Server Providers

tecreasey

Hello,

I am not sure if this has been discussed previously or not, and I have looked through previous discussions, so I apologise if it has.

I have recently gone solo with a handful of hosting clients, and I was looking to use Enhance, but I have found that it is just not viable when looking at different server providers.

When compared to the reseller hosting pricing that is available, it is so much cheaper than running your own server, especially with the resources that are required.

I was wondering who and how everyone was able to be profitable using your own servers?

I understand that usually, when you reach a point, providers apply a discount, so it might just be getting above a threshold.

If you're willing to share, I would be interested to know what providers people are using (AWS etc.), how many hosting accounts you have and the resources you have across all of your servers.

Machiel92

Hi tecreasey

I am using hetzner as my server provider, it's a budget server provider (mainly based in europe, but they opened a hub in USA too)
Currently running my handful of clients on 2 servers (1 control panel server and 1 webdb server)

Hetzner is crazy reliable for me at least 🙂

twest

It's about price to performance at scale. Reseller plans are just "big shared hosting plans", very low quality hosting - you can put a small number of little smb sites on a reseller plan, but you'll quickly find the account hitting resource walls and need to upgrade to something more powerful. You can't build a hosting business on the back of a basic reseller account. In fact, the further away you get from selling someone else's services, the more profit you get.

A long long time ago I started out with a little vps and rolled my servers by hand. Eventually I found some free control panels that made work easier. Eventually it became unwieldy managing dozens of vps servers so I upgraded to dedicated servers. Now my servers costs $400 each, plus another $100 in licenses for things like cPanel, cloudlinux, JetBackup, kernelcare.

The goal with Enhance (for my biz) is to have the same level of quality/stability as the current software stack, while reducing software costs per server, and also adding new features like built-in Redis.

Turning a profit on your service is all about the numbers. If you spend $100/mo on a server, you only need $100/mo in plans sold to break even. With an optimized server maybe you can host $500/mo worth of plans on that $100 server, netting you $400 of profit. Out of that you also have to pay for more business services like additional external backups, taxes, etc... You run the numbers to figure out what you can afford to make a profit.

The real key is to have a good service at a good price. Don't fall for the rat race to the bottom, the goal isn't to have the cheapest price, nor is it to compete against the GoDaddys and Bluehosts of the world. Instead, make your own path, offer services the big guys can't compete with (like amazing human support). Most people don't want "the cheapest", they just want "good", and they want good support. That's how you make money in this business.

JohnB

twest The real key is to have a good service at a good price. Don't fall for the rat race to the bottom, the goal isn't to have the cheapest price, nor is it to compete against the GoDaddys and Bluehosts of the world. Instead, make your own path, offer services the big guys can't compete with (like amazing human support). Most people don't want "the cheapest", they just want "good", and they want good support. That's how you make money in this business.

This right here. I usually only sell to my web development clients and I'm a 1.5 man show which changes things a little but its always managed hosting. It includes uptime monitoring (that always well over 99.99%), updates etc, REAL backups (seperate region/country & provider) and good support.

They don't have to wait 50 minutes in a chat window that may accidentally close to talk to someone who will say "i understand this is a scary time for you right now" (legit had a big name provider support rep START the convo like that after I just listed the facts of the issue).

I'm honest and if the site is down for 10 minutes I let them know and that it was resolved. They don't actually care about the 10 minutes of downtime but shows honesty which big name providers don't have. Honesty costs a lot more than $3/mo.

... Few things make me happier than moving a client from Godaddy and they ask me to cancel the account for them.

twest

I think you must be looking at some really low quality providers to think reseller has such an advantage over your own server. Here's an example of numbers:

Siteground Reseller
$45/mo
40GB storage
Other resources are also limited, but they don't list those limitations - you will hit CPU limits fast.

Linode VPS w/Enhance
$48/mo + $5/mo
160GB storage
4vCPU
8GB RAM

Slightly higher price for your own server with semi-dedicated resources, but you're getting 4X the storage and guaranteed your CPU/RAM allocation is at least 2X what the SG plan includes. With the Enhance plan you can set limits on your sold packages to prevent individual sites from overloading your server, while the SG plan has no such limiter so you will run into bottlenecks quickly and often.

For a simple test of server density, let's assume your average client uses 1GB storage and pays $10/mo, and CPU/RAM needs are minimally bursted:

SG setup maxxed out:
40 1G sites
$400 revenue generated
$355 net profit.

Enhance on VPS setup maxxed out:
160 1G sites
$1600 revenue generated
$1528 net profit (-$48 server, and -$24 Enhance license).

That's a real oversimplification, and you're also not going to pack 160 sites on a server with only 4CPU, but you get the picture. The SG plan is also not going to support 40 sites either, maybe 10 sites might work as long as they're optimized and not getting a lot of traffic. The point is, having your own server/infrastructure gets you more resources that you can commit to your business, allow for higher density of customers per server, reduce cost at higher scale.

You should have some sysadmin skills if you're going to be running your own servers though, meaning you know how to do most common things in linux command line. If you don't know how to partition drives, set boot records, alter network config, traverse directories, find/analyze logs, troubleshoot errors, diagnose bottlenecks and load issues, etcetcetc then you may find yourself way in over your head some day. In this case, Reseller plans could be a great option while you learn systems admin separately.

8Dweb

We rolled out own data center build-out in the late 1990's - and from there have expanded or moved entire buildouts as required, though we currently reside in several data centers at which we have remained since 2012.

in 2012, with all the "free everthing, forever, unlimited" marketing garbage, we made a decision to focus on CMS hosting and VM's for specific types of clients. This moved us toward a more boutique offering, but it has served us well, and we never became part of the "get everything for nothing" marketing hype. We all see where that has gone.

Additionally, we do target customers and industries that need good security and performance. Since we built our own cloud system (been through several iterations over the years) and finally settled on Xenserver, then XCP-ng (open-sourced version of Xenserver) our management of VM's both for our and our customer usage has become a breeze.

If I were starting out again, I would select to rent a couple of smaller VM's than move up to dedicated hardware (without concern of self-build-out or rental such as Hertzner etc) as my requirements grew.

I would opt for Enhance servers running on 4 core (minimum); 8-16GB RAM, 500GB-1TB storage for the main web server, then get a tiny VM for DNS secondaries. You could run mail on the original web server, but I would plan to migrate that to a dedicated server in the Enhance cluster.

In plans like we offer, this setup would run you (approximately)
$50-60 for main VM web server (6 Cores, 8G RAM 500GB disk)
$10-15 for DNS Servers (2 Core 4 GB 150GB Disk)
$40-60 for Mail Server (4 Core, 8GB RAM 500GB Disk)

So $120-150 to get started with all VM's and your own Enhance Cluster. You could even start smaller with just one server for web/mail/control/dns but you still need a secondary DNS or utilize Cloudflare...

We don't aim to be as inexpensive as Digital Ocean, Akaimi, etc...

As part of our Enhance build out, We also added plans where we add a customer with dedicated servers into OUR enhance cluster (we now have a number of customers who love this and moved away from our Plesk VM offerings almost immediately). You still get your dedicated VM's but you get to take advantage of OUR big-beefy Mail, DNS and backup servers at no additional cost, so you just buy the dedicated web server to get started and run Mail, DNS and Backups for Enhance on our infrastructure, and your websites on your dedicated servers.

These comments are not to sell our services, they are simply reflection of what works in the markets in which we operate (Eastern US; Great Britain; Brazil) and to give you ideas. Pay attention to @twest as the comments there are very good.

One final thing, since we have our own rather robust multi-data center infrastructure, it is easy for us to spin up Enhance servers in any of them. This is not necessarily the norm for all companies, but I am quite certain there are other hosts here who could do similar things. Ask around, ask questions, join the hosting party!!!

All that to simply say, there are multiple paths to profitability. The two main things, you must spend money to get started, but do not try to buy the whole farm. Start modest with a good VM provider. Plan for the inevitable upgrade (Enhance makes this a breeze, turn up new, bigger, better server and migrate customers over to it/them).

Plan to spend more money in the first 6-12 months than you take in, but keep it TIGHT, and when you become profitable take a close look as the cost to migrate up to the next step. Start small, not too small, plan carefully for the place/time where the tipping point that requires the "next level" of resources happens to be, and do not wait until you go over that edge to upgrade your servers.

Matt

tecreasey

Thanks for the replies, everyone. @twest and @8Dweb, you have given me a boost.

My situation is that I have been managing web servers and networks for 10+ years, so I am very familiar with the management of servers in the command line. I am not always 100% with everything, but that is what Google and Communities like this are for.

I have managed a company using Reseller hosting and cPanel for five years, and this has been easy. That business has ended for various reasons, and I am taking on 5-6 clients from that business.

I was going to spin up another cPanel Reseller Hosting plan, but I have followed Enhance for a while now, dabbled with it, and thought this would be an excellent opportunity to take it further.

Looking at server costs and the requirements to get started made me rethink, but your replies and comments have spurred me to continue using Enhance and my own servers.

I am fully aware there will be more going out than coming in to start with, and I do not want to try and be as cheap as the 'big players' as we all know they cram more customers onto servers than they should and ultimately offer a less superior service. I am definitely not wanting to offer a crap service.

Thank you for the advice and figures, it is much appreciated.