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The Reseller Agreement

The Definition of Reselling

A hosting reseller purchases hosting services from a hosting provider and resells them onto their customer at a profit.

This profit can take many forms. It could be that the reseller get hosting services at a discount price and then adds a margin. Or it could be that the reseller acts as an agent for the top-level provider and receives a commission for every customer that is forwarded onto the top-level company. The main form of profit might not be the hosting itself but in the form of a service provided to the end customer, like development of a site or programming scripts for the end customer.

There are several types of reselling arrangements; here are a few of the most common ones on the market today:

  • The reseller has his own web site to sell the hosting services of his host. For this he receives a commission, but perhaps the primary for of business is actually web design.
  • The affiliate is a common form of reselling. The reseller is linked to the host who tracks all traffic that is originating from the reseller. The reseller is then credited with any end customers who sign up for hosting services and receives a commission for each sale.
  • The most common is the reseller who receives a discounted rate for web hosting with a certain host or provider. He then sells services onto the end customer at a profit. The end customer has no idea that another customer is in fact hosting him, because everything appears as if the reseller is the top-level provider or host.

Shared or Dedicated Services

As a reseller there are generally two options you can choose from to offer services to your end customer. These are Shared Services or a Dedicated Server.

Shared servers are the far cheaper of the two options. Usually the technical requirement for getting setup with a Shared service is minimal and the main reason for this is the fact that the technical administration is done by the host. This is usually the best choice for entry-level resellers.

Another advantage of going with the Shared option is that the host will usually supply you with various tools to resell onto your customer. These tools include things like mail and web page administration tools, usually in the form of a control panel.

The monthly rental of a dedicated server is much higher. And you will have full responsibility for setting up the server and maintaining it. You probably won't get the control panel functionality, although many have such services but at an extra cost.

But there are some advantages to this:

  • Applications - You are able to install any application you pleas eon your server and offer this to your end customer. Lets say you install MS SQL Server you can then offer this functionality to you customer at a charge or value added service.
  • Resell - You can start up your own reseller service and charge you customer a monthly reseller charge and they will receive wholesale prices for your packages.
  • Customisation - Usually when reselling you have a fixed number of plans and options that you can then resell. With a dedicated service you can decide what disk space and services you offer to your customers.
  • Profit Margin - Even with the additional cost of the server, you dictate what prices you set for your customers. You might even have a free web hosting option with 5mg of web space and a couple of mailboxes. The offering customers upgrade options to pay for services.
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