The web hosting service industry is at an all time high and thus many users want to step into this business. However, many of them might have questions about the profitability of a web hosting business. Yes, a web hosting business is profitable. Therefore there are many brand names that have established themselves as powerful service providers for their clients.
Even if you want to set up a web hosting brand, white-labeled reseller hosting services are the best option to prefer. However, running this business is not everyone’s cup of tea. Thus, many users drop the idea of running a web hosting business. Here are key reasons mentioned below.
Top 5 Reasons Why People Quit Web Hosting Business
Starting an online web hosting business has become quite easy. The best part of web hosting business is that you don’t have to fulfill any criteria to qualify to become a web hosting provider. All you need is a website, hosting space and a phone number to kick start a web hosting company. Many people find this very easy and start the web hosting business.
Below are few reasons why people give up their web hosting business:-
1. Profit Margin – Making profit is the most challenging part of any business. In web hosting business people offer crazy discounts without thinking much about profits. The tendency of people is to focus on mass and attract as many customers as possible. There is a cost involved behind offering service to every customer and on top of that profit has to be made from every customer. This is the area where many hosting owners fail; they manage to attract customers but fail to make profit out of it.
2. Infrastructure Cost – To start any business some sort of investment is required. In web hosting business, infrastructure is utmost important to keep the customers website up 24/7. A single downtime may affect your business and spoil your company’s reputation. In order to setup a quality infrastructure a decent investment is required. If a good infrastructure is used and cheap hosting plans are offered on it then it starts getting difficult to justify the cost of the server hardware.
3. 24/7 Support – Most web hosting companies hate to offer 24/7 support. The nature of web hosting business demands round the clock support and service. A web hosting company has to offer 24/7 live chat, email and phone support. The hosting companies fulfill the requirement during business hours but when it comes to offering support and service during off peak hours, festivals and weekends the problem starts.
4. Building A Team – An individual can handle few customers for a certain period but when the customer base starts growing more people are required to run the day to day operations. Getting talented people at a lower cost is not easy and if you are not making good profit then you cannot afford to hire good people. Inexperienced people are hired and trained and there is no guarantee whether the inexperienced staff would continue or quit the job after few months.
5. Poor Promotion – As mentioned in the start of the article, starting a web hosting business is easy but promoting the business, getting customers and surviving in this saturated market is not that easy. You have all the basic things required to run a successful web hosting company; good website, contact modes, payment options, hosting space etc. To get customers you have to promote the business on the web. There are free and paid options to promote the business but it doesn’t guarantee whether you will get the customers or not. Even if you don’t have a single customer you have to pay a monthly recurring fees to run the business. This recurring cost starts to become a burden when you have fewer customers or more customers with low profit margins.
Easy Way Out
If you have failed as a web host or confused whether you should start a web hosting business then there’s an alternative that can save you from any mishaps.
By becoming a reseller web hosting provider, you save a lot of your efforts from the above which reduces the chances of any failure. You don’t need to invest a lot for the infrastructure, neither you need to hire a team. Simply buying a web hosting plan is sufficient.
As a reseller, you buy hosting plan from the web hosting provider and can resell it at your own price. Here, as you are buying server space from a web hosting provider in bulk, you get it at a cheaper cost. Additionally, you don’t have to spend a lot buying the datacenter and worry about routers, switches, firewalls, storage systems, servers, etc. Neither there is any server maintenance task involved. Also, the cost of setting up a team will be cut down. In case any technical issue arises at your client end, you can contact your web hosting provider and get help from them.
So, if you are planning to start a web hosting business, you can consider becoming a reseller instead.
Related: Guide to Make Profitable Web Hosting Business
Closure
It’s always the right time to start a business. The future of web hosting business is very bright. There are 47 million SMB’s in India, out of which 30 million are running micro businesses and 16 million are running small businesses. Only 1.1 million SMB’s have registered the domain and most of them are not having an active website. It would take time to educate the people, the hosting company’s who will survive in a long run would own good share of customers from this 47 million SMB’s. The web hosting companies would be in the league of billion dollar company if the profit margin is maintained between 30% – 35%.
FAQs
Is the web hosting business profitable?
Yes, the web hosting business is profitable and could be a passive income stream. In the future, the web presence will be higher in all industries. But as a business owner, you need to have proper planning, connection, marketing strategy, and other resources. Moreover, always have a determined pricing strategy that significantly impacts earnings.
Is web hosting a good side hustle?
Web hosting business is an ideal side hustle for beginners. It is because they do not have to pay any kind of upfront cost. Gross earnings might vary depending on the pricing model you set. Web hosting business owners must be flexible in managing clients and handling technical aspects. cPanel reseller hosting is a good option for them. They get a control panel with a WHMCS license to manage web hosting accounts.
How much money can you make from web hosting?
Profit margin depends on several factors like pricing strategy, billing cycle, and human and IT resources deployed in it. Furthermore, if you are paying extra for customer support then the profit margin will reduce. The best way to earn maximum profits is to lease out server resources from the parent web hosting company and resell them to clients.
How important is web hosting?
Web hosting is a crucial factor in building an online presence. With this, any organization or individual gets the server space to host websites and make them accessible to visitors worldwide. As a web hosting owner, you can charge them monthly, give a free trial, and provide quality services to build the brand’s trust and credibility.
