So, you want to set up a website. Your first decision is to chose between buying a web server and all the supporting equipment along with a network technician to run it for you, or to find a company whose business is to run websites and pay them a monthly fee to host your website on their equipment. This question, at least is a no-brainer: unless you are a big company going online for the first time (almost unheard of these days), you can’t afford the capital investment to set up your own web server infrastructure. So you chose to rent server space from a web hosting company. Simple, right?
Not really. Once you start shopping around for web hosting services, they have several different options to choose from. One of the first big decisions to make is if you want shared or reseller web hosting. But what exactly is the difference?
In a nutshell, the difference is scale. In shared hosting, you rent server space for a single website with a single domain name. You would pay a separate monthly fee for each additional website you set up. With reseller hosting, you rent a large amount of server space, divide it up among as many websites as you need, and then have the option to resell the left over server space to other people to set up websites-essentially making you a hosting subcontractor. So which option should you choose? There are advantages and disadvantages to both, and we’ll examine each below.
The main advantages of shared web hosting is that it is simple, cheap, and efficient on a small scale. For a personal or small business website, this is all you will need. You get one website and one domain name, often with the option to set up sub-domains for the different parts of your website. First, you are not only renting space on their web server equipment, you were renting their support. It is the responsibility of your hosting provider to keep your website constantly accessible and running smoothly, and provide you with any technical support you might need-making this one less issue, you have to worry about when running your own business. Second, shared web hosting is five to twenty times cheaper than reseller hosting, with prices ranging as low as $5 per month, or even free.
There are drawbacks to free hosting sites, however. The main one is reliability. As you are not a paying customer, if the site goes down, all you can do is wait. You have no contract guaranteeing you a set response time for internet outages. Free hosting is great for a personal website, but if you’re running a small business where your website needs to be available 24/7/365 and you need quick, reliable support for any and technical problems, then you’ll definitely want to go with a paid host. The costs vary depending on how big your web site is, and how much web traffic you anticipate. The web hosting company Hostgator, for example, offers three shared hosting packages varying between $4.95 and $12.95 a month. Finally, if you want to set up another website, you have to buy another shared web hosting plan, and your monthly expenses have just doubled.
The main advantages of reseller hosting is flexibility and economies of scale. If you are running a fast-growing company, or are an entrepreneur running multiple businesses, then the cost of multiple shared accounts every month can quickly add up. With reseller web hosting, you can set up as many websites as you need, and reallocate resources among them as they grow over time. Of course, you can rent out or resell and left over space to other individuals or small businesses to run their websites. If you juggle the finances well, reseller can be much cheap on a large scale than shared web hosting.
There are, however, two main drawbacks to reseller hosting. The first is expense. While Hostgator offers shared web hosting for prices between $5 and $13 a month, their reseller packages vary between $25 and $100 a month, depending on size and traffic. Sure, some of this expense could be offset by reselling your unused web space to others, but that is never a sure thing. What if you have trouble finding customers? There is a good chance that in any given month, you will have some hosting space you are not using, but still paying for.
The second problem is that, as a hosting subcontractor, you are now responsible for maintaining support to all the people you resold web hosting space to-except that you actually have very little power over such technical problems. Although you often have some limited administrative functionality, all you can do for serious technical problems like an internet outage is pass the information on to your web hosting provider. Once your customers realize you are essentially just a near-powerless middleman, they may lose confidence in you and switch to a different web hosting provider. It doesn’t take much to ruin your brand name, and once that happens, your monthly reseller web hosting costs will rise and you lose customers to offset those monthly costs.