I always think a web design business should expand the services it offers. One obvious way to do this is to resell web hosting services to clients.
So, what do you do? Purchase a Hostgator Reseller Account (affiliate link), charge your clients, sit back and watch the money come in? Right? Wrong!
I’ve been offering hosting services to my clients for years and this is NOT an easy way of making passive income. However, with the right systems, contracts, pricing and billing in place, it can be a mutually beneficial operation for you and your client.
Choose the right host
As you will be reselling the servers of an existing host you must choose a long-established host with a great reputation. Personally, I use one shared host to resell from: the Hostgator Reseller Account and one VPS host: Dreamhost VPS (both affiliate links). My shared hosting packages are cheaper as the hosting can be slower although, with Hostgator, I haven’t had many problems.
Once you have the hosting set up it is extremely important that you put one of your own websites on the host you are reselling. See how you get on with this host. If you are using WordPress, see how it handles WordPress, plugins, caching, etc. If you are using this host adequately yourself you can then sell their hosting services.
Be clear to your client about the service you are offering
Remember, if something goes wrong with the hosting, you will be expected to put it right. Potential pitfalls can be avoided by perfect prior communication and hosting best practices.
Here are some of the many lessons I’ve learned while providing hosting services to clients:
- Downtime. All hosts have downtime and it’s important that your clients realise this. Thankfully, most downtime last for a few minutes but it’s important to choose a good host with good support so that you supply information about the downtime if it occurs. Use Pingdom to monitor this.
- Scale. A set amount of disc space and bandwidth should be discussed and agreed upon.
- Email. Use Google Apps for Business to route the email. You can charge a set-up fee for this and make sure your client understands that there will be ongoing fees if they exceed the 7.5 GB storage ceiling or require more than 10 email accounts.
- Maintenance. Bundle in your website maintenance with the hosting fees. It is in your interest to keep backing up and updating WordPress installs and plugins. If this is all done regularly there will be less problems. If you leave this to the client, it might not get done.
- Termination. Tell the client that they can terminate the contract or agreement at any time. But if this happens, either they arrange for the site to be moved or they pay for you to do so. Liaising with another host and moving a website can be a time-consuming process.
Domain name registration
I usually prefer the client to arrange the domain name registration but, if they prefer me to do this, I will.
Pricing and Charging
The price should be charged monthly or annually and should be paid by the client in advance, preferably via automatic transfer.
You should charge the client at least double what you are paying the host. So, if the reseller hosting costs you $30/month, you should charge the client at least $60/month for hosting and maintenance. This is regardless of how many other clients you have on the same server.
What you can do
Put together a plan for potential clients and what you could offer them. Remember to set the price with the worst case scenario in mind. Always use a hosting service that you have had lots of experience with. Find out more about how to run your own web design business from home in my e-book.
Do you resell hosting services for your clients? What are your experiences? I’d love to hear about them in the comments.