Splitting Your Resell Packages: A Numbers Game For Resellers

Some people who think about reselling wonder how they can ever make money and gain customers with so many big-name hosting providers out there offering a lot of space and bandwidth for such a cheap price. How can they possibly compete? Believe it or not, it can be easier than you think to compete with these big-name competitors. Some people would rather save a few bucks a month than pay for a bunch of space and bandwidth that they do not need -- even if it means they would be paying more per MB than they would through a big-name competitor’s package. This will allow you to make more money for the same amount of space and hopefully gain small-time customers over the competition. There are two ways that you can decide to sell your packages to rise to the challenge of this consumer need.

The first option is to sell your space and bandwidth by the MB, per every 5 MB, or even by every 100 MB. Your customers can then choose how much they want. The smaller you portion out your available space and bandwidth, the more that you can potentially make off of that space. This is because every customer has different needs and they will be willing to spend less money, while essentially paying more per MB, than paying less per MB, but having to spend more money in the end because they have to pay for all of the unneeded extras that come with the package.

Furthermore, allowing customers to choose and customize their own plans will give you a marketing ‘edge’ to focus on when trying to lead customers towards your service -- and away from the competition. Everyone loves when a company is so committed to pleasing them that they will specifically cater to their individual needs. A customized solution lets customers know that you want their business and that you understand what is important to them -- their money -- and that is why you are willing to offer a solution that allows them to keep more of their money, instead of wasting it on extra space and/or bandwidth that they just don’t need.

Another plus about offering customized solutions is that, if they expect to have little content but a high amount of traffic, they can take what they need and leave what they don’t. Otherwise, that some customer would have to pay 50% to 100% more to move up to a new plan that has a lot of added stuff they don’t need, just so that they can have the extra bandwidth that they do need. You will be saving many of your customers a ton of money, while making more money per MB than your competition -- plus you will have a unique marketing message to get the attention of potential customers.

This option will allow you to attract customers who need the most flexibility. For example, small businesses. In the beginning a business may need a lot of space, but not much bandwidth, since they just do not have the customer base yet. But, as their business grows, they will be able to buy more bandwidth as they need it.

The second option is to offer only very small plans for $1-$3 per month. While this may make you less overall profit than option one, it may be easier for you to manage than having thousands of plans at different sizes. Although $1-$3 a month may not seem like a lot of profit, you can require that your customers make a commitment of 6-24 months by paying in advance or by signing a contract. The downfall of this is that you have to make sure your business stays up and running for several years or else you could end up owing a lot of people a lot of money. Furthermore, $3 per month begins to add up when you begin to get an influx of customers. A mere 1,500 customers can mean $4,500 in revenue per month. Since resell hosting often requires little overhead costs, you can likely keep most of it as profit.

This option will allow you to attract those customers who want to avoid free providers who require banner ads and pop ups, but who still have a very limited budget. This may include parents whose children want a small site, young adults who want to host a daily journal for their friends to read, or adults who want to keep distant relatives updated on their family news.

No matter which of these strategies you choose for your Web hosting business, make sure that it is one that you are comfortable offering to your customers. Some people may feel more comfortable managing accounts that are split equally, while others may not mind the challenge of customized accounts. On the other hand, some new providers may not be able to handle hundreds of account right off the bat, while more experienced providers may feel comfortable taking on thousands of accounts. You need to know and realize what you can take on based upon your own experience, knowledge, and comfort level. Try to take on too much too soon, and your resell business may crash before it ever gets off the ground.