Design your product packages.
Ok, now we need to figure out what hosting packages we can sell from our reseller hosting package. This is kind of important as it will be the part where we decide how much money to make.
The important thing upfront: As a newcomer to the hosting business we will have to work with lower prices in the beginning if we target the Internet for customers. If you are going after the local market you can work with normal (or higher prices) right away. Local customers tend to compare less and rather pay a little more but deal with the local ‘guy’. Which way you can go depends on where you live. If you live in a rural area with not many businesses and possible clients around you will need to look on the Internet for clients. If you live in a medium to large metropolitan area you can try the local route.
Overselling: It’s a known industry fact – most customers will never use all their resources. It is safe to assume that the clients will maybe use 75% of the resources purchased. For you as the webhost this means that you can sell more resources than what you actually have. Be sure that your webhost allows you to upgrade your own package if you reach the limits.
Packages: It is always good to offer at least 3 different packages for the client to choose from. Variety helps to attract clients.
Internet Prices (liberal approach):
Assuming you buy a reseller package with 2 GB disk space and 20 GB traffic allowance (bandwidth). By using overselling you could sell the following packages and barely run into the risk of reaching your limits at all.
Package “A” with 50 megs disk space + 3 GB Bandwidth – $3.99Package “B” with 100 megs disk space + 5 GB Bandwidth – $6.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $8.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $8.99
Package “B” with 100 megs disk space + 5 GB Bandwidth – $6.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $8.99
Example A: Let’s assume you sell 20 Packages “A”. This would give you an income before cost ($35.00) of $79.80 or a net profit of $44.80. Not bad, isn’t it!?Now let’s add 20% overselling to this approach. That means you make an additional $15.96 on top of the $79.80 (= $95.76).
Example B: Let’s assume you sell 10 Packages “A” and 10 Packages “B”. This would give you an income before cost ($35.00) of $109.80 or a net profit of $74.80. Not bad, isn’t it!?Now let’s add only 10% overselling to this approach. That means you make an additional $10.98 on top of the $109.80 (= $120.78).
So, you can play the numbers game and also keep an eye on the resource usage of your clients. In most case you will be able to add additional 20% on top of the estimates here. We have been able to receive income of almost $250.00 of a single reseller account ($35.00) and our clients used only a fraction of their resources.
Important: Once you have aquired about 30-40 clients you should raise your prices for all new customers. You are here to make money, right?! Raise the prices slowly and clients should still sign up. A dollar per quarter might be a good aproach.
Local Prices:
Assuming you buy a reseller package with 2 GB disk space and 20 GB traffic allowance (bandwidth). By using overselling you could sell the following packages and barely run into the risk of reaching your limits at all.
Package “A” with 25 megs disk space + 2 GB Bandwidth – $9.99Package “B” with 100 megs disk space + 5 GB Bandwidth – $16.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $21.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $21.99
Package “B” with 100 megs disk space + 5 GB Bandwidth – $16.99
Package “C” with 250 megs disk space + 8 GB Bandwidth – $21.99
Example A: Let’s assume you sell 20 Packages “A”. This would give you an income before cost ($35.00) of $199.80 or a net profit of $164.80. Not bad, isn’t it!?Now let’s add 20% overselling to this approach. That means you make an additional $39.96 on top of the $79.80 (= $239.76).
Now look at this margin. The best thing is – other local providers charge even twice as much as the prices listed here and still find clients.
The only problem with the higher prices is that it takes a little longer to get the clients.But in the long run the higher prices will carry you much further. A good strategy is to find clients with low prices first and then change the strategy. Or you can operate 2 websites – one for Internet clients with lower prices and a marketing strategy for the Internet. The second site has higher prices and you operate on a marketing strategy locally.
Cost associated with this step (max): $0.00 per month
Money spend so far: $6.98 (one-time)
Money spend so far: $35.00 (recurring per month)
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