated web hosting operation themselves? Through reseller hosting.

This article will help you understand the opportunity that’s presented by reselling web hosting services to your design and development customers. Each and every website project that you work on needs to be hosted. As the expert hired to create the website vision and technical implementation of that vision, you’re in a unique position to advise your clients on their choice of a web hosting solution. By offering to manage this aspect of their website business as well, you’ll stand to earn additional monthly revenue—and be seen as an even more essential part of the client’s website strategy. In preparation for this article, we sought out experts in reseller hosting. Companies like Microsoft, cPanel, MaximumASP, NaviSite, DedicatedNOW, HostGator, and 34SP.com have all offered their perspectives on how to succeed when reselling hosting.

The following can act as a guide for those of you who are considering entering the market to resell web hosting services. We’ll start by introducing you to the technical concepts behind reseller hosting, and then follow up by offering the insights of professionals on how to go about selecting a hosting partner to work with on your reseller business.

How Reseller Hosting Works

Many large web hosting companies now offer a special account type—usually called a “Reseller” plan. This account is specifically set up so that the account holder can pay a flat monthly fee for an account, and then host multiple subaccounts under it which the account holder manages and bills for. Here’s an example: let’s say that you purchase a reseller account for a flat fee of $30 per month. Let’s also say that you currently have ten customers who’d pay you to host their website. Here’s a projection of your earnings each month if you charged:

  • $5 per month: 10 customers x $5 = $50 per month – $30 for the reseller account = $20 profit each month

  • $10 per month: 10 customers x $10 = $100 per month – $30 for the reseller account = $70 profit each month

  • $25 per month: 10 customers x $25 = $250 per month – $30 for the reseller account = $220 profit each month

These profit numbers become even more attractive if you have 100 customers instead of just 10 (of course, at that point you’d probably need to spend more on the hosting plan, depending on your clients’ traffic).

So let’s say that you have decided to resell hosting to your clients. Let’s first look at understanding exactly what reseller hosting is from a technical perspective; then we’ll turn to helping you select the best provider.

Understanding Reseller Hosting

Let’s start with a solid definition of reseller hosting from a technical perspective. While in many ways reseller hosting plans are similar to normal shared hosting services, it can be helpful to understand the technical underpinnings of how it allows you to host multiple subaccounts under one master account. The information that follows was provided by Tom Hill, a server engineer with reseller host 34SP.com.

The fundamental components of a reseller hosting plan are:

Web server and database components

The web server is the software that resides upon the server hardware, listening for HTTP and HTTPS connections. The most common web servers are Apache and Microsoft’s Internet Information Services (IIS). Multiple websites are served by a single IP address, thanks to what’s called name-based virtual hosting, which uses the content of the HTTP headers to distinguish between requests to the same IP address for different domains. This allows resellers to easily and cheaply create multiple websites without paying for extra IP addresses or servers.

The database server is the software that provides database functions upon the server hardware. It allows for data to be stored in a structured method that enables fast retrieval of data with a querying language, such as the popular Structured Query Language (SQL). Common database servers are the open-source MySQL and Microsoft’s SQL Server. Typically, a single instance of a database server can provide multiple databases, each with their own users. This allows resellers to create multiple databases or database users per client, providing segregated control and access to data.

Mail server with SMTP/IMAP/POP3

Email servers are tasked with two of the major functions provided for reseller clients: the sending and receiving of email. SMTP (typically used for sending email) is often provided by software like Qmail, Exim, and Postfix, in addition to many others. IMAP and POP are two protocols used for receiving email; both have their pros and cons, and both should be offered by any reseller. Typically, these services are provided by programs like Courier and Dovecot.

Of special note, all-in-one services (such as Microsoft Exchange and Zimbra) are often touted as higher tier, enterprise-class email platforms that comprise all functions, along with (sometimes proprietary) synchronization of mailboxes, calendar, and scheduling functions, and also contact management. Such products are not essential for all levels of reseller hosting, but are often requested by larger clients.

DNS server with full zone management

Integral to the Domain Name System is a DNS server, which provides name server and domain name server duties to the reseller and their clients. Often this will involve the creation of branded name server addresses for which to use with domain names. Management of DNS zone files (a list of DNS records for each domain) is paramount to any reseller. It allows them to create subdomains, redirect traffic for other subdomains (say to services hosted at an office), or create new entry points to the same website for marketing purposes. By far the most common DNS server software in use today is BIND, an open source project.

Brand-agnostic servers, to enable white-labeling

Often a reseller would prefer that clients were unaware of the upstream hosting provider, so that they appear to be the provider, rather than simply a reseller. White-labeling covers a number of activities, such as company-branded name server addresses, for pointing to your name servers. Also, if clients are given limited access to a control panel (that is, Plesk, cPanel), the clients’ company logos and theme colors could be used. Often the upstream provider will supply separate mail server addresses purely for reseller use—the domain itself would have no relation to the provider company’s branding.

Brent Oxley is the CEO at well-known hosting reseller, HostGator. Here is how he describes the main components of a HostGator reseller hosting account: “A reseller hosting account’s main component is WHM (Web Host Manager). It allows resellers to create and modify accounts, change settings, set up custom branding, and more. Below the WHM is a standard control panel (we use cPanel) for each account that allows individual websites to add and remove email accounts, upload and manage files, and more. HostGator reseller accounts also include a variety of nice add-ons, like an Enom account to reseller domain names, access to 4,500 free website templates, and a free billing system.”

Given the technical basics are all there in a reseller hosting account, what else should you look for in a provider? Here is what Oxley suggests: “I would consider 1) if the subaccounts have the features you and your own customers need, 2) that the extras offered by your host are valuable and useful to you, and 3) that the overall uptime and reliability of the host is good (99.5% or higher at minimum). When it comes to finding a reseller hosting company to use, reputation and longevity are everything.”

Josh Ewin is the director of sales and marketing at DedicatedNOW, a hosting company founded in 1997. The company provides managed and unmanaged dedicated web hosting services to thousands of clients. Many of those clients are hosting resellers. Ewin added his thoughts on the most important technical considerations when setting up a reseller hosting account. “Make sure you understand how to support your clients 24×7. (Say that 3 times over). The rest is pretty easy if you’re comfortable with setting up your own website. That stuff can be learned. The successful resellers know how to set up a process to support their existing clients and bring in new sales. Master those two things and you’re sure to win.”

Selecting the Best Reseller Web Host

Research is going to be the key to selecting the very best reseller web host you can find. Whether it’s the word-of-mouth recommendation of a fellow designer, or online searches in search engines or forums, you’ll need to conduct some solid research to arrive at the best decision. Here are several suggestions on how to research a good reseller host.

Experts on the Subject

I’m fond of turning to experts when my own knowledge is insufficient. Here’s how several experts would go about researching a reseller web host.

Monish Sood is Microsoft’s marketing manager for the worldwide hosting business and contributes to the Hosting Insights blog. He says, “Word of mouth is the most powerful way to attract and retain customers. Reputation is everything when it comes to service. When I was with a reseller hosting company, our number one source of new customers was through customer referrals. We surveyed customers frequently to gauge satisfaction and asked one very important question: would you recommend us to a friend? At Microsoft, we use customer references to feature hosting partners in our hosting catalogs. As part of the Microsoft Partner Network, hosting providers are able to survey their customers on overall satisfaction. The results are used to help partners earn points towards achieving the Hosting Solutions competency, which provides many great benefits, such as being listed in the catalogs—a great source of leads.”

“Any good solution starts with defining one’s own needs,” says Aaron Phillips, vice president of operations with cPanel, Inc. “Developers and designers have a lot of tough questions to ask themselves and then once the objectives have been answered they can seek a great solution. Levels of support, features, and reseller hosting companies all vary depending on the specific needs of individual developers and having some kind of defined needs list will go along ways. Finally when you have developed the needs and if you have a specific control panel or software package you like, you go to directly to the source (control panel companies website) to start your search. Affiliate marketing has diluted good information on the search engines.” Mr. Phillips added, “In the hosting industry their are many great choices and finding the one that best meets your needs will be worth every ounce of effort you put into it.”

William Toll, of NaviSite, suggests, “A web professional should start with their own network: ask around and listen to both the good and bad news about different hosting options. They will then quickly build a list of what to look for and what to look out for. Look for a hosting provider that focuses on reliability and security first; if that’s their focus, the web professional can rest assured that their clients will be in good hands. Once the short list of providers is finalized, it’s okay to ask them for a reference, preferably another web professional company. Any reputable hosting provider will be happy to supply such a reference. Also, if the company is a Microsoft shop, they should consider the WebsiteSpark program, which empowers the Web VAP with free software and tools.”

Stacy Griggs is vice president of sales at MaximumASP, a Microsoft-centric dedicated server provider. He adds his thoughts: “By far, the best way to select a hosting company is to talk with other designer/developers you personally know and trust. Additionally, you should look for a company that’s an expert in hosting your specific technology; for example, at MaximumASP we only host Microsoft technologies. Validate the reseller hosting company’s claims, also. If the company says they have great 24x7x365 service, call them at midnight; say that you’re a prospective customer and wanted to see how good their support is. Additionally, I would ask the company for a copy of their SAS70 report. A SAS70 report is prepared by a third-party auditor and verifies that the hosting company follows documented procedures. Most better-quality companies conduct an annual SAS70 audit, and will be happy to provide a copy of the results to their clients.”

34SP.com is a reseller hosting provider based in Manchester, United Kingdom. Stuart Melling co-founded the company over nine years ago and offers this advice: “Reputation, service, and support are the key components for success in a reseller hosting partner. Narrow your choices down to a select few, and then research them in every way possible. If you can, find others who have used the service and see what they think. Of course, there are search engines that you can query, as well as designer and developer websites like sitepoint.com. Plus, don’t forget the forums—there’s a forum devoted to dedicated servers and reseller hosting at SitePoint as well. That’s a great resource.”

Industry Websites or Forums

Another good source of research is to view forums specific to the hosting industry. Additionally, there are a number of specialty sites that post hosting company news and reviews. Forums are popular as they offer an opportunity for customers to appraise reseller hosting companies, and share that firsthand information with others. In this way, forums act as a sort of extended word-of-mouth channel.

As mentioned above, the forums here at sitepoint.com are extensive and cover much ground on this topic across a variety of threads. There’s also another well-respected resource for reseller hosting forum research: webhostingtalk.com. This forum is devoted to web hosting topics and contains a forum subsection specifically for reseller hosting.

Twitter

You might wonder how Twitter is any different from research with conventional search engines. The difference is in the real-time, uncensored feedback of actual customers of the web hosts you’re researching. You can gain an up-to-the-minute view of how that particular web host is doing. If there are recurrent problems, they’ll manifest themselves in a Twitter search. The most effective way to use the Twitter real-time search is over the course of several days or even weeks, as it gives you the best opportunity to assess performance. The methodology is as follows. Reduce your pool of potential reseller hosts down to just a few. Then go to Twitter.com and type in a search of the web host’s name. Scan the results looking for tweets that mention the web host and gauge the writer’s satisfaction level. Keep in mind that all businesses can have one or two unhappy customers at any given time, and that problems are inevitable. That’s why a search spread over a few weeks is best. If a company is having problems on a specific day, you’ll see that the situation is much better when you return a few days later—otherwise, that can be a red flag.

Conclusion

I hope I’ve convinced you to investigate reseller hosting if you’re a web professional; you might be missing out on a significant opportunity for additional revenue otherwise. What’s more, by providing your clients with web hosting, you help maintain the relationship. The tools and information I’ve supplied here should help you choose a suitable provider for your reseller hosting.

The consensus among hosting industry professionals is to conduct thorough research, and rely on personal recommendations from other developers and designers who’ve used various web hosts. You should also remember to use search engines, forums, and Twitter to back up your research efforts.

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