Quandry....

[ats-tech]

I'm currently on a reseller plan with a well known host for $75/mo. (Most of you are probably already doing the whois)

I have a dilemma. I really like who I am hosted with, but feel that I can get more value for the buck in getting a dedicated server from ev1 or servermatrix for around $100 to $120. I am very interested in exploring Windows 2003 and HELM. (As I am a network administrator for a completely Windows based shop for my day job)

The problem rests in the fact that I've got a limited amount of funds before I will be personally funding the company.

I feel that I can get more out of the dedicated due to the fact that I can administer it myself, sell reseller plans as well as shared hosting, (more of a market) and overall have more space and control than my current reseller. The lowe end Linux hosting market is pretty full also, thus nobody will even look at you unless your prices are pennies on the dollar. I also feel that it looks more professional to prospective clients (event though there is NOTHING wrong with reselling through reputable firms)

Ahhh, thanks for listening to my rant...:cool:

[Chicken]

It sounds to me as though you don't have quite enough clients yet to offset the cost of moving to dedicated... just yet. I get the feeling you're heading that way, and/or are close, but it's not quite there yet. If so, gather some more clients, and devise a business plan as to how everythign will be paid for. If the numbers don't work on paper, they simply won't work once you get a dedicated server.

[ats-tech]

You're correct, currently I do not have enough clients to offset this cost (hopefully soon). My main thought is that with the dedicated I will be able to offer a broader range of products including reseller accounts, and be more competitive in price. (5gb for $75 / 80gb for $105)

I just don't know.

[Chicken]

That is a consideration. As with most new businesses, there's a period of loss before a period of gain. With reseller accounts, that period can be extremely short, and likewise you can start up somewhat inexpensively with an inexpensive dedicated from ev1 or servermatrix.

You just need a plan. If you devise that, I have this feeling you'll be able to look at it better. Add in everything, support, scripts, everything, and see how far off you are now.

[Webbase]

Another consideration is the additional work that will be required. Currently as a reseller all you have to do is manage accounts and provide tech support.

Managing your server will require some more time, stress and of course money (don't forget if something breaks and you can't fix it, then chances are its coming out of your back pocket).

However, one reason for doing it sooner rather than later is migrating sites to your new server, this will probably require NS updates etc....which can take a while for clients to get around to doing.

Also some sites aren't practical to move. So be careful as you may end up with your reseller bill + your server bill.

[GordonH]

Here is how I moved from reseller to having my own server (and in those days it was $400+ per month for a server plus set up charges):

I started selling annual plans based on the reseller plan ($99 per year, probably you couldnt charge that much now...) then when I had $400 I ordered the server.
I then sold 6 $99 plans that month which paid for month 2.

Obviously there were a few customers signing up for monthly as well, but by taking the money in advance it gave the business the cash flow necessary to switch over.

Then I gradually migrated the resold ones onto our server which reduced the cost of providing services for them.

This strategy worked for me but three years later and I actually still have a few customer son the old reseller plan.

Gordon

[Chicken]

Originally posted by GordonH:

I started selling annual plans based on the reseller plan ($99 per year, probably you couldnt charge that much now...)
Gordon, I was thinking just the other day that $99/yr. used to be a pretty low-priced special, mostly offered by startups to get some business. I was also thinking that this simply isn't the case anymore and that that "special price" si probably over much of the "normal pricing" you see offered in many places. (Obviously there's no such thing as "normal pricing" which is why I put it in quotation marks, but hopefully you get the point).

[GordonH]

Thats correct. When I was doing the $99 it was compared to $14.95 per month normal price for the same plan.

The problem with pricing is that the cost of good servers has not really decreased much but prices have fallen because so many are using rackshack etc. This means that profits are down.
(My profits last year were only 20% of what they were the previous year and this has not been good for customers as it has prevented further investment in infrastructure).

I still think that selling annual plans is a good way of getting cash flow. Its certainly easier than trying to explain web hosting to a bank manager.


Gordon

[Chicken]

Originally posted by GordonH:

...but prices have fallen because so many are using rackshack etc.
Gordon, yep. This is the thing that seems to escape people as they moan and bitch about new providers offering what they deem to be "unrealistic/ridiculous plans and pricing" -but in fact, the plans and pricing are not unrealistic nor rediculous, and it is more than possible to offer a 1GB with 50GB of transfer shared plan for $10/mo. or less as you can rent a 100GB+ server which includes 1000GB+ of transfer for under $80. They can even say they aren't selling more than they are purchasing (what some call "overselling").

You can moan and bitch about these end-user providers all day long, but truth of the matter is that their providers are the ones who are facilitating the "unrealistic/ridiculous plans and pricing" IMHO. Honestly though, you don't find many complaining that these companies are offering low-priced servers though, (except maybe other dedicated providers who don't/can't offer that pricing, but who wish they could). The RackSpace-type providers (who simply don't, nor want to, compete in that area), don't complain about it -publicly anyhow.

[GordonH]

For the boxes that we own and have in our own racks it still costs us about $300 per month in bandwidth, colo and admin costs. The servers we lease come in at around $470 per month, so IMO the actual cost of hosting has not decreased at all in three years.

Of course I have hedged my bets by having abrand which operates on cheap servers and does the very cheap pricing ....