Reseller Hosting Do’s and Don’ts

photo by jeff_golden

Reseller hosting is a good way to begin an online business. It has relatively low start up costs and when maintained properly can be a lucrative endeavor that brings financial independence. Like anything else, there are good ways and bad ways to go about being a reseller host.

A new reseller must avoid three common pitfalls of a new hosting service. The biggest one is spending all the income instead of reinvesting it in the company. Offering packages that are impossible and unaffordable to maintain in the long term is another mistake. Some people simply get tired of the time and effort that is needed for a hosting service, pocket the money and move on.

It is because of these scenarios that potential customers may not consider a small hosting company, and 99 percent of people will not use a company that has no reputation. Anyone who is serious about being a reseller needs to do it right. The following list outlines some tips to follow for a reseller’s first year in business.

Do’s for resellers: 

Offer Discounts
First year discounts are a great incentive to attract new customers. Posting them in forums and hosting sites around the web will get the word out to a wide audience. The posts may also go viral and be passed on in emails, instant messages, Twitter and Facebook. Social media is a new businessperson’s best friend and a quick way to provide customer service.

Recruit Friends and Family
Offering free or discounted service to family and friends who may not have considered a website before is a great way to get started and establish a customer base. After the initial month, they may find the service to be useful and will be happy to pay for it. They may also spread positive word about the service to friends and coworkers of their own.

Request Feedback
Encouraging new customers to provide feedback about the first month of service will help to build company reputation. This is easy to do by creating a well designed welcome email. Offering the customer a discount on one month of service if they will write a review on a reputable hosting review site is worth losing the little bit of income, and will give new customers confidence in the company.

Save All Income
All money received for hosting should be left in a PayPal or bank account and used to pay for domain and service renewal, as well as the license for the billing software. There will not likely be a profit in the first year of business as being a reseller is a long term commitment. The goals should be staying within means and growing a solid base of customers.

What NOT to DO:

Avoid Paid Marketing
While paid marketing is an important tool to gain customers, it is not advisable to use it right away. A company with no reputation will end up wasting a lot of money this way. It is best to wait until after the first year before considering a marketing scheme. This will give customer reviews time to build a reputation to make marketing a better investment. Word of mouth is always the best advertising and it is free.

Bypass Overselling
People who are new to reselling may think offering unlimited or unmetered hosting plans is a big selling point. This misconception comes from not understanding how much bandwidth actually costs, and thinking no one will notice if the servers are oversold. Customers do notice and will leave.

Skip Unnecessary Purchases
Keep things simple and manageable by not buying what is not needed. This covers licenses, servers and any web based services. By paying careful attention to customer signups and cancellations, it is easy to calculate when any services need to be extended to match company growth.

It should be noted that reseller hosting is not a way to get rich fast. It is an investment of time, dedication and patience that will pay off well when done right. Following the guidelines above will go a long way to ensure a reseller business is a success.