What Is a Reseller? How to Become a Hosting Reseller

What Is A Reseller

Hosting resellers act as intermediaries between a larger hosting company and consumers. The reseller purchases hosting services from the larger provider and repackages them to resell to its own customers.

Successful resellers offer unique services or products on top of the larger hosting provider’s features. This often comes in niche offerings like sustainable hosting, managed hosting for specific CMSes, or hosting made for users in a particular region.

Overall, reseller hosting improves the entire hosting community. Customers receive niche services, products, and prices they’d rarely find with large hosting companies.

The large hosting providers boost their profits. And resellers can operate viable businesses without the overhead that comes with a full-scale hosting infrastructure.

Understanding the Basics

The arrangement between a reseller and a larger hosting company benefits everyone. The larger company makes money on unused server resources without completing any extra marketing.

Resellers often receive hosting services at a discount, so an upcharge (and room for adding more products) is possible. They also don’t have to manage the hosting infrastructure.

The customer benefits, too, by receiving niche hosting services they would’ve never received and often with improved customer support.

The larger hosting companies usually sell reseller packages with features like custom branding (white labeling), account management, and billing systems.

Reseller hosts acquire resources from a larger provider and then resell to their own customers.

Before becoming a hosting reseller, it’s crucial to know the basics. You should have a strong understanding of how reseller hosting works, and that involves examining the types of reseller hosting plans.

You’ll also want to learn about the benefits of becoming a hosting reseller to see if it’s for you.

How Hosting Reselling Works

Reseller hosting involves three parties: a reseller, a larger hosting provider, and the reseller’s customer. The reseller buys hosting services and resources in bulk from the larger hosting company, usually at a discount.

Those resources get split into smaller packages by the reseller. The reseller customizes those packages and adds other services or products to differentiate. As a result, the customer gains access to niche services and potentially improved customer service.

The larger hosting company continues to manage its hosting infrastructure, while the reseller focuses on customer support, billing, and customer acquisition.

With this setup, the reseller has no server maintenance responsibilities, minimizing capital investment for their business.

Types of Plans

The parent hosting company usually lists different versions of reseller hosting plans for resellers to choose from. The type of plan depends on the business structure you intend to build.

Here are your main options:

1. White label: This is the most popular form of reseller hosting. The parent hosting company provides hosting services and maintenance, while the reseller rebrands its interface to sell the hosting services as its own.

The main hosting provider remains anonymous, allowing the reseller to build its brand and add other services.

2. Affiliate: An affiliate reseller plan is the most hands-off solution for resellers who want the lowest upfront cost.

Many bloggers and online marketers take this approach since it only requires you to promote a larger host’s services. When a customer clicks through the affiliate’s link, that affiliate receives a commission for each sale paid directly by the larger hosting company.

3. Managed: Although many standard reseller plans offer a managed hosting solution, some larger hosts go above and beyond to ensure their resellers have as little overhead as possible.

For instance, a truly managed reseller plan would provide services like updates, server maintenance, security elements, and performance enhancements.

You might even see add-ons like WordPress and WooCommerce installations so the reseller can sell these services without adding them separately.

4. Business-specific: This type of reseller hosting offers resellers one kind of hosting to support specific customers.

The reseller may only buy shared hosting for small business customers or VPS and cloud servers for growing brands. Resellers can also purchase dedicated server hosting to find customers with enterprise needs.

With the main type of reseller hosting plans in mind, it’s time to explore the benefits of becoming a hosting reseller.

It’s a tricky business to get into, but with the right differentiation and a high-quality primary host, you can turn it into a successful business that caters to niche customers.

Benefits of Becoming a Hosting Reseller

If you’re considering becoming a hosting reseller, it pays to look at the benefits first:

  • Revenue generation: Resellers can establish a consistent revenue stream with basic hosting packages, add-on services, and other elements like domain registration and SSL certificates.
  • Branding potential: Reselling allows you to build your own business instead of just marketing for another company. The white labeling features allow you to upload your own logo and customize the dashboard.
  • Scalability: With low upfront costs and minimal server maintenance, resellers scale their businesses by focusing on other aspects like customer acquisition and product development. In addition, resellers can upgrade hosting resources whenever they want.
  • Low initial costs: The reseller only pays for a reseller hosting plan, marketing efforts, and customer support tools. The primary hosting provider handles costs for server hardware and maintenance.

With these benefits, reselling hosting looks like a rather lucrative business opportunity if you differentiate and offer high-quality customer service. There are challenges, but we’ll show you how to avoid issues.

Choosing a Hosting Provider

There are several factors to consider when choosing a hosting provider. Read through the various types of hosting plans available, then consider elements like features and pricing.

Types of Hosting Plans Available for Resellers

Three main types of hosting plans exist for resellers to repackage for customers. You can choose from shared hosting, VPS hosting, and dedicated hosting.

Shared Hosting

Resellers can purchase shared hosting in bulk to sell to small business clients. It also works well if you have many customers with personal blogs or portfolios.

Shared hosting offers one server with multiple users on it. The users share the server’s resources. This works well for smaller sites, but it may cause performance issues for larger ones.

VPS Hosting

Resellers should purchase VPS hosting if the customer base demands more control and flexibility. It’s ideal for users who outgrow shared hosting.

VPS hosting still uses a shared server, but each user receives a separate portion blocked off from other users, resulting in improved performance and customization.

Dedicated Hosting

Dedicated server hosting provides resellers with multiple business models.

The reseller could pay for a dedicated server and portion it out to customers, essentially building a more custom shared or VPS hosting solution. Or, the reseller could purchase multiple dedicated servers for enterprise-level clients.

Evaluating Features and Resources Offered by Hosting Providers

Once you know the type of hosting you’d like to provide customers as a reseller, you must examine the features and resources offered by potential hosting providers.

Not all hosting companies have reseller hosting — and the ones that do vary in their feature sets — so here’s a comparison of the most popular reseller hosts:

InMotion HostingA2 HostingLiquid WebGreenGeeksCloudwaysHostGator
Hosting TypeShared, VPS, and dedicatedShared and VPSVPS, cloud, and dedicatedSharedCloudVPS
Starting Price Per Month$35.99 ($0.99 promotion)$35.99 ($17.99 promotion)$159$34.95 ($19.95 promotion)$11 per user$36.99
White LabelingYes, personal branding and messagingYes, branded dashboard, nameserver, and billing softwareYes, branded dashboard, nameserver, and communicationsYes, branded dashboard and DNS settingsNoYes, branded dashboard and communications
Domain ResellingYesYesYesYesYesYes
User DashboardcPanelcPanelcPanel, Plex Web Pro, or InterworxcPanelCustomcPanel
Client Billing and Management SystemYesYesYesYesYesYes
NVMe SSDsYesYesFor some plansNoYesFor some plans
CDNNoNoYesYesYesVia add-on

This comparison only considers a fraction of the hosting companies that sell reseller hosting. Be sure to complete additional research, especially if you need to compare multiple niche reseller packages, such as eco-friendly or cloud-based reseller hosting.

Pricing and Profitability Analysis

As you can see, you should choose a reseller hosting provider based on your customer base. From our comparison, Liquid Web is the most expensive but caters to users seeking high speeds (VPS, cloud, and dedicated hosting).

That provides the potential for higher profits; you can promise more robust performance and split a cloud server between many customers.

Cloudways has less of a reseller program where you just buy the standard hosting and mark it up (best for design agencies that want to offer the added service). GreenGeeks is the cheapest, but it only offers shared hosting.

InMotion and A2 Hosting provide the best value since they offer multiple hosting types that can be split into packages for multiple customers. This boosts profit potential and provides excellent performance (particularly with VPS plans).

How to Set Up Your Hosting Reseller Business

To set up a hosting reseller business, start by researching the target market. Then, establish a branding strategy based on that market. You should then register the business, acquire the necessary tools, and look into legal requirements.

Research Your Target Market and Audience

To find success in the reseller business, it’s crucial to research your target market and audience.

target market illustration

A reseller that simply takes a product from the parent host and then sells it at a markup has a small chance of succeeding.

You must differentiate, and that all begins with finding a niche market. Consider underserved communities.

For example, you might only sell hosting to bloggers, businesses, small eCommerce sites, or those who are conscious of the environment.

Many resellers cater to users in specific locations, too. This way, you can figure out the extra features that add value for those specific customers — features they can’t find from standard hosting companies.

Brand and Position Your Reseller Business

For branding, it helps to find a reseller plan with white labeling features.

branding illustration

White labeling features allow you to block all branding from the parent host in your messaging, billing, and control panel.

With that, work to establish a brand name, logo, and unique identity that resonates with your target market.

Everything from your website to email communications should reflect your unique selling points (like superior customer service or eco-friendly hosting for small businesses).

Register Your Business and Set Up Legal Framework

Before selling any hosting to new customers, register your business.

legal framework illustration

You should also establish a legal framework for legitimacy, compliance, and tax purposes. Pick a legal structure like an LLC, sole proprietorship, and corporation.

With that, you can register the business with your municipality and apply for required permits or licenses.

For your website, create pages to protect your business: privacy policies, terms of service, and user contracts.

Acquire Necessary Resources and Tools

resources and tools illustration

To market your reseller hosting business, you need the necessary resources and tools.

Build a website to showcase your services and process payments. Find a parent host that offers a billing platform like ClientExec or WHMCS. This helps with managing payments and sending invoices.

You’ll also want tools like a content management system, email marketing platform, social media accounts, and a customer support tool for live chats, ticketing, and email messaging.

How to Build Your Hosting Packages

A hosting package should present value to your customers. It shouldn’t be a duplicate of what the primary hosting company sells.

To establish the right pricing and the features to go with those packages, examine everything from your customers’ needs to how your competitors price their services.

Understand Customer Needs and Preferences

Customer needs should guide you in creating the perfect hosting packages. Your target market tells you exactly what the user wants, whether that’s unlimited bandwidth, a security suite, or a built-in CDN.

Create initial pricing plans that allow for profit and give users a chance to scale their websites between plans (no huge price jumps). Then, ask for customer feedback regularly to tweak those plans.

Customize Hosting Plans and Features

The process of customizing each hosting plan relies solely on what your target market desires. Begin with your starter plan. What’s the lowest resource offering you can make while still providing value (with things like security suites, high bandwidth, and NVMe SSDs)?

This helps bring in new customers and works well for the smallest websites. Next, think about additional features — CDNs, performance upgrades, and automated backups — to build your higher-priced plans.

Create small but profitable price increases between plans, and provide two or three new features with each one.

Pricing Strategy and Competitive Analysis

To land on the right pricing for your hosting, research key competitors to figure out their pricing models and value-added features. Then, calculate your overall costs to establish the amount of money you can charge to reach your desired profit margin.

A tiered pricing structure is standard in the hosting world, so break up the plans with increasing prices, then calculate how many users you’d need with those plans to reach your goals.

Package and Present Your Hosting Services

A clear presentation of hosting plans and services could make the difference between a successful business and one that struggles with sales. Each plan should provide detailed descriptions, preferably laid out as bullet points.

The plans should sit next to each other for easy comparisons, and you should highlight the key features that differentiate your hosting business. In particular, focus on unique selling propositions like superior customer service or an advanced security suite.

How to Market and Promote Your Business

Marketing brings in customers, so you must prepare your budget for a significant amount of advertising and promotions.

After all, you should have room in the budget for marketing since you’re not spending money on the hosting infrastructure. Here’s how to get started:

Develop a Marketing Strategy

The marketing strategy for a hosting reseller relies on a well-defined target market and the appropriate marketing channels to reach that target market.

Some of those channels may include email marketing, social networks, search engines, and advertising.

It’s also wise to consider affiliate marketing to encourage bloggers and online marketers to recommend your hosting company. Content marketing helps, too.

Create high-quality content and knowledge base articles to assist customers. And always go back to analyze your marketing strategy to see what works.

Leverage Digital Marketing Channels

Digital marketing channels — like SEO and social media marketing — help promote your brand and bring in more target customers.

marketing channels illustration

It may cost money to leverage these channels, but it’s perhaps the quickest way to find paying users. First, approach the free methods: creating webpages and blog posts optimized with keywords and quality content.

Speak with potential customers on social media and forums, and consider running promotions to attract new customers.

After that, consider paid methods like search and social advertisements. You may even partner with affiliates or influencers to spread the word.

Create Compelling Content to Attract Customers

Interesting content not only attracts customers through organic SEO and social sharing but also keeps current users updated with knowledge-based articles and helpful blog posts.

content creation illustration

Your content strategy should start with support articles organized in a user-friendly knowledge base.

Once you’re done with that, build a blog with tutorials, case studies, and other content types that guide customers and address problems.

In all of this content, stick to simple formatting, clear wording, and sections broken up with images, headings, and bullet points.

Network and Build Partnerships in the Industry

networking illustration

Another way to expand the reach of your reseller business involves networking and building business partnerships.

This may mean partnering with other hosting companies, establishing friendships with bloggers, or bundling products with related businesses (domain registrars, CDN companies, or security suite providers).

Go to industry conferences and consider local meetups where web developers may seek better hosting.

Your best bet is to target agencies, developers, and designers. Those organizations and individuals have their own clients, so they may want a contract with you to provide hosting to their entire customer base.

How to Manage Customer Relationships

One of the easiest ways to stand out in the crowded hosting space is to offer better customer service. The industry is littered with stories about poor customer experiences, so you can present your business as an alternative.

Here’s how:

  • Provide exceptional customer support: Always respond to inquiries quickly. Educate your support staff. Know everything about the platform and provide friendly, real people who know customer pain points. Also, offer consistent support through channels like live chat, a ticketing system, and email. To really stand out, offer a phone number.
  • Handle billing and invoicing: Billing should remain transparent. Send customers an automated bill each month without extra or hidden fees. Consider getting rid of tricky promotions that eventually expire, and make it easy to cancel, downgrade, or upgrade accounts.
  • Resolve technical issues and provide technical support: This ties in with exceptional customer support, but it focuses more on the knowledge behind that support. The goal is to resolve technical issues in minutes. Have knowledge base articles ready to go. Offer quick fixes by logging into customer accounts and doing the work for them.
  • Implement feedback mechanisms for continuous improvement: Feedback helps you build your knowledge of the target market. You’ll never know everything about them, and things change, so send out customer surveys regularly. Ask for feedback after customer support conversations, and offer a channel for any type of customer complaint.

On top of all these strategies, think about implementing customer relationship management software to really get to know your customers.

When you’re a small startup hosting company, you can even address customers by their first name when they call in, showing the ultimate level of personalization.

Not to mention, a CRM allows you to see what issues the customer had in the past, meaning you can pick up right where you left off.

How to Scale Your Hosting Reseller Business

Scaling means growing your business, usually with cheaper costs as you grow. This growth comes in many forms for resellers. Here are some tips to scale successfully.

Expand Your Service Offerings

Your basic service offerings may make customers happy in the short term, but what about when technologies change? What about when customers see a competitor offer something new?

One key to growth is expanding your service offerings. Options include expanding your customer service hours or adding services and products like free SSL certificates, maintenance packages, or domain registration.

Increase Customer Base and Revenue Streams

More service offerings are one way to increase your customer base and bring in additional revenue streams, but it’s important to consider other tactics as well. For one, you might grow your marketing operation.

Implement affiliate or loyalty programs. Partner with bloggers willing to write about your services. Add upsells and cross-sells on your website — with add-ons like premium customer support, domain privacy, or advanced security.

It’s also essential to explore new advertising channels and partnerships. And more than anything, keep your current customers happy. New customers won’t make up for current customers who leave.

Invest in Infrastructure and Resources for Growth

Some large hosting companies started as resellers. So, it’s not out of the question to eventually invest in your own hosting infrastructure.

This scaling tactic requires healthy profits. When you reach that point, look into buying your own server hardware, renting space, and hiring people to manage servers.

Also, consider other elements to support your business, such as advanced customer support software, analytics technology, or hiring a marketing agency.

Manage Resources and Scale Operations Effectively

Sustainable growth demands the efficient management of resources, which often entails automation. Customer support, for example, can benefit from robust knowledge base archives to relieve customer support representatives’ workload.

You might also use AI tools or automated replies for your live chat. We also recommend revising every piece of customer-facing content regularly.

Update outdated blog posts, review hosting plans, and check that support articles have images of the most updated interfaces.

Best Practices for Hosting Resellers

Building a reseller business, catering to your target market, and scaling up the business all happen with careful planning and hard work. To strengthen your plans, we’ve put together a list of best practices for all hosting resellers.

  • Ensure reliability and uptime for customers: Choose a parent host with a reliable track record. Choose the best VPS, shared, or dedicated servers, and never overload those servers with too many clients. Also, provide an uptime page so your customers understand if something is wrong with the server.
  • Secure customer data and websites: Go with a parent host that follows standards for protecting customer data. You’ll also want a security suite with malware protection, DDoS protection, and firewalls.
  • Stay updated with industry trends and technologies: This tells you when to add new features, adjust pricing, and consider other technologies. Don’t fall behind, or your profits could drop.
  • Maintain transparency and build trust with customers: Be upfront with pricing, avoid hidden fees and confusing promotions, admit when a server goes down, and always underpromise and overdeliver.

Following these practices won’t solve every problem you encounter with your reseller hosting business, but they can help you avoid the most pressing issues. Having said that, it’s also wise to prepare for any challenges that may arise in the future.

Challenges and Considerations for Hosting Resellers

You’ll encounter challenges with any business, but the hosting industry presents some unique hurdles. From fierce competition to adapting technologies, it pays to plan for these challenges.

Competition in the Hosting Industry

Thousands of hosting providers fight for market share in the industry. You may find that advertising efforts struggle because of competition on search engines and other channels.

Prepare for the competition with outstanding customer service, competitive pricing, consistent innovations, transparency, easy cancellations, unique selling propositions, and niche target markets.

Managing Customer Expectations and Satisfaction

It’s difficult to manage customer expectations as a fledgling hosting company. You may encounter disgruntled customers in the early days when you can’t respond to everyone or provide necessary documentation online.

Try to always provide prompt support and be transparent about your limitations and pricing. If you can’t handle 24/7 support, switch to regular business hours. If you struggle to answer a question, state that you’ll look into it instead of making something up.

Dealing with Technical Issues and Downtime

Customer trust may falter if users experience regular downtime or technical issues. To deal with those problems, begin with a strong monitoring program to watch the health of each server.

Your parent host should provide something like this.

Also, provide immediate customer support if you know a website or server failed. Finally, maintain a backup system for all users and make it easy for them to restore to previous versions. Better yet, complete the restoration for them when they call.

Adapting to Changes in Technology and Market Dynamics

Resellers may find it difficult to remain competitive if they cannot adapt to changes in technology and market dynamics. To avoid falling behind, sign up for newsletters and industry publications to immerse yourself in the business.

Always remain flexible, too. Be flexible with your infrastructure. Be flexible with your marketing strategies. And be flexible with the way you approach customers.

All of that allows for growth instead of sticking with old technology just because it’s comfortable.

Success Stories and Case Studies

Not all hosting companies began with their own data centers and hardware. You can find many success stories where an individual or group began with reseller hosting and grew into much more.

Case Study 1: Inspry

Inspry, a WooCommerce development agency, partnered with Nexcess (a Liquid Web brand) to resell hosting services to its current web design clients. Here’s what happened:

  • Inspry increased hosting speeds for all clients, adding value to its main services and offering a more reliable platform.
  • The agency cut down on overhead costs by passing all server maintenance and updates to the parent host.
  • The company received server monitoring software from the parent host to improve how it managed uptime/reliability.

This is a wonderful example of how reseller hosting works wonders as a value-added service. That’s why web developers and agencies should always consider reseller hosting.

Case Study 2: Smart Domain Group

Smart Domain Group resells hosting, along with web design, SEO, and social media services. It signed up for the Easynic reseller program to build a business around reliable hosting and add-on services. Here’s how it went:

  • Smart Domain Group was able to target customers in need of quality web design and reliable web hosting in a specific market: The UK (mainly the Kent area). It also focuses on smaller enterprises.
  • It gained access to low-cost hosting with bulk purchases from its parent host.
  • The reseller expanded its features with domain reselling, managed hosting, and excellent customer service.

The good news is that with reseller hosting, you have several options. Some success stories come from providers that expanded into parent hosts, while others stuck with smaller operations.

To stay competitive, hosting resellers should keep up with future trends. Here’s a head start on what we expect to happen with the industry.

Evolving Hosting Technologies and Services

Cloud computing, edge computing, containerization: all these technologies have infiltrated the hosting world. You should expect them to evolve, too.

Cloud computing, in particular, provides performance improvements over VPS hosting, and it’s often a similar price.

Impact of Cloud Computing and Virtualization

Cloud computing demonstrates how hosting users crave flexible, high-performance hosting at a reasonable price. It’s forcing hosting companies to offer cloud hosting solutions and reassess pricing.

Virtualization also shows how parent hosts and resellers must pivot to virtualized technology because customers demand superior customization and performance.

Opportunities and Challenges in a Changing Digital Landscape

Hosting resellers have several opportunities in the current digital landscape: innovative technologies like virtualization and cloud computing, emerging markets looking for better web hosting, and automation that streamlines customer service and daily workflows.

As for challenges, resellers should consider rapidly changing server hardware and requirements, advancements that may prove difficult to keep up with, and overwhelming competition in the hosting space.

Finding Success as a Hosting Reseller

The reseller hosting business presents opportunities and challenges for those interested in creating a profitable business.

Keys to making a successful reseller business include understanding your target market, finding the perfect parent host, and establishing a reliable system built on transparency and trust.

We encourage aspiring hosting resellers to continue their journey and find an untapped market for unique hosting features.

Whether for business owners in a specific industry or region or those who want improved customer service, there’s enough room in the hosting world for more providers.