How to Make Money as a Web Hosting Reseller

Person inspecting ethernet cables of a server as a Self Service Web Hoster

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Since the Web Hosting sub-channel comes under the Industry & Trade channel, and our focus is on helping the hosting businesses, and not the individuals, We've never covered such topics, but recently there have been a lot of individuals who've been contacting us, and seeking assistance in entering the hosting arena as a reseller. So, we finally decided to write this article to throw some light on potential revenues and profits that hosting resellers can really generate.

What Does Your Success Depend Upon?

First off, the amount of money that you make totally depends upon your marketing tactics, and effectiveness of your PPC campaigns (if you decide to invest any money on Pay-Per-Click marketing), conversion rates, and then the margin at which, you decide to operate.

Can You Make Six-Figure Income?

We know it for a fact that most of you would be interested to know if you can really make a six-figure income as a hosting reseller, but before we talk about earning $100,000+ or such fancy figures, let's start with just a thousand bucks as a reference.

Setting a Meager $1,000 Target Initially

So, if your target is to generate a monthly profit of $1,000 then it's essential that you generate sales of at least $5,000, assuming a healthy 20% profit margin. Note that it’s totally up to you to decide the profit margin, but we’d highly recommend 15-20% profit margins, because anything over 20% margin will make your hosting packages way too costly, and this may turn off many of your potential customers. On the other hand, if you decide to work with 5% profit margin, then you’ll have to resell hosting packages worth $20,000 to generate monthly profits of $1,000, and we simply don't think it'd be worth your time and efforts.

Working as a Reseller vs. Hosting Affiliate

Even as an affiliate marketer, you can generate up to $60 per referral very easily, and you just need to generate only 20 good leads to earning $1,000 per month working as a hosting affiliate for top web hosts like JustHost, HostGator, and GoDaddy. In this case, you’d potentially be generating business worth at least $10,000-$20,000 for those hosts in the longer run, and earning only $1,000 from it. However, the big hosting agencies don’t mind paying high to their affiliates on a per-referral basis, because they know it from their past experiences that most of their customers will end up spending anywhere from $200-$5,000 per annum easily towards hosting and domain registration/renewal charges, and the average profit margin would easily be much more than $60 referral bonus paid by them. So, if you want quick money, then working as a hosting affiliate makes more sense, than reselling hosting packages. But, in the case of affiliate marketing, it’s tough to predict the conversion rates, and your earnings may vary drastically from month to month.

In case of reselling the hosting packages, if you manage to attract 20 customers every month (just 1/day), and assuming average order size to be just $100, you’d end up generating only $2,000 first month, out of which, just $200-400 will be your actual earnings (with 10-20% profit margin). But, don't get disheartened so soon, because this is just the beginning; the magic of compounding makes all the difference here. If you manage to do the same next month as well, the profit margin in the second month would be $200-400 from second month’s customers plus at least $100-200 from recurring billing. Likewise, your profit margin in the third month would be $200-400 from that third month's sales plus $100-200 from recurring billing of previous month's sales, plus $100-200 from recurring billing of first month's sales.

Earnings at the End of 6th Month

Making money as a hosting reseller becomes easier and easier as time passes by. At the end of sixth month, taking average figures, your profit margins would be $300 + $150 + $150 + $150 + $150 + $150 = $1,050. Now, at this point, even if you stop generating new orders, you'd be making a stable $1000 monthly profit merely by sustaining the existing customers, and you literally don’t have to do anything, because once your customers are subscribed to monthly hosting packages, there’s nothing that you really need to do. Since you're reselling hosting packages, you won't have to worry about customer service, so long as you're reselling the hosting packages of a reputed web host. At this point, all that you need to do, in order to sustain your $1000 monthly level is to add a few more customers, as and when any of your old customers go off. However, you must be wary of issues with reselling hosting packages of unreliable firms. So, it's important that you buy web hosting packages only from a reputed firm as a reseller.

Making Your Six-Figure Dream Come True

If we continue the math, then at the end of 24 months, you could be easily looking at a healthy income level of $4,000+/month, and even if you’re unable to generate consistent orders, you’d surely be earning in the range of $2500-3000/month by then. And, that's assuming only a meager order size of $100/order, but if you’re reselling VPS and managed to host packages, then the average order size can easily go up to $200+. Applying the same math, you’d easily be generating $8000+/month by end of the second year, assuming that you manage to generate 20 new orders every month, and retain the majority of your old customers with an average order size of $200. And, guess what $8,500/month, means you’d have already started making a hefty six-figure income level at that point. However, in the case of affiliate marketing, if you fail to generate any orders, you end up earning ZERO DOLLARS for that particular month, and that's quite risky, especially if you’re planning to pay your credit card, and utility bills with that money.

The Starting Problem

A word of caution here is that things can be quite rusty and frustrating during the first six months. But, that pretty much applies to any business, and you get to reap the real benefits only after a year or two (and, this was pretty much the case when we had started an SEO company). So, you can certainly make a living working as a hosting reseller if you chalk out the plan correctly, and work your way through it smartly, and patiently.

Biggest Challenges in the Process

The biggest challenge in the process is generating orders on a consistent basis. You can make use of PPC marketing, organic search engine optimization, social media marketing, and several other ways, but remember — it's always easier said than done! Hearty wishes from our side to all those who plan to take up this challenge and make some serious money as a hosting reseller. Just remember, you can make things happen, but it’d require a good deal of time, effort, persistence, and patience! We'd also like to add that you can also generate similar income levels working as an SEO reseller too; the only difference would be that you'd be reselling SEO packages of a reliable SEO firm.