Reselling web hosting to clients

Having a company that first started with web hosting and moved to web development one year later I can say you are completely wrong! If you are a reseller (VPSes, reseller accounts) and host your clients than you’re up for trouble.

If you prefer to call it a full service (web development, hosting, management) and price accordingly then there’s nothing to lose. I used to offer even shared hosting for clients that didn’t buy any other services, and it worked, until I figured that I should stick with the web development clients only, charge more, and offer a great service to them.

This way I can configure their accounts and servers the way I like, and I don’t have any issues because my client’s host has switched some configuration in the server. I prefer getting calls and emails regarding email quota’s as opposed to “The site is full of errors. What have you done?” and the try to explain to my client that I can’t have done anything since the site isn’t hosted by me.

It is so much better hosting your client’s sites. It sure is painful in the early days, but in the end it pays off big time!

This is something that I have been contemplating since deciding on starting my own company. On the one hand it is regular income for recurring services, on the other it can be a nightmare when things go wrong. I am not a sysadmin, but I can do basic things, but as you point out when things go wrong, there is usually little you directly can do about it.

If you’re dicing out a virtual server to clients when the server does go down, and one client rings up, you know the rest aren’t far behind.

I have decided that educating the client on the required specification for the site, and possible recommending a host are the best solutions for myself – something that you seem to agree with also.

Perhaps I’ve been lucky with my clients! I’ve been offering web hosting services for some years now without (most) of the problems you describe.

I appreciate that it can add extra stress at times, particularly if there is a support request when you’re working on a project with a tight deadline – however I’ve managed to find a great web host that have excellent uptime and support, which takes the hassle away from me.

I don’t host as many sites as I used to, however I find my clients (particularly non-techy ones) appreciate the extra services, and perhaps it even gives them more confidence in my abilities (as a web designer/developer).

I do agree that it can add a lot of extra work and stress unless managed correctly though.

@Bogdan you can get all of the control you mention with a transparent relationship though. We put our clients onto VMs with Memset, usually I have the root access to those and can configure them exactly as required (we tend to be developing web apps/large CMS sites). However, the client knows who the server is hosted with and can contact them directly.

I can also suggest they contact Memset directly in case of emergency, as they have the contract with the host – not my company.

Paul - that's also a great point and I've seen that kind of thing happen too. Also web designers refusing to give their clients access to their own sites at the end of the relationship. I think there is a degree of protection for a client if they own their own hosting account. As Mike Jones says, the client is then staying with us because they like what we do and not because we have their files hostage! 🙂

Nice post!

I agree with your sentiment and I try and steer my clients towards their own server or hosting that they manage if possible.

However, there are many occasions where the client simply doesn’t want anything to do with their hosting and want someone to just manage it for them, in this case we charge for the service and they only deal with us. A level of support is agreed and that is our service.

With offering any service you need to be upfront about what it is you’re offering. If you host the web site, do you back it up? Do the clients know that when they manage their hosting own they are responsible for back-ups and software updates – these things sound obvious, but unless it’s in black and white, there can be contention when / if something goes wrong.

As with any business you will get customers who don’t pay or are slow at coughing up, but as long a you communicate what you intend to do with a reasonable timescale there should be very little comeback. We personally insist on payment per annum, in advance for hosting, this way we may be chasing a for little while but we only do it once a year rather, than every month. Some companies inflate their prices and offer discounts for early payment, which is also a good incentive for prompt payments, and costs are covered for chasing late payments.

We have a firm belief that if a customer wants to move to another Developer / Host, then let them, and provide them all their code and domain names with no issues. There little point trying to keep an unhappy customer and you never know they might return if the grass isn’t as green as they expected.

Our main philosophy is to be upfront with the customer, from day, if they know you use a 3rd party host, they are more likely to accept that it’s beyond your control when / if something goes wrong.

Hope this helps someone.

Again, nice post 😉

For years I used to hook clients up with what I considered at the time to be reliable hosting companies. However I found that they rarely understood that their hosting contract was with these companies rather than myself.

When problems arose, as they very often did, I would get angry clients on the phone demanding that I fix their issues. I became an intermediary between the client and hosting company, usually unpaid.

Eventually I decided that since my time was being taken up with these support queries anyway, I may as well host these clients myself and make a bit of profit for my time.

Initially I went with a reseller account on a shared hosting service which was an absolute nightmare for all of the reasons you descibe in your article – however now that I’ve moved to using VPS (with Memset, as it goes) things have become a lot more stable and I’m finally reaping the rewards.

I always give clients the option of hosting elsewhere, and I figure now that if they have enough understanding to make that decision, then they should understand the clear distinction between developer and hosting company.

Finally I’m happy that I’m hosting clients myself, but it’s been a long struggle dealing with several utterly useless hosting companies, and having to learn an awful lot about sysadmin!

You also mention billing for small invoices. I ask clients to set up standing orders which is very helpful, but there are plenty of apps out there that can handle recurring monthly subscription payments. I’d suggest people use one of those. Unfortunately they weren’t around when I started, so had to write one in house – which took a while! – either way, I think it’s important to have that side of it automated.

Loads of great comments! I do think this is a subject that isn’t often discussed – my concern is there are some absolutely terrible hosts out there (I’ve written on this blog before about the things we see when support our product, Perch) and a newcomer to reselling may well end up hosting a bunch of clients on an unreliable host with terrible support and really cause a huge amount of work and potential damage to their business for very little money.

What comes through loud and clear is if you are going to resell, then an excellent host is a must so do your homework if you want to go down that route!

@Pete Memset offered a fully managed service where they will do security patches and so on. I think most decent VPS hosts should do that. The advantage of a client taking that out themselves is they have the support relationship with the host and are paying for it so should understand where the responsibility lies.

I’ve never had a problem with clients not understanding the difference between host and web app/CMS developer. I just make sure it is clearly explained at the outset.

Some really good advice there, I often hear people starting up offering hosting services and asking for advice on mailing lists. I usually tell them it’s not worth the hassle it can create.

However, if you can get a good setup I think it does have some valuable benefits. Most of our clients don’t understand the complexities of DNS, SSL registration, server setup, etc, so for project clients we’re happy to host them on managed servers at Rackspace. We don’t offer hosting or email services for clients who aren’t project clients, it’s simply not worth it. But for those we have an ongoing relationship with I find our clients are happy for us to take all this hassle away from them.

All the hosting related services we offer are manged so there are 24/7 support staff behind the scenes ensuring things run smoothly as well as monitoring systems that alert support staff if something awful happened like Apache went down. I’m not sure I’d want to run a server where we had to maintain the software and security patches for the reasons you state.

We get know the platform really well so it makes development work straightforward, but I see your point that’s exactly the same if you only work with one trusted provider.

Billing-wise we just bill yearly since its easier to manage. If a client left our services we’re happy for them to send FTP details to a third party (since the accounts are locked down anyway), or we’ll just assist with any transfer away if that’s the way they wish to go. Trying to tie clients in and witholding data isn’t how I like to do business (but I know some companies do). For the same reason we run seperate SVN repositories for different clients so we can hand them over if we ever had to.

So I’d advise caution to people when considering offering hosting services. Unless it’s the only thing you do it’s not worth it just as a standalone service, but if it can support existing clients and projects it can be worth considering.

Your advice works well for freelancers, because they do not have the resources to scale their services. But as the owner of a small agency, it quickly becomes in your interest to either host yourself or find a local data center to partner with for hosting. There are a few reasons for this, some of which have been addressed already in the comments.

1. Clients don’t usually care.
They just want to see their site/app on the web and working. They don’t know and aren’t interested in learning the difference between support and hosting. There is a lot of finger pointing between developer and host if something goes wrong. If you host, the buck stops with you.

2. Relationships
It is in your financial interest to maintain ongoing relationships with your clients. Even if you don’t make much money on hosting, you are supporting that client indefinitely. Any change or update is profitable because it is billable maintenance.

Keep in mind that you can and should bill your time for support situations. A client can quickly be educated to understand that paying for hosting is only renting space on a server. Any design/maintenance/content/security updates is acceptable as billable work.

For any small business, you are typically going to get stuck with the phone calls and support regardless, as the customer isn’t going to know if it is your server code or the hosting company. So instead of ticking the client off by saying, “not my problem”, it is easier to use a GOOD hosting company and manage a group of very similar servers and be able to answer the customer’s questions. Build this into your hosting fees!

Email is usually the issue and causes all of the problems, and you will still inherit the email questions (“How do I set up email on my new phone?”, “Why is this email getting blocked?”) because that client wants to use you for all things internet-related. Sure, hosting is not a big profit center, but at least you have some control over the process and an avenue for billing the client further if they do become a support nightmare.

I get the feeling that some commenters believe I am advocating totally refusing to have anything to do with the client’s hosting. That is not correct 🙂 There is a difference between acting as a reseller and supporting your client with hosting they are the owner of.

In most cases (unless the client has an inhouse IT team) we configure servers and, if a problem arises within office hours, the client would usually contact us – perhaps also copying in the hosting technical support. If I can sort it – or liaise with the host then I do, as part of any support agreement we have for that app/site.

However, if the client spots their site is down at midnight on a Friday when I am on my sofa with a nice glass of red, they know they have access to the support that they took out with the host and can contact them directly. I don’t want to be unavailable and find that a site has been down most of a weekend when a quick call to the host would have had it rebooted.

In addition, if anything really odd occurs that is outside my sysadmin skills, we always use hosts that offer managed servers and the ability to pay for sysadmin time to fix things. The client doesn’t expect us to have those skills in house and understands who is doing this work and crucially who has access to their server and application.

Really interesting article, Rachel. Reselling web host can be good and bad.

As a web designer/developer, usually will need to provide full services. Web host is only a part of the whole. It will brings troubles sometime. But this is somehow is why client still pay us… is to take care of the troubles.

So I will usually leave web host as an option to clients.

Thanks for writing this post Rachel (passed on to me via @cole007). Very well considered and eminently sensible stuff.

I was about to start offering hosting direct to my clients, but the points you raised make so much sense they can’t be ignored. I’ve come to the conclusion that your approach of getting the client to engage the hosting company direct while you supply support is not only less risky for me and the client, it will result in better service for the client and I won’t be worse off financially: win-win.

Oh, and – like half the other commenters here – I’m also using Memset. Those guys definitely must be doing something right!

Hi Rachel – I disagree with this.

For me, reselling hosting is easy money.
I charge the client an initial set up fee, and bill them up front for annual contract of hosting. Once I have set up the domain, I ask them to update their DNS and it’s pretty much forgotten from then on. I just collect the money every year.

My reseller account has WHM of course, but I am not responsible for server updates and security patches. The host is responsible for this. However if I do want to do something, I have full access to the box using Putty over ssh.

if something goes wrong (downtime, etc) – they have an Online Chat for their technical support – and 99 percent of the issues I’ve had over the years have been fully resolved in under two minutes chatting with their technical support.