You really don’t want your clients to call you. Not ever. You don’t want to hear a peep out of any of them whatsoever, at all - because when you hear from your clients, it usually means one of two things:

1. Something is broken.
2. What you are offering isn’t clear, and they’re confused.

Now, the first thing you can’t really do anything about - granted, we can, and we do. One of the advantages to going with a smaller company is that we’re looking at every server, every single day as opposed to larger companies that have too many servers to actually hang out on and who are only alerted that something has gone wrong when the “Oh, crap, it’s down!” alarm goes off. Now, we have those alarms, too, but we’re a bit more proactive about trying to avoid the things that wake them up than larger companies can be simply because each server is 1/4 of our business.

The second you can do something about, and that’s where good documentation comes in. As a reseller, you have somewhat of an advantage in that you can mercilessly rip us off for the most part, as long as you’re paying us - since you’re our reseller, we want you to get big and upgrade. Then we want you to outgrow a shared box and get a VPS, then we want you to outgrow that and get a server, and then we want you to outgrow that and get many servers, and then we want you to overtake us so we can sell you our clients and retire to Tahiti.

Ok, I’m kidding about that last part, but you get the point - since we want you to grow, we welcome you to take whatever it is that we have built up for the past ten years that helps you do that. The data center that we started out at 10 years ago let us use their stuff, and that was our starting documentation. Generally, it’s how most people start - ripping off whoever they are reselling for.

Nowadays, though, manuals and text directions aren’t as good as the flash demo. We have switched most of that tediously written documentation over to flash demos because (a) most folks have flash and (b) most people’s eyes don’t glaze over quite as fast when they are watching a movie that shows them step by step how to perform an action and it is easier for people to understand something when it is visually shown to them. What isn’t covered in a flash demo is usually swept into sound byte chunks backended to a searchable knowledge base, or FAQ section.

Most people do not read a treatise on their hosting anymore - and they used to. People really wanted to understand it. Now, not so much - they want it up, they want it done, and they don’t want to have to understand why it works the way that it works, they just want to know how to get from point A to point B. These two forms of information are an excellent compliment to each other enabling the imparting of quick, clear, and precise information.

Now you have to learn flash, and create the demos.

Ok, I’m kidding - again, there are companies that do these demos professionally, and you can get them in a day or so branded. The previous “It Girl” was demodemo.com and we have used them. DemoDemo produces a quality product - however, our particular choice is DemoWolf.

Demowolf allows leasing of the demos, which is (in my opinion) vastly superior to owning the demos themselves due to the rapid advancement and changes in many control panels and software products. If you purchase a slate of demos and that product changes visually next month or the way to do something is completely different, you’re stuck with outdated demos that don’t adequately reflect the current product you are offering and worse, may confuse people when what they see in the demo is not what they see on the site.

This is the web - things change fast. We must have purchased and re-purchased the same set of demos 4 times before Demowolf showed up, and we’ve been happy with the cost and their quality.

One particular world of warning with their demos - make sure that you take a look at the Demowolf HTML files and you change the Meta information in them before uploading them to your site and using them. Demowolf places their own meta information advertising their own service in their files. Kudos to them for gumption, but if it’s your site, you want your own meta information don’t want to unknowingly be serving another company’s meta-information advertising someone else for free unless it’s your choice (or it’s required, like a “powered by” statement).

The cost of the lease per package varies, and without speech directions is in the neighborhood of $3-$4.

As far as knowledge bases, it’s almost impossible to recommend just one. Hopefully, your billing choice will come with it integrated but if it doesn’t, set aside two days and start googling ” knowledge base software”, test some out, and find one that merges into your own design and does not take it over . There really are such an amazing amount of choices that it could take up an article series on its own.

Hopefully, you’ve been thinking about how you want to charge your clients, because it is a fairly big decision. Rather than go over every single billing option out there, we’ll let you know about the WHT Wiki, which has an overview of Current Billing Software available specifically designed for web hosts.

We’re going to go ahead and caveat right now that we’re not a reseller for any of the following software, so nothing that we say here is in any way motivated by us being paid for the recommendation or referral. If you buy any of these products and say that we recommended you, the company’s response will be that that’s nice, but we won’t get anything out of it. (Considering the rate that people attempt to monetize blogs, we thought we had to say that).

We’re also only focusing on cPanel, Linux based software packages since that’s what we do and offer.

PHPCoin is located in your Fantastico area, and its free, so there’s a benefit for you right there. You know what they say about free, right? You get what you pay for and this is very true with the PHPCoin Software. It is very basic, and it functions for the most part. There is no integration.

We use Ubersmith, and have since 2002. Ubersmith, when we signed up, was expensive and extremely high quality - however, for smaller web hosting companies, their focus has wandered a little bit. We’re still pleased with the software but the developers are not as responsive as they once were considering the company itself seems to have shifted its focus to Ubersmith for Data Centers, and the Lite and Pro versions seem to resemble a tad bit of an afterthought. For us, though, we’re used to these features and so we’re sticking with it. We’re not sure we’d recommend it at this point for other folks starting out. It does come with an integrated support desk. It starts at $24.95 a month for a leased version or Lite, and $499.00 to own. Support is forum only unless you pay for it.

Modernbill has long been popular with web hosting companies, and for a long time was somewhat of the undisputed “It Girl”. It is free for up to 10 clients, $24.95/mo for up to 50 clients, and $49.95 a month up to 1000 clients - after that, you have to call for pricing. There is no owned version. You can get telephone support for it - for $150.00 an hour, which puts it out of the price range for most small resellers without knowledge to tweak it. It does have an extensive amount of features, though, including automation that is fairly easy to set up and integrate. As you grow, it’s pricey. (Disclaimer: We have not used ModernBill.)

Coming back down into the affordable range, we have AccountLabs Plus written by the same folks that bring you Fantastico and, as you guessed, it’s available in Fantastico - but is not free. It’s domain-based license is $45 initial year for a single domain, $15 renewal fee every year thereafter, putting it in the much more affordable range than many other offerings. It is a strict ordering/billing system without a support desk or knowledge base and may be appropriate for those folks who are designers offering hosting with no interest in being a full-fledged web hosting company. We have tested this system, and it was “ok” - we were a bit underwhelmed with features, however, they were more than adequate considering the price. Support is generally forum only.

WHMAutoPilot has been the other “It Girl” for a while. It’s developers have a pretty good reputation as being responsive to client needs, and the software package scales nicely. The pricing is also tiered, though less than ModernBill - free for up to 10 clients, $19.95 monthly for 2.x leased, and $199.95 for an owned version. Support is unlimited and free from them for the leased version, and for 6 months with the owned version. It does not have an integrated helpdesk, though you can purchase two (Kayako or Cerberus) and integrate them.

There is, however, a current “It Girl” called Web Host Manager Complete Solution, or WHMCS for short. Around the turn of the year, we helped migrate 7 different web hosting companies from the Alabanza platform to LiquidWeb servers and the cPanel platform due to the selling of Alabanza to Navisite and the complete and unparalleled botching of the technological merging of those companies. In every case, these established companies chose to go with WHMCS after testing multiple solutions due to cost, features, as well as the responsiveness of WHMCS to the emergency issues that were being faced by the unfortunate companies that got caught up in the Alabanza meltdown fiasco.

WHMCS attempts to be just that - a “complete” solution for a hosting company, including billing and automation and integrated support desk and knowledge base. A monthly lease is $15.95 if you leave the “powered by” line in it, and $18.95 if you want it out. It’s $249.95 to own with the “powered by” line, and $324.95 without it. If you purchase it, you can purchase support and upgrades after a year for a $44.95 renewal. It includes a support desk, a knowledge-base, as well as a fairly robust billing system that enables automation if you choose to do it.

Though it’s not a billing solution, we can’t leave the post without mentioning the Kayako Helpdesk - it’s the helpdesk “It Girl”, but doesn’t do any billing. The pricing varies, and is generally not cheap - you can spend upwards of $50 a month on your support solution. (For those curious, DrakNet’s costs just based on our systems run around $250 a month.)

Next time, we’ll talk about support pages, demos, and their cost/benefit ratio.

So, once you decide you want to do this - getting a reseller account (or server), starting a business, getting a merchant bank account, yadda yadda - then you have to decide how you’re going to do it. So, what does that mean?

Well, there’s the way most people do it - purchasing a web hosting billing/support software package and automating as much as you possibly can. These days, it’s actually possible to accept an order, open a billing account, install it on the server, provision it, bill it, charge it, and send a thank you note at 2am in the morning so that you wake up and notice you have a new hosting client while you were sleeping.

Then there’s the way we do it, which (we’re told) is quaintly old fashioned, and that’s by hand (once you are installed and set up, things are automated, but not until we decide so). At DrakNet, we see every order that applies to be on our servers, a real human looks at it, investigates it, provisions the account, opens the billing, charges it, etc. We admit to you openly that most people of our size and with the frequency of the orders that we get do not and would not choose to do it this way. It’s a lot of work.

So what are the benefits and drawbacks to each system?

Well, obviously, the benefits to the automated system are that clients applying with you get instantaneous set up, and you won’t have to do much of anything for them. In fact, if you do it this way and they have no issues, you could have a client that you never have any direct contact with at all. You cut your staff costs down (or your own work), you are able to offer instant set ups since everything is automated. All you may have to do is collect money, and watch that you don’t overload your account.

So, why do we do it the way we do it?

The benefits of eyeballing every order is that a human being sees it, as opposed to an algorithm that may or may not be any good - spammers and black hat hackers regularly sign up with hosting companies so that they have an untraceable platform to do whatever nefarious things they are planning. Our firewall regularly (read: daily) firewalls IPs of other hosting companies servers as they attempt to attack ours through port scans, mod-security breaches, and the like. Just during the overnight we firewalled at least one shared hosting server from every large shared hosting competitor in the “top ten” due to attempted security breaches.

If you are indiscriminate about who you sign up regardless of how ridiculous their order form looks, you’ll have these problems sooner or later. That’s not even considering the chargebacks that you can face from stolen credit cards being used to sign up.

We personally prefer to do far more work on the front end (and to turn down any orders that seem slightly hokey) than to clean up on the backend after we’ve installed someone we shouldn’t have. They’re both work - it’s just a matter of which work you want to do.

It’s also going to depend on your market - are you going after a market where instant sign ups are absolutely imperative for growth? If you’re going after a market that wants it “now now now” and lack the patience to wait for an install, you may have no choice but to go with a system that provides instant sign ups.

Making these decisions before you look at your billing software is important because each set of software has its features and drawbacks, and each set may have a ceiling as far as expandability. Before you plunk down the cash that may have a hefty price tag, consider how you’re going to run your operation - because if you choose billing software before you do, that and software how it operates will likely decide many things for you.

Ok, so you’ve decided you actually want to start your own mini-web hosting company within ours. So, what’s it gonna cost?

Getting Their Money

You don’t have to have a business bank account if you don’t make a whole lot of money to start out - but it helps.

First, it keeps your personal finances and your business finances separate, which makes life much easier at tax time. Secondly, it might not cost you all that much because a lot of banks are offering free business checking and if you don’t have a lot of activity, you’ll probably qualify for one of the free bank accounts.

You’ll also need a merchant account and gateway - many of them come bundled. We personally sell, and use, e-onlinedata. e-onlinedata will get you the merchant account and id, and will settle the money into your bank account. As you can imagine, there are lots of fees involves with being a business that takes credit cards:

• DBA - at the very least, you’ll need to register your business as a DBA in your area so you can get a bank account with a business name instead of “Tom Jones”, or whatever your name is. (Business types are beyond the scope of this article). There are usually small fees associated with this.
• Bank Account - hopefully, you’ll get a free business checking account.
• The set up fee for your gateway/merchant account - through us, it’s $79.00

Recurring fees that you’re going to pay are:

• Us, for your reseller’s account.
• $10 monthly service fee for your merchant processing (if you go through us)
• $.30 per transaction for each charge or credit or hold you perform.
• $25 or 2.29% (qualified transactions) of your charges for the month, whichever is greater

Now, obviously, since this is our web site we want you to use our stuff and those are the fees that we used. If you don’t want to use what we offer, a simple Google search will bring you to a plethora of other options, but we can gather from the above that for processing transactions and setting yourself up as professionally as possible, it’ll cost you roughly $100 to get started, and it will cost you roughly $50 a month (more if you are successful) as far as an investment before we add any software or additional services into the mix.

The alternative, of course, is PayPal. PayPal doesn’t require a set up fee, DBA, business bank account, or any of those types of things, and it is less expensive when you have a lesser volume. The drawback to using PayPal exclusively for payments is that as a merchant, you have both less control and less rights, as they are not a bank. There have been stories of PayPal freezing money in people’s PayPal accounts due to a dispute or yanking accounts altogether - and should that happen, your business is dead in the water. (There’s more than one reason that we choose to use our PayPal payments for do-gooding besides the fact that we like being do-gooders).

There is also the fact that a “business” that doesn’t take the time to set up the ability to directly accept credit cards does look less professional - web hosting is not really an industry like auctions, for example, where that is the norm.

Whether you can “get away with it” is going to entirely depend upon the market that you are targeting and whether they will see PayPal only as an acceptable limitation, and whether you find the lack of control over those payments and a third parties’ ability to come in and take it from you at any without at any time an acceptable risk to your business. Personally, we see PayPal as a fine alternative option adjunctive to traditional merchant card acceptance, but not ok for a sole option - but that’s just us.

OK, so now we have the ability to take money from clients - always a good thing if you’re trying to make a go of a business. How to keep track of who you’re charging what? In our next section, we’ll go over your billing options and integration with your gateway, what the start up costs are for that, and what software we recommend to get you started.

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, and let you know some of the choices and pitfalls that lay in wait for you.

First, what’s a reseller?

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 have 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.

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.

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.