Introduction to Reselling, Part 1

So, you’re a designer or a developer, and you keep sending clients to us because you’re not sure what’s involved in reselling and the concept freaks you out a little bit. These posts will be a series introducing you to reselling web hosting, and let you know some of the choices and pitfalls that lay in wait for you.

confused potential reseller hosting candidateFirst, what’s a reseller host?

That’s a pretty tough question to answer, especially in this industry. In its simplest definition, a reseller is anyone who sells someone else’s services. In the hosting industry, though, the term “reseller” is not so simple because hosting is so intertwined between different companies and services coming together that it can be confusing for the uninitiated.

Let’s first go through the various ways a web host can “be” a web host. These are listed from highest investment/cost/size to lowest.

You can own your own Data Center. This covers hosting companies like The Planet, Liquid Web, CI Host, and Rackspace – though there are more than just those. What that means is you own (or lease) the building, and everything in it belongs to the company. The benefits of this is that the company controls every aspect of the infrastructure. The drawback is when things are going wrong, there’s no one else to blame so you better have a darn good staff to run it, and it ain’t cheap.

You can own your own equipment and co-locate it in a data center. One of the largest shared hosting companies chose this method – Dreamhost is actually located in Media Temple’s data center (though I believe they co-locate in more than one place). The benefit of this is that you get to take advantage of an already in-place infrastructure and you own the hardware, which brings monthly costs down. The drawback is that you are in charge of any hardware failure and a tech will usually need to take a drive to the data center to address any issues. It should be noted this choice, as well as the ones following, are better for the environment than starting your own data center (even though all of us sometimes wish we had our own).

You can lease your boxes from an established dedicated server data center (which is where we fall). The benefits are that there are techs onsite that are responsible for any hardware issues in addition to the connectivity benefits you would get the same as colocating. The drawbacks are that everything other than the data on the server is not yours, and you can only create hardware configurations that your hosting company has the ability to offer and chooses to offer, and its more expensive than colocation (though there are less upfront costs). The vast majority of smaller hosting companies (and some larger ones) fall into this category, and please note that just because you lease a server does not mean you are with a NOC – you may be leasing a server from someone that leased a server from someone that leased a server from a NOC.

I know, mind-boggling, ain’t it?

Then there’s a Reseller account with any of the above hosts. These come in two flavors – one allows you to set up a mini-hosting company so that you can provision accounts with packages you choose, have your own DNS servers, and in general create your own brand identity within your host’s system (which is where our reseller accounts fall), and those that simply allow the reselling of their own defined packages at a discount. The first option involves more work than the latter, and the last option usually little more effort than cashing a check.

Now, you can be a combination of the above – for example, we had dedicated boxes at Liquid Web. Now, are we a reseller? For the boxes that we host you on, and our shared services, no – Liquid Web has absolutely nothing to do with your accounts or services and, in fact, we offer many things that they do not. They manage the boxes for us, but not our accounts. So in this case, we are not a reseller host.

Previously, though, we have leased a box from them and sold it to someone else for a small profit. Since we are selling the dedicated server to someone else, and the service that Liquid Web was giving us was the box itself and all the management and that is the product we sold, in that instance we were a reseller host.

The line is at management – you graduate into a non-reseller once someone stops helping you manage your hosting accounts and the responsibility is all on you to deal with them. Once you’re managing your own accounts and no one else is there to help you run it, you’ve graduated into a full fledged web hosting company, even if it’s just one box.

Next post in the series, we’ll go over what you should think about when you are considering becoming a reseller host.

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