How Much Should I Charge for Hosting, Reseller Charges, a Guide
There are usually a few reasons why you might want to consider running a reseller hosting package. So to help you out, then in this article, we’re going to cover some of the reasons why you might consider it, what to expect, and what you might want to charge based on your business model.
But first, let’s give you a quick answer so that you can see some options, then we’ll dive into the information behind it...
How much should I charge for hosting? There are two main routes you would usually follow for hosting packages. The first is an add-on to your existing business as an up-sell or as an extra service. Or, as a hosting-only provider. The latter is based on volume, the former is based on additional revenue want to gain vs the work involved.
So let’s take a look at the breakdown of each of these two approaches.
Hosting only business
Creating a business as a hosting provider can be very profitable. The basic model for this is that you have a finite amount of hosting space that you’re able to offer out to customers.
You charge and invoice for that space, and as part of your responsibilities as a hosting provider, you ensure that the server is fully operational and maintained at all times possible.
Customers can be charged based on a number of factors, here’s an example list:-
- How much drive space they’re provided
- How much bandwidth they’re provided
- How many e-mail accounts they can host
- cPanel options
- Additional server support and maintenance
The hosting only model is based on simple maths and mostly boils down the amount of space you provide for your clients. For example, with our Reseller hosting package you get 150GB of fast SSD web space for £14.99 per month.
Let’s say for example you decide to sell a basic web host space of 5GB for £8 per month.
So, of your total 150GB, you’ve used 5GB of space, and the total revenue is £8. If you have two customers paying £8 each customer per month, then you’ve covered your hosting costs. Certainly, in terms of hosting you’re in profit. So well done.
Aiming for volume
Here’s where hosting gets profitable. Having a couple of customers is great, but it’s not going to make a huge profit.
In fact, if we assume you sold almost all 150GB of space for the same price, that makes 30 customers paying £8 per month for 5GB of space each. Therefore you will receive revenue of £240.00 against your initial £14.99 costs. Nice!
So from this, you can aim to do three things, sell each GB of space for more money. And/or obtain more space and repeat the process. And you can provide more services - more on that shortly.
If you can go through this process repeatedly and successfully, then your business will build by sheer volume. Your task then will be to build more customers, while maintaining the customers that you have already.
Hosting as an upsell or add on
As an entrepreneur or self-employed web site designer, then hosting is something you can offer as part of your business.
Whether it’s business-to-business, or business-to-consumer, most people are clever enough to type in hosting costs into Google and find pretty low prices available for hosting. So charging more for hosting is not an option - unless you can add value.
Providing a hosting service for websites for your clients, and having an ongoing support agreement to go with it can be one of the easiest ways for web developers to earn somewhat ‘passive’ income.
Let’s look at what options you have for adding hosting as an addition to your main business and adding value.
Hosting requires maintenance
Most hosting and websites require maintenance to continue to run in good order. There are a number of aspects that need to be maintained on a hosting account and these don’t come with standard hosting packages.
Here’s a quick list of hosting and website maintenance details...
- Content management system updates
- Plugin and module updates
- Security updates
- Backup scheduling
These require mainly time, but also some expertise to maintain in areas like WordPress and cPanel.
Many businesses do not have the time or the resources to provide these updates themselves. This is where you can add value to your clients. By carrying out your normal services (e.g. building a website) you can then offer your own hosting alongside which includes maintenance services.
Assuming you spend just an hour or two per month checking and updating systems, this could provide a good additional revenue to your existing core business. And maintenance is on top of what you would charge for hosting the site too.
As an example, let’s imagine you charge a client just £50 a month for hosting and on-call services to maintain their website service. Some months there may be one to two of work required in updates and checks. Other months there may be no work required at all. That £50 a month is largely passive income.
If you’re not sure if the client is likely to go for it, then offer a three-month introductory price of say £25 - and just make sure they’re getting value for money during that time. After three months, they’ll have had great service and can probably see the value in the full monthly price.
If they already have web hosting, then consider offering a monthly fee just for the maintenance of the server and the updates, etc.
Maintain a steady revenue
One good reason why having that hosting and services income is that during times when there is less work coming in. With enough clients, the hosting and maintenance service enables you to continue to gain an income for your business. It may be less than you are used to, but it might help you weather the storm until further work comes in.
Selling the service
How to incorporate this service means taking a look at the long term vision, as well as the long term requirements for your clients.
Your clients could get their own web hosting, but then do they know what to do with it? If they did then they probably wouldn’t have needed you anyway. Or, do they have the time to spend setting up and working on all the setup and maintenance needed?
If you are creating websites for your clients, and you intend to be in this business for the long run, then charging your client a monthly fee for hosting and maintenance is perfect.
Managing client billing
Aside from invoices and payments, you manage for your web design or other work. It’s also a good idea to automate the billing for your hosting and maintenance clients.
We say it’s ‘passive’, but naturally, there’s always some work to be done. One of those is ensuring you’re providing your clients with regular invoices. These generally will be re-occurring invoices - and a kind of set it and forget it approach is best.
Here are some options you can set up and use for automated billing.
- Google Checkout
Stripe - an example
Using a merchant platform like Stripe, or PayPal enables you to create customers and provide re-occurring billing. And while they do take a percentage of the revenue, it’s worth it for the amount of time it can save you.
They’re relatively easy to set up, they sync with your accounts and you can also track all your customer payments within them.
We hope this has been useful in providing some insight into how much to charge for hosting if you’re using our Reseller hosting package. Hosting can be a profitable business and a good extra income for businesses who are able to sell them to existing clients. If you don’t incorporate it into your model, you could be leaving money on the table!
Why not start your hosting business today, or add it to your portfolio of services. Get in touch, or check out our reseller pricing and plans for more information.
Friday, October 25, 2019