Hostgator competing with its resellers?

[robertolito]

I have a reseller account and since Hostgator started offering unlimited "everything", such as unlimited bandwidth and unlimited space, I have found more and more difficult to convince people to buy from me. No matter how much value I add to the service. I have even given them 3 months for free: they don't want my hosting, they want Hostgator Unlimited hosting, which is even cheaper. When they ask me what hosting it is, I cannot lie to them and tell them I have my own servers. They would eventually find out.
If had known Hostgator was going to offer hosting with these unlimited features, I would have probably never have decided to go for reseller account. Now I am trapped with the few clients I have. I am trying to find a way to move them to another account so I can close my reseller account. I have not been able to sell anymore accounts for some months.
I am paying $300 for a reseller account and competing with my own provider. What a big joke!

[freeman]

Originally Posted by robertolito

I have a reseller account and since Hostgator started offering unlimited "everything", such as unlimited bandwidth and unlimited space, I have found more and more difficult to convince people to buy from me. No matter how much value I add to the service. I have even given them 3 months for free: they don't want my hosting, they want Hostgator Unlimited hosting, which is even cheaper. When they ask me what hosting it is, I cannot lie to them and tell them I have my own servers. They would eventually find out.
If had known Hostgator was going to offer hosting with these unlimited features, I would have probably never have decided to go for reseller account. Now I am trapped with the few clients I have. I am trying to find a way to move them to another account so I can close my reseller account. I have not been able to sell anymore accounts for some months.
I am paying $300 for a reseller account and competing with my own provider. What a big joke!

If you pay $300 / month why don't you get a dedicated server and you can offer unlimited space and all the option like hostgator?

It is easy ...

Regards,
George B.

[EarlyOut]

Frankly, I've never understood how any reseller who isn't offering some kind of value-added service that HG isn't offering, like custom website design, could possibly compete with HG itself.

[robertolito]

Hi George B, and how much are these dedicated servers? Are you paying for one? I am not paying 300/month but 300/year. That makes $25/month. To make a difference, I need to resell accounts at a minimum of $70 per year. Let me know what dedicated account you suggest by your experience.

To Earlyout: Are you a reseller? Are you able to resell HG accounts? What sort of words do you use to convince people that your accounts are better than the unlimited HG accounts? I have offered people 4 months for free and they are not interested if I don't give them unlimited bandwidth and disk space. How much does it cost web design for you? Do you think people are satisfied with a simple website that you can design with a wysiwyg program? Some people are asking for very expensive web design that 3 years of web hosting don't pay. What is real value for them: full unlimited bandwidth or having someone that will troubleshoot their problems instead of HG Support? Am I missing something that you are considering and I am not?

[EarlyOut]

No, I'm not a reseller. I don't see how one can expect to make money by relying on one's customers to be too dopey to figure out that they don't need to go through a middleman.

And if all you're offering is troubleshooting support, how can you possibly hope to do a better job than HG? Are you on duty 24x7, 365 days a year? Do you have access to things like the server config? If the only thing you can actually do most of the time is relay your customer's problems to HG support, why would anyone pay for that?

It just strikes me as a fatally flawed business model.

My impression is that the people who've been successful at offering things like website design have found a particular niche market to service. So, they're not starting from zero with every client. If all of their clients are, say, art gallery owners, they can produce a "new" website design in short order, just by modifying what they created for someone else last year.

[Ulatan]

I don't compete with Hostgator because the webhosting I provide is only for my clients. I offer webhosting for their website that I designed at $90 a month + $300 a year for yearly support.

Not bad when only paying $30 a month.

[robertolito]

EarlyOut:
First let me clarify to you that I am not saying it is impossible to sell hosting accounts trying to compete with "unlimited" HG features.
In fact, the few accounts I managed to sell, I sold them to people to whom I was doing some other online job, and not troubleshooting or any kind of support that HG can offer them 24/7. They were people that did not know what a hosting account was, what the Internet was, and how they can do business at all,because if they had known, I wouldn't have been able to sell them at all. People (like you)that do have a knowledge of what a hosting service is don't jump into the first offer they are made.

I wish I could ask all those that purchased reseller accounts before HG launched their "unlimited" ones, to see if their sales have gone down.

It shows you are not a reseller, otherwise you would see differently.
Buy a reseller account, try to promote your hosting competing with HG "unlimited features" and come to tell me how many accounts you sold in a month. If you manage to sell 10 accounts per month (and this is nothing), I will admit you are right and will even give you a hosting (limited) account for free for life. :-)
To give an opinion you need personal experience. Otherwise you are just guessing.

[robertolito]

Ulatan: Of course you are not competing with HG. HG is competing with you by offering "unlimited features" that you can't offer to your customers. Now, whether your customers could care or not about not getting those unlimited features, that's a different issue. You got those clients not for selling them hosting but for selling them web design. They liked you as a web designer so they relied on you for the hosting too. It happens this way. Now, I am not a web designer but a hosting reseller. If I want to offer quality web design to gain clients for my hosting, how much would I have to pay you to get quality design? Right?

[CyberAlien]

You can offer unlimited features to customers - just not on a cheap reseller plan like you're on.

If you are that serious about running a hosting company then I would suggest investing in a dedicated server or at least a vps.

[robertolito]

CyberAlien,
Running a hosting company does not mean investing in a dedicated server. It means running you own servers. If you mean a real hosting company. Otherwise, you are always running somebody else's services.
Second, you don't seem to see the point in this conversation: the whole point here is to demonstrate that HG was first selling reselling accounts that offered similar features to the ones they sold themselves. And they then started offering accounts with features that attracted the public in such a way that the reseller accounts were left behind and very difficult to offer. See the point? We the resellers have to struggle to find a client that will want to buy our "limited" accounts. Put it this way: You give a franchise of your business to sell products, yes? You tell him how to sell and at what prices to sell, yes? You yourself offer the same kind of products or services at the same conditions, yes? But one day your franchesee starts offering what you gave him for franchise at 50% less than you sell yourself, yes? What would you do? You go to him and congratulate him for the great sales he is making while you are making less and less?

[CyberAlien]

Yes, running a host company means investing in a dedicated server. Using a reseller account means you are cheap and inexperienced in the field and probably shouldn't be in it. If someone's WordPress starting loading a blank index page what would you look for? If there's a 500 error what normally causes it? Why would you see a 404 error when going to a page that actually exists?

1. HostGator has never offered resellers near what HostGator offered customers with shared hosting. They have always offered incredible deals to customers that a reseller would never be able to afford - which isn't HostGator's fault - it just means their a huge company.

2. HostGator doesn't need to worry about a reseller running them out of business. You really think that you are going to start off with a reseller account and become as big as HostGator? Big hosting companies are financed by big companies behind the scenes, that's how you see them come up so fast.

3. Even if HostGator let you give unlimited space and bandwidth, you really think you can compete with a company that has hundreds of employees and thousands of servers? Can you offer true 24/7 phone, live chat, and email support to your customer - that's what people are looking for nowadays? Why would I signup with a company that will take hours to respond back to my email when I could signup with a company I know I can call day or night?

If you want to compete with HostGator then break up your company into providing services and niches such as Managed WordPress Hosting where you will help them setup their site and walk with them in baby-steps.

So, even if you could give your customers unlimited space and bandwidth, what makes you think you can compete with a big company? What are you going to be giving customers that the big company isn't?

[CyberAlien]

Also, I am assuming that you are suggesting that HostGator allow resellers to oversell and offer unlimited space/bandwidth to their customers, not actually give resellers unlimited space and bandwidth.

HostGator can control shared hosting because they can limit the amount of accounts on each server and keep it running fast.

1. Unlimited - if they actually gave resellers unlimited space and bandwidth there would be no way for them to keep the server under control.

2. Overselling - if they allow resellers to oversell then that may work but what are you going to do when you reach your limit on that reseller account? You will still be limited by the actual space allocated to that reseller account even if overselling is enabled for your clients.

[robertolito]

Cyber Alien,
I am NOT trying to compete with HG in any way. Or you think I am crazy?
So, your judgement of me trying to compete with HG is absurd.
I am just trying to sell web hosting accounts, because this the reason for which I bought the reseller account: Reselling.
Hostgator offered me a reseller account that at that time had practically the same features they were offering to the customers that turned to them directly. So, I bought the reseller account on the idea that I could sell also because HG was not offering something better but the same. And don't tell me they were offering to their customers something better than they were offering their resellers because that is simply not true.
Now, whether they have the right to sell whatever comes to their mind, that is something unquestionable. They are the owners and they can do whatever comes to their mind.
What is questionable is that what they began to offer to their own clients was much better than what their resellers were able to offer to theirs and this creates a state of affairs in which the reseller has to offer accounts that are at a disadvantage in terms of quality services.
As to troubleshooting Wordpress and other scripts the clients install themselves: HG does not troubleshoot what you install but only what is related to their server. If you get a 404 error and it's an installation problem, HG will not solve it, unless the problem resides on their server. On the other hand, let me tell you, I offer my clients much more than solving a 404 error, I offer them total guarantee that if anything happens to their website, because of attack or anything, we will save their website so that it will not have to be taken offline for good. This is something HG is not able to offer, NEVER.

And again, if you think that I am trying to compete with HG, you do not understand the issue here. And obviously you are not going through the trouble I am going to convince people to buy from me. Go through my experience first, then come to tell me about me competing with HG.

[robertolito]

Cyber Alien,
There is no doubt from what I am saying in all my posts here, if you understand what I am saying in them at all,that the issue is not that HG should allow now their resellers to offer unlimited bandwidth and space, because to do that, it is obvious that the reseller must have unlimited bandwidth and unlimited space himself to distribuite in each of the accounts he resells.
HG should have evaluated before they started to offer unlimited features that they would be putting their resellers at a disadvantage. After all, we the resellers are helping HG to sell, right? We are feeding their machine, aren't we? Thanks to us HG sells more, right? We bring clients to HG, right? Or don't we? So, if you have a "partner" that increases your sales, why would you ruin your partner's business?
Now, it's too late. HG has been offering their "unlimited accounts" for quite a time.
What is done is done. They cannot go back and tell their clients they cannot offer the unlimited accounts anymore, all that is left fair to do is try to compensate the resellers for the damage caused by this unfair competition.
And they cannot leave the fawcett open for everyone to help himself to bandwidth and diskspace.
I don't know if there is a solution. The only solution could be perhaps: 1. Increase the resellers' accounts space and bandwidth so they will have more available to distribute for their clients, but keeping it limited.
2 Reduce the yearly fees, so the losses the reseller has will be compensated.

[Ulatan]

No one can compete with Hostgator if you are using their reseller services. Only way you can actually profit, is to offer a service bundled with your webhosting that Hostgator does not provide.

Now if you are thinking of trying to compete without spending too much, I suggest co location services. Completed servers are so cheap nowadays that you can get a powerful 2U server under $600. You should only pay for Power and Connection speed.

Check out https://www.colounlimited.com/

[EarlyOut]

Originally Posted by robertolito

To give an opinion you need personal experience. Otherwise you are just guessing.

I'm not a reseller because the way it looks to me, being a reseller puts you in the business of trying to compete with HG, and that's very obviously a losing proposition. Why would I go into a business like that? This isn't a matter of guessing. This is a matter of looking at a business proposition, and using my good sense to realize that it's a loser.

It's like deciding to go into the business of selling new Subarus. You decide you're going to buy cars from the Subaru dealership in your town, and then try to make money selling those cars to people out of your garage. I don't actually need to try that to figure out that it's a non-starter.

[striddy]

Originally Posted by robertolito

I have a reseller account

Hello Robert,
How long have you had your reseller account here?

[robertolito]

Striddy,
2 years.

[robertolito]

Earlyout,
Well, it might be bad business for you, because you have not attempted it and may not be interested in what it gives you monthly. It all depends on how much you want to make out of this business, or any business online, for that matter. For me, it can provide me an extra income together with other activities I do online.

[EarlyOut]

Originally Posted by robertolito

For me, it can provide me an extra income....

Based on what you said in the very first post in this thread, that's apparently not true. Which is precisely my point.

[robertolito]

Earlyout,
What is not true?
You know what the problem is in this discussion?
That all the people that have given an opinion in this thread are not re-sellers. If they were, they would see all this with a different perspective. And if you think I cannot understand you or don't want to understand your point. Well, there isn't much to understand, you are not following my reasoning but yours, which is unrelated to what I am complaining about.

[EarlyOut]

Sigh. If being a reseller could actually provide you with extra income, you wouldn't be looking to get out of the reseller business, which is what you said you wanted to do, in your first post.

It's a pretty simple set of circumstances. HG is, in effect, a reseller for Softlayer/The Planet. Ordinary users can't purchase directly from S/TP because they offer only dedi's, for a monthly fee that most of us wouldn't want to pay.

HG, in turn, shares out the dedi's it buys from S/TP. It brings website ownership within the grasp of damn near anyone. For $5 a month, about what a latté costs, anyone can get unlimited storage, unlimited bandwidth, a bunch of handy tools, 365x24x7 support, etc., etc.

Trying to be a reseller for HG is obviously a losing proposition, if all you can offer is hosting. HG already has that market covered. It would take way too many $2/month customers to generate any real income.

To me, it seems fairly clear that being a reseller can work only if you're offering something that HG isn't already offering. Face it: you can't compete on price. And I don't see how you can compete on basic support. If those are the only things you can offer, I don't think you can make any money being a reseller.

[robertolito]

Ok. Since you seem to know a lot about all this business, perhaps you could explain why HG offers re-seller accounts? What is the value of a re-seller account they offer? And why are so many re-sellers? Are these re-sellers so stupid that they bought these accounts to lose money? Have you asked a re-seller how much he earns? I myself have already passed the $300 I pay them yearly. I won't tell you how much I have sold and can sell, but I have my own market that HG does not cover, only, I need to be in an advantageous position. By not being able to offer what HG offers, I cannot sell as much as I could. My intention is to expand this business not to get stuck with a few clients. Now, this objective is more difficult to reach because of what I can offer. I suggest you contact a few re-sellers and ask them if this is not good business. They will laugh at you.

[striddy]

Originally Posted by robertolito

perhaps you could explain why HG offers re-seller accounts?

Robert,
HG offers an inexpensive way for someone wanting multiple cpanel accounts and/or the ability to resell hosting. Whether they want to resell those hosting resources, or give them away free, is up to each person. How or if a person monetizes such a hosting package is not HG's problem. They simply provide the hosting packages and it's up to each person to decide for themselves whether or not it is a worthwhile proposition.

For some people, a reseller account is adequate. But for others, particularly those wanting to offer unlimited type packages, a higher package is needed. This requires spending considerably more money per month than some people wish to do.

Originally Posted by robertolito

By not being able to offer what HG offers, I cannot sell as much as I could.

You can offer what HG offers with a different server package.

[EarlyOut]

Originally Posted by robertolito

They will laugh at you.

I guess I'll just have to cry myself to sleep.