I’ve noticed some providers offering hosting as low as $1. How do they get it so cheap? Is anyone here in the hosting business who can share what they’ve learned?
I work as a provider and have been in the field for over 10 years.
Most hosting services that are $1-$3 per month are oversold, meaning the provider sells more accounts than the server can really handle. In the end, it’s usually the user who suffers, as they’re stuck with poor performance because of unrealistic expectations set by such low prices.
If you’re looking to start a hosting business, here are a few tips:
- Do market research. Figure out your competition and decide how you’ll stand out. Will it be better support, better service, or lower prices?
- Start small and scale as you grow. Don’t invest in an expensive server right away if you don’t have any customers yet. Maybe start with a VPS or a smaller dedicated server like OVH or Hetzner.
- Look into providers and licensing costs and make a realistic budget.
- Make a business plan. Outline what services you’ll offer, your costs, and your profit margins.
- Know your tech! If you’re not comfortable managing servers, dealing with incidents, or being an admin, this might not be the best business to get into. Always go into something you either know or enjoy learning about.
And keep in mind, it might take a year or two to turn a profit. If you have a solid niche and marketing skills, it could happen sooner, but patience is key.
@ServerSleuth
Great response, thanks for taking the time!
Isla said:
@ServerSleuth
Great response, thanks for taking the time!
Thanks! I learned a lot of this stuff on my own when I first started and from some business courses.
A lot of people either tell you to go for it blindly or they scare you off with extreme stories. Many will say hosting is oversaturated, which is true if you look at big names with poor service. But when it comes to reliable, quality hosting, there’s still demand.
@ServerSleuth
Exactly. I think there’s room for good hosting companies that offer excellent support or serve specific niches. Competing on price alone against giants like Hetzner is really tough.
Isla said:
@ServerSleuth
Exactly. I think there’s room for good hosting companies that offer excellent support or serve specific niches. Competing on price alone against giants like Hetzner is really tough.
Hetzner is great on price and performance, but their support can be lacking. Also, if you encounter any issues like DDoS attacks or DMCA complaints, they’re quick to shut things down.
@ServerSleuth
True, that could be a gap where smaller hosts can find an opportunity.
Isla said:
@ServerSleuth
True, that could be a gap where smaller hosts can find an opportunity.
Absolutely! There are niches like true DDoS protection and privacy-focused hosting that smaller hosts could target.
@ServerSleuth
Adding on, many providers offer $1 deals for the first year, then hike up the renewal price. They’re betting customers will stay rather than go through the hassle of moving. They also make money on add-ons like email accounts or storage fees, or by overcharging for domains. The low upfront price is just a hook.
@Gabriel
Exactly! I really dislike that approach and made a point to avoid it. Some providers even make it hard for users to leave by blocking backup options or forcing them to use a custom interface that’s less user-friendly. As someone who started as a customer, I think it’s important to understand those frustrations.
@ServerSleuth
It’s been a while since you commented, but I’m curious about your thoughts on how crowded the hosting industry is now. My friend and I are considering investing in a server and renting space at a colocation center. Would it even be worth it, or are we up against too much competition from big players?
@Natalia
Starting with a reseller plan might be a better idea than jumping into dedicated servers right away. As you grow, then you can scale up. I started out that way and now my business is steady. I sent you a message if you want to chat further about it!
@ServerSleuth
Couldn’t agree more with your second point about starting small. I advise my clients to start with basic plans and only upgrade if they need more space or bandwidth. Many websites never need more than the first couple of plan tiers.
@esleystanley
Absolutely! Some clients thrive on a $10/year plan while others try to squeeze an online store into the cheapest option and end up losing sales due to slow performance. I’ve explained the need to scale, even offered free upgrades, but some just won’t budge.
@ServerSleuth
Thanks for all the details! I have a few more questions if you don’t mind.
How do you calculate your costs, like support and growth? Do you use a standard overhead percentage?
How do you decide on the number of accounts per server? Is it based on performance or a default number?
Also, do you offer unlimited services or put caps on everything?
I’m considering reselling through MDD or KnownHost. Any advice on which might be better?
@Winslow
Happy to help!
> For overhead costs, I mostly use a base percentage, depending on expenses like hardware and licenses. I try to keep prices stable but notify customers if adjustments are necessary, offering a free month as notice.
> For server capacity, I check disk space first, then adjust based on performance. If there’s room, I oversell a little; otherwise, I cap it.
> I don’t label services as ‘unlimited.’ That’s just not practical.
When choosing a provider, check their resource limits per account. Go monthly first, then consider paying upfront if it’s working well.
I grew my hosting from a DIY setup to having racks in multiple locations.
- Hosting under $4/month is barely profitable, if at all.
- You need to focus on sales more than tech in the beginning. Get a book on sales before worrying about server setups!
- Costs can add up quickly. Realistically, a hosting business will need at least $100 per month for things like billing software.
- Don’t underestimate the time and stress of 24/7 support.
If you’re set on this, start with a reseller account. Once you have a base of customers, think about your own servers. Also, webhostingtalk has a solid community for hosting business advice.
It’s a rewarding business, but it’s not easy money by any means. Feel free to reach out if you hit any roadblocks.
Honestly, I’d be cautious. Hosting is super crowded now. Companies like Namecheap have big infrastructure and redundancy. Customers rely on websites and email and don’t tolerate downtime. I’d look into something else unless you have a unique angle.
I’d just ask why first. There are so many providers offering cheap hosting that it sounds like a tough market with thin margins.
I used to work in data centers and now run a web agency offering hosting and maintenance, along with ads and web design.
Hosting and maintenance are consistent revenue streams. I use a dedicated LiteSpeed server with CyberPanel and also run virtual servers. Hosting clients have been stable income for us.
It costs me about $500 a month for servers, but it’s worth it.