The idea of starting your own web hosting business can be seen as very appealing. You can work for yourself, and once the business is up and running, there is little that you have to do to maintain it. However, the real question remains, is starting a web hosting business profitable?
The Costs
There are not a lot of start-up costs when you start this type of business. However, there will still be a few things to splurge on. The highest cost will be renting space in a server farm. This is because your clients will expect that their websites will always remain completely operational 24/7. You cannot accomplish this by running a server from your home with a shoddy internet connection. On average, the cost of renting this server will range from between $50 to $300 per month.
Customer support will also cost you money, especially if you need to hire an outside source. Clients will expect that you are available to solve their problems if their website unexpectedly goes down at 3 am. If you decide to hire an employee as your customer service representative, this will cost money that will eat into your profit margin. The cost of the employee will depend on the salary and number of hours that you decide on.
The Revenue
There is heavy competition in the world of web hosting, as many people have gotten the same idea to start their own business. There are hundreds of well-known web hosts that typically tend to attract the majority of the clients. It can be difficult to fight for a place among these companies, but it can be done!
A result of the direct competition means that you will need to lower your prices to a rate that is appealing to customers or offer special discounts. It is difficult to achieve a good profit margin if your prices are too low. However, doing so may be essential in order to secure any clients. The price that you charge will also depend on what type of web hosting guide for clients that you are offering.
Shared Hosting
The idea of shared hosting is that hundreds or thousands of websites will be using the same server. This type of service will cost the client, on average, anywhere between $5 to $10 per month. The fee for this type of web host is lower because there will be a lot of other sites on the server, which can bog down the download speed. This will be more likely to happen if one of the other websites on the server is very busy, slowing down all the other sites. Shared hosting is a favorite choice for certain sites that do not require quick download times. This could include websites that are not yet fully developed, websites that are not commonly popular with viewers, and sites that are uncomplicated for visitors to maneuver.
VPS Hosting
This type of web hosting involves sharing the same server as well, but only with about 20 websites in total. All the websites will have the same amount of memory available, which prevents one site from bogging down the speed of others. There are more opportunities to configure a website with VPS hosting, so the price tends to rise for this type of service. The price will usually range from between $100 to $450 per month for VPS hosting.
Dedicated Hosting
As the name suggests, dedicated hosting will maintain one website per one server, a 1:1 ratio. This type of service caters to websites that are very popular and see thousands of visitors every month. In addition, this service is also great for websites that require information confidentiality. Since there is only one website to host, this option is the best in regard to cyber-attacks and information theft. The price of dedicated hosting is about $125 per month and is favored by large, well-known companies.
The Profitability
Is the business of web hosting profitable overall? The answer is yes, providing that you have the resources and available time to operate the business. The start-up costs may be low, but you will also need to factor in the consideration that you may not get clients right away. As well, even after you get clients, there is no guarantee that they will stay with your business from one month to the next. Building customer loyalty is key, especially since there is so much competition in this industry. Give all your attention to the clients you have, and make sure to be completely available for their needs. After a little while, your business will start to grow along with your profitability.
