Understanding Reseller Hosting Packages

[jordanpa]

Hello,
Can someone explain how the reseller hosting works. I see that the different packages have different levels of disk space. I don't understand this. The aluminum pack has 24 gigabytes. Does that mean 24 gigabytes total? Lets say I have a customer and I sell them hosting and I signed up for the aluminum pack. Does this mean that for each customer I sell a pack to, they get 24 gigabytes EACH? Or do I have to divide the 24 gb amongst customers (1gb each for 24 customers lets say)?

[Jordanlw]

YOU get the space listed,
So you must split it between your customers.
And you can't oversell.

Id advise going straight to Dedicated.

[ghpk]

24GB would be the total space you could allocate/distribute between your customers, HG doesn't restricts you from any minimum quota.you will define your limits and pricing to your customers by creating your own packages under this.

Eg, If you sell 1GB to each customer, you can accodmate 24 customers under first Reseller plan.

[jordanpa]

Thanks. I don't see how anybody could keep customers at that rate if host gator themselves offer 8 times as much space for only 5 dollars. Well thanks for the answers everybody. Seemed like a good idea. : (

[whatrevolution]

Originally Posted by jordanpa

Thanks. I don't see how anybody could keep customers at that rate if host gator themselves offer 8 times as much space for only 5 dollars.

No kidding, right?

Considering that fact, the savvy reseller must realize that they are NOT ever going to, supposed to, or intended to attempt to create another HostGator within HostGator itself. Obviously. Talk to ThePlanet.com about that.

Reseller options are for designer/admin freelancers to have a spot in which to locate their computing knowledgeless customers' websites. That is to say, you go find work, handle ALL of the details yourself (the details HG and TP doesn't handle), allocate only a reasonable amount of your reseller space, and hand your customer a working site which they browse to, log in, and post stuff for their kids or church or whatever to look at once a week.

Then you keep a sharp eye on your disk usage (automated notification when an account hits 60% usage, ideally), and up their quota, shuffle accounts (buy more resellable space), or warn your customer if you sold them a limited space contract equal to what you actually set the quota to.

Hardly different from what HostGator does, in theory.

Also note, before you "keeners" go back to the "dedicated dedicated dedicated" mantra (though, I agree), the Resellers are also for the partially informed, who haven't had the years of hours we have to RTFM.

So, consider the math.

You buy 350GB disk and 3,000GB transfer for $5, but you aren't licensed to sublet the space, and have to build and manage the site yourself, and all which that entails.

You buy 24GB disk and 250GB transfer for $25, are licensed to sublet the space, but still build and manage the site.

I'll use disk space to calculate.

Shared:
5 / 350 = 0.014286 = $0.014 per GB per month

Reseller:
25 / 24 = 1.041667 = $1.04 per GB per month

Rounding the figures further, you're paying $20 per month (over shared), which equals $1 per disk GB per month, for the license to sublet your account, since you obviously intend to earn a profit reselling HostGator's service as a lynchpin of your service.

Considering these numbers, and your assumption of 1GB per customer, now calculate your profit. Classically, store retail accepts no less than 30% profit, and asks for at least 60% or more (whatever arbitrary amount you can reasonably get away with asking... WalMart brow-beats the suppliers, and dips below the competition's prices by a few %, ALWAYS).

Check out HG's profit on Reseller accounts, over Shared:

1.041667 / 0.014286 = 72.915232

Looks like we're in the right business, afterall.

I won't go into details of pricing an entire design/management business, since I already have to sign this post with the blahblah emote. Suffice it to say, in addition to the other price calculations you make, you should charge your customers whatever reasonable amount per GB you can get away with.

By reasonable, I mean, it is competitive and it is mostly lost within the higher costs of paying a person (or group of people) to do EVERYTHING for you, all day, every day. Much of that can, in fact, be placed within your more up-front fees, such as retainers and the larger fees for site building and design. Monthly fees need only cover real costs (hosting, employees), support, and moderate profit.

I'd have to spreadsheet this to hazard an honest figure on THAT, though.

As a side note, this reminds me of my psychology professor's story of his first job in Nashville, selling glassware door-to-door. His company sent him to the poorest neighborhoods, equiped with a list of households known to have teenagers nearing graduation or marriage (age, demographic, etc.)

When selling these kids' parents on glass bakeware and silverware and such, his opening offer (as he was trained) would be a single item. If it was refused, he would begin the "hard sell", offering a second, then a THIRD item. The catch? If you were a push-over, and took the bait at item 1 or 2, you paid for all 3 regardless. This is precisely the same thing television marketing (infomercial) does.