As a freelance web designer, one of the most common thoughts to run through my mind is: how can I generate more recurring revenue?
One effective and potentially pain-free way to do this is to become a hosting reseller for your clients.
Even if you’ve only seen the term as you were browsing hosting plans for your clients’ websites, you’ve probably noticed it as an option.
What is reseller hosting?
Put simply, this form of web hosting allows you to purchase hosting at a wholesale price from a provider like GoDaddy, Bluehost, etc. Just like a retail store gets its merchandise at a substantially reduced price, by purchasing a reseller hosting plan, you get a great price for the amount of disk space and bandwidth you receive from the hosting provider.
When you become a hosting reseller, you’ll be given tools to partition, sell, and manage the resources you purchase from a hosting provider.
If it sounds a little daunting – you’re not wrong: it can be. But, there are steps you can take to start slowly, get your bearings, and ensure you’re not getting in over your head. If I can do it, with a pretty limited understanding of how it all worked when I started, you can too!
Before we dive in, I want to describe the scope of the hosting service that I offer my clients and why I wanted to keep my hosting offering a little more limited.
Primarily, I wanted my business to remain a web design provider. I don’t advertise myself as a hosting provider at all. Rather, I offer hosting as a way to add value and close deals.
I do my best to limit my hosting option to my smaller clients who, for the most part, won’t require very much assistance after initial set-up. This may reduce the amount of money I bring in, but it helps me achieve balance by keeping in check the time I need to dedicate to that side of my business.
To achieve this more limited scope, I do my best to follow these simple rules:
- I offer only two email addresses per account by default. And if my client will need more than 3-4 email addresses, I generally steer them toward a different hosting provider.
- I don’t offer tiered plans and don’t limit clients’ disk space or bandwidth./li>
- I only charge annually.
Pros of Offering Hosting to your Clients
There are a lot of really great reasons to sign up as a hosting reseller and offer this to your clients. Here are a few that stick out to me after several years of offering this service:
1. Recurring revenue: Any person or business with a website must purchase a hosting package. Somebody’s going to get paid, so why not take a cut? As of this writing, one year of the most basic hosting (including promos) on GoDaddy costs $57.44, and on Hostgator it’s $53.88. Both of those increase in price after the first year.
2. Convenience (for you): Reseller hosting allows you to have immediate access to your clients’ cPanel accounts without keeping track of individual usernames and passwords. Need to check which version of PHP your client is running? Easy! Need to create an FTP account? Easy! You have a master control panel (Web Host Manager, or WHM) which allows you this ability.
3. Convenience (for clients): This one may be a little more controversial, but for the clients I target for my hosting solution, being able to email me with an issue they’re having is much more convenient than calling a support technician.
4. Repeat business: Just like any business – keeping in contact with previous clients is a great way to ensure you’re the one they call when they’re ready to grow their business.
For instance, say a small mom & pop shop that you built a website for two years ago is ready to create a new site with an eCommerce store. Would they be more likely to reach out to you if they’ve had semi-regular contact for the last two years as their website host, or if you were a distant memory?
5. You’ll learn (a lot): This may not be true for everybody, but whether it’s fixing my car or fixing DNS settings – I learn best by being confronted with a problem and figuring it out. In the beginning, you’ll probably be on the phone with support for many issues you and your clients encounter. But as time goes on – and probably more quickly than you expect – you’ll learn to diagnose and fix many hosting issues yourself.
Cons of Offering Hosting to Your Clients
Don’t get me wrong. Just like any solution you offer to your clients, there are negatives.
1. You’ll be the first-level of tech support: Try as you might to strategically target low-maintenance clients, you will get emails and phone calls for support requests ranging from changing passwords to websites going down. The good news is, at least in my experience, the vast majority of issues you’ll experience are easy to resolve. No matter how experienced you are, however, there will also be times you’ll have to call the hosting provider to help resolve an issue.
2. You’ll be on call: If having the ability to turn off your phone, close your laptop, and leave the world behind for days at a time is a priority for you – being a hosting reseller will be tricky. While it’s not common, you do get emergency requests for help that come at all times of the day or night. I’ve learned to prioritize which issues are truly emergencies and which can wait until the morning.
I’ve had only one stretch in three years of offering reseller hosting in which I had to be completely out of reach for more than a day (it was 4 days, in my case). To head off issues, I let my clients know I’d be unreachable and arranged for a person I trusted to take care of emergencies in my absence. Not only did no emergencies arise, but no issues came up at all.
3. You’re at the mercy of your host: Choosing the right hosting provider is vital. If you choose poorly, it can make you look bad and may result in you having more support requests from your clients. What’s worse, if you decide to make a change, moving to a new hosting company as a reseller is a painful process and can cost you money.
Choosing the Right Hosting Provider
There are plenty of factors to take stock of when you’re browsing around for the right reseller hosting provider. You’ll find that many of the price points and features offered are very similar. For instance, most include vital tools like WHM, one-click installs, billing solutions, as well as up-time guarantees.
But there are also some pretty drastic variations between offerings, and I wanted to explore a few things that tend to be different:
1. Tech support: Choosing a hosting provider with great tech support will save you a ton of headaches down the road. You’ll want to be sure the company you choose offers 24/7 phone support, has knowledgeable and pleasant support staff, and won’t leave you on hold for 20+ minutes every time you call.
You should search for reviews of the hosting provider’s tech support, and even go so far as to call them several times at different times of the day (and night) to gauge how long you’ll have to wait on hold when you do have to ask for help.
2. Server response time: As search engines place a greater emphasis on site-speed for their rankings, having a web host that prioritizes short server response times can be much more important than you realize. For a fantastic breakdown of web host server speeds, check out this blog post.
3. Free SSL certificates: Beginning soon, Google will be making changes that will be pretty detrimental to websites that are not encrypted. While many hosting providers are licking their chops at all the money they’ll be making, others offer reseller packages that include free website encryption.
Being able to offer SSL certificates to your clients at no cost could be the value add that closes a deal. Or, charging them could be a way to make a little extra money with no up-front cost.
4. Free cPanel migration: Even if you have no clients lined up to host before you launch your reseller hosting offering, you probably have your own website and email account that needs to be migrated over. You shouldn’t have to do this yourself!
Some hosting providers offer limited, or even unlimited, migrations from a previous hosting provider to them. Be on the lookout for how many migrations a host will provide to a new reseller. If that number is limited or even zero, ask how much they charge per migration.
Pulling the Trigger
After you’ve done your research and signed up as a hosting reseller, you’ll want to take action on a few items before offering your new reseller hosting service to your clients.
1. Migrate Your Own Website & Email: A great first step into the world of reseller hosting is to use yourself as a guinea pig. Most reseller hosting accounts include at least a few account transfers at no additional cost. The processes for requesting a transfer vary depending on the host, but in most cases, you will find a form in the hosting console after logging into your reseller account.
In my case, I provide FTP information and cPanel logins, and my hosting provider does the rest – usually in less than an hour or two.
After you receive confirmation that the account has been migrated, you can log into WHM (more info on that below) to see the new account, change bandwidth and disk space quotas, and access the account’s cPanel.
The final step will be to log in to your Domain Registrar and change the Name Servers to your new hosting provider, to ensure the domain is pointing to the newly migrated website. Changing nameservers can take up to 24 hours to take effect, but it’s usually less than that. Here is nice tool to check and see if the nameservers have updated, and the URL is pointing to the migrated account.
Another important note: things get a little more dicey if the account your migrating in is not a cPanel-based account. In that case, you may have to either migrate WordPress manually and export/import your existing emails to the new hosting account. This is a pretty rare occurrence, however. Only twice now, in the years I’ve been offering this, has this issue come up – and both times I was able to pay a fee to my web host to do the migration for me.
Doing a migration on your own website and email will give you a good primer on migrating future clients’ accounts.
2. Decide on Pricing: This part doesn’t have to be as tricky as it sounds. For my web design business, offering hosting has always been about adding value for my clients and creating convenience for myself.
To achieve this, I offer hosting and 2 email addresses free for one year, and then charge $99/year after that. This accomplishes the two goals I stated above, and because there’s no up-front cost, the majority of my web design clients agree to host their websites with me.
3. Learn WHM (Web Host Manager): The vast majority of reseller hosting packages offer WHM as the way you’ll manage your clients’ hosting accounts. It may look intimidating when you first log in, but it’s not nearly as difficult as it may appear on first-glance.
Check back tomorrow for a detailed dive into setting up your reseller account with WHM!
4. Selling your first hosting account: My best advice would be to start small. Wait for a client who you think will be low-maintenance, who won’t need more than one or two email accounts, and who you have a good relationship with. You may even consider offering them free hosting for an allotment of time, in exchange for them being your guinea pig.
As you get more comfortable with reseller hosting, offering your service to bigger clients can be a great way to generate even more revenue.
In Closing
Depending on your price point, it may take a few months to begin making money in your new service. But before long, you’ll have a reliable source of recurring revenue, you’ll learn more than you ever thought possible about how hosting works, and you’ll have a new way to remain top-of-mind with previous clients.
Happy Hosting!
Featured image via Macrovector / shutterstock.com
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