An excellent higher-tier Web host truly values its relationships with
resellers. Through such relationships, a Web hosting firm enhances the
market reach of its product and services offerings through the reseller's
specific market segments. A higher-tier Web host will thus offer a myriad
of specifically tailored services to enhance the reseller's service
offering. By providing a wide range of options, a reseller's business can
scale along with its customer base. The options, or resale models most
usually made available to resellers include "volume discount" reselling,
discount per domain, affiliate and private label reselling.
Let Rackspace make the difference with reliable managed hosting solutions backed by Fanatical Support.™ 100% Network Uptime Money-Back Guar., 1-hour hardware replacement, 24/7 LIVE, MS and LNX certified technical support.
The volume discount approach provides increased revenue per domain as the
reseller increases the number of accounts within their hosting portfolio.
This model is extremely cost-effective for larger resellers, since the cost
per account declines as the volume of accounts increases. The major
disadvantages of this model however are that resellers are usually directly
identified as resellers, since the infrastructure and brand identity
throughout the entire Web hosting service is usually identified with the
higher-tier hosting provider. The model also is not very advantageous to
newer and smaller reseller operations which have just started-up, since
reselling under this model is much more expensive if the reseller's customer
base is small.
The more advantageous reselling model for the start-up reseller operation is
therefore the discount per domain model. Under this approach, higher-tier
Web hosting firms offer discounts to the reseller per account purchase. Most
start-up resellers first elect to purchase this type of service because i)
it is the hosting option with the least expensive cost of entry and ii) the
option provides substantial savings as the reseller's customer base grows.
The most advantageous discounts offered usually range from 15 to 30 per cent
of the original account's price. With the reseller able to set the retail
price for its consumers, profitability can accrue very quickly via this
resale model.
The other popular resale option is affiliate reselling. Under this model,
resellers are offered a simple, uncomplicated payment structure that pays
commissions on all referrals for Web hosting services and hosting accounts
that recur monthly. This option is extremely popular with smaller Web
designers, developers and system integrators, since it allows them to
collect an up front fee for placing their client's hosting services at a
particular higher-tier Web hosting firm. By utilizing this option, system
integrators need not spend thousands of dollars to offer their clients
hosting infrastructure that is constructed in-house. In wide contrast,
integrators can collect a fee while relocating the rather involved
responsibility of hosting onto a firm that makes hosting its core
competency.
While this resale approach will satisfy most small system integrators, it
would not likely satisfy a value-added reseller (VAR). A VAR is a vertical,
market-centric, solution provider who integrates specific products into its
own offering as part of a complete customer solution. Because VARs are
focused upon providing transparent and integrated products and services,
they usually select private label hosting solutions. Private label hosting
allows resellers to utilize the services of an outsourced, higher-tier
service provider while reaping the benefits of a fully customized look and
feel. Private label solutions are considered the most complex since most
offer a high level of customization and automation. For this reason,
private label solutions have the most expensive cost of entry, and are used
by the largest of resellers, who posses hundreds and even thousands of
accounts.
