The term Reseller according to the dictionary means to sell again i.e. to sell a product or service to the public or to an end user, especially as an authorized dealer, while making sure that you make a profit on the sale.
Reseller hosting is no different either, a reseller buys a Web hosting package from a hosting company and tries to sell it independently. The profit for the reseller lies in either the discount or in the commission s/he gets from selling an account.
For example: The reseller might purchase a package whose features are valued at $100 for $90. So, the reseller stands to make a $10 profit on selling the package to customers. Normally as the customers increase, so does the profit margin for the reseller. Or, you can get some money by earning commissions from a hosting company. This happens when you refer potential customers to the hosting company. If the customer signs up with the company then you earn a small recurring commission until the customer uses the services.
Most web hosting companies try to outsource their services to resellers as it helps them to extend their business reach without the cost of marketing and sales and also helps them to concentrate on the business side of things.
What can be resold
As a reseller you can decide what kinds of services you can sell.
You can provide shared, dedicated or co-location web hosting or merchant accounts, store fronts etc.
If you go with hosting then it might be useful to offer some other hosting related services like domain names, search engines etc.
Of course, if you have problems selling these value added services in the beginning then you can sell them later.
The cost and resources involved
The cost of becoming a reseller and the equipment and people required in order to be successful depends on many factors.
If you just plan to earn commission by referring people to the hosting company by using the Internet, then you do not have to put up a lot of money, all you need is an Internet ready PC and an Internet connection.
For a small start-up not a lot of money and resources are required. You can purchase a good reseller package from a hosting company by paying them some money upfront. All that is needed is a decent computer that can manage the accounts of customers and a good Internet connection.
It is advisable to start small if you are very new to the concept of web hosting and reselling. Then you can expand as you go on and start getting more and more customers in which case offering domain registration is also a very good way to make profits.
If you have the money and the experience then you can go as far as buying all the server equipment required, in which case you will also be responsible for all the server maintenance costs.
The other option could be leasing a server as this will be cheaper than buying the server, but here as well you are responsible for all the maintenance and running costs of the server.
In the above two cases you also need to make sure that you have multiple connections with the hosting company so there are no complications in case a connection goes down.
The best thing about being a reseller is that you do not require a lot of upfront investment.
There is no need to have a lot of technical knowledge. Account management and Internet skills are all that is required. However, it would be really handy if you have some sales and marketing experience so you can interact with your customers better.
The hosting company generally provides and maintains all the hardware and software.
You do not need to hire a lot of IT staff to provide support. Providing basic support and leaving the more technical issues to the parent company support staff can be easily achieved.
Support can sometimes be delayed, as you are dependent on the parent company to handle the technical aspects. If there is a delay from their side then you along with your customer are affected.
Sometimes customers leave you if they find out that you are a reseller and not a real hosting company.
Tips for marketing yourself
If you are starting out on a small scale then visiting message boards and posting your services there is a good idea. A lot of potential clientele with relatively small hosting needs also frequent message boards and outline their desired services.
Having contests is a great idea for bringing awareness and interest about your services.
Online ad campaigns, signatures, and text links are very helpful techniques.
Once you have gotten a bigger budget then you can go for Google ad words or PPC search engines.
The best strategy is to try out various combinations of these approaches and work out the best one for your needs.