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How I Have Made Money Online – Part 3 – Online Services and Web Hosting

By Yaro Starak
26 Comments

In this the installment of my series on how I have made money online I take a look at running my most successful web business, BetterEdit.com, and one of the most popular online business, web site hosting. If you missed the other parts of this series you can read them by following these links:

A Services Web Based Business

That title sounds a bit vague but BetterEdit.com is an example of a services web based business. I’ve talked about BetterEdit.com a lot on this blog and through it and MTGParadise.com I’ve gained most of my Internet business skills.

BetterEdit provides editing and proofreading services to students and business, although presently we are moving towards focusing on only the student niche. BetterEdit is a perfect case study in creating and operating a profitable web based business. It’s too complex to discuss in detail in this article but no doubt if you subscribe to this blog and go through the archives you can get a good feel for how exactly I operate BetterEdit and have experimented with marketing to keep it growing.

A service based business often starts with the owner providing the service. I didn’t go this way although every now and then early on I was tempted since the margins are obviously a lot better when you complete the work yourself. Although I would have been doing my business a dis-service if I did do the editing since I’m not nearly good enough. I’m adequate, but compared to our current staff, not great. Consequently very shortly after starting the business I had a contract editor working for me. This format actually works great because the editor only needs to focus on what he or she does best, editing, and I can focus on client attraction and business management, certainly areas I prefer to work in.

The formula is really quite simple – find a need and satisfy it at a profit. Sure there are a lot of variables to control but when it comes down to it I found a need, hired the best people to satisfy that need and tested which marketing methods work best to find the target audience with that need. The rest is history, and ahh, the present too.

Earnings: I advertise that I make $2000 – $8000 per month from Internet business. It’s true. However note that is not gross profit, that is revenue. I have expenses and I choose to invest most of that money in growth so I don’t pocket the money myself at this stage. I can honestly say that I do generate at least $2000 in sales per month with the highest month so far peaking at just over $11000 (there is a Goods and Services Tax component, 10% to be exact). Things are growing and I’m starting to generate income from other sources, but that’s all the info you are going to get out of me for the moment.

Web Hosting

A quick (…or not so quick) note about web hosting. What an industry hosting is! Every kid is signing up to start a web hosting business, spending the $10 per month required for a reseller account and then promoting the crap out of their template designed hosting site. I was one of those kids not too many years ago.

Hosting is by far the most saturated industry online and yet I still wholeheartedly endorse anyone starting a web hosting business. Why you ask? Because you can niche your market locally and work your network contacts to get new clients. If you play your cards right and cull the not profitable pain-in-the-ass clients you have a nice income source. Most people build a website and let it sit there and for that you can collect a $50-$200 a year or more per client. Multiply that by 100 and you have a pretty good living. Plus you can market things like search engine optimisation, online marketing, domain names, PPC advertising (AdWords and Overture) and a whole host of additional services (pun not intended).

Remember too that despite the web hosting business being saturated the demand for websites is not going to stop. The Net is becoming one of the most important commerce and marketing tools around and more and more people are going to want to be a part of it. If you can service your 10 friends-of-friends word of mouth should keep you growing.

Ironically though I don’t think web hosting is a good business to market online unless you are the only player in your area. Yes nicheing your market can work, especially geographically or industry based (Brisbane’s best band hosting service for example if you are well entrenched in the music scene with contacts), but the thought of being another webhost in a sea of millions is not a prospect I liked and hence I stopped operating my business. I also hated that every client wanted a web site built for them too and that was certainly not a service I wanted to get into. However if you are a web designer then web hosting is definitely a service you should be offering for some nice recursive income.

To be successful at web hosting you must become that “reliable web hosting guy/girl” in your area that everyone refers to. Don’t expect to get random clients signing up online, that’s not an easy strategy to work since another million copycats are out there doing the same. I’m not saying it’s not possible, but you have your work cut out for you if online visitors can’t distinguish your hosting service from your competitors.

I still have a few clients from my web hosting days. Occasionally I send out an invoice and collect my cheque and every now and then I get a support email with a password request or similar. Web hosting is a great business if you love the web and love dealing with customers (which I think there are maybe like 5 people in the world that do). If you can handle the support and have the tech skills to keep things running then web hosting is a good first choice Internet business or part time occupation for some extra income. Heck I’m starting to convince myself now…

Earnings: Nowadays I bring in about $1000 per year from the handful of clients I still have but they are slowly leaving me. All of them came from friends or family referrals. A few years ago I had about 10 clients paying between $50-$250 per year and I was at one point planning on growing that to 50 clients as my main business. I stopped because I got sick of building websites and doing server migrations. If you have ever had to move 10 domains from one server to the a new one you know what a nightmare it is. I enjoyed other web projects more so I stopped proactively marketing myself as a web host and yet I still get one or two new $50/year clients coming in every now and then.

*****

That concludes my roundup of how I have made money on the Internet. I’m still experimenting now with other methods and no doubt I will start another crazy business website that may or may not go anywhere (writing articles like this always gets the idea juices flowing). Note that in every method mentioned in this article series where I have made significant money it’s been because of a lot of persistent, consistent work and I’ve been lucky starting the right project at the right time. The trick is to keep trying ideas you believe in by taking action and building something.

You can read the other parts of this series here -

Yaro Starak
Web Entrepreneur

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

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26 Comments

  • Given that we do a lot of support for a webhosting company at our office. I have to completely agree with you on the web hosting side of things.

    The company we work for have over 300 or so clients. This might not seem like much but everyday we would get at least 5-10 calls, most of them annoying and irritating. Fortunately for us, we are going to stop the support for the company very soon.

    Difference being ofcourse that this company actually have their own servers, and WE are the ones selling reseller accounts to every kid out there. Nothing is more annoying than having reseller customers call you and ask absolutely stupid questions :)

  • Great article again. LOL at Alborz’s comment! I’m actually pretty interested in going into the web hosting business. BUT, the tech support you outline does sound a little iffy – what if I myself don’t know how to fix a problem – jeesh, that would be a nightmare! It also sounds pretty annoying that a billion other Billie Joe Hosters have the same idea, but I think if I stayed and marketed locally, maybe it would work. I’m also interested in web design, so maybe this is a career for me? I love the inspiration that you give through these articles, and you’re right, it certainly does get those creative juices flowing! Ben :)

  • Rob

    I’m interested in setting up a web design company that will utilize templates in a niche market. Can you give me some advice on how or where to buy hosting as a reseller? I want to be able to easily provide about 100mb of space a domain name and 5 emails for each client. What’s the easiest way to set this up as a reseller so that it appears it’s coming from my company instead of them checking their web mail at Godaddy? Thanks for all the great articles and podcast!

  • Hi Rob – head over to webhostingtalk.com and have a good search for feedback on reseller webhosts. You have literally thousands to choose from so you need to make a decision based on reputation – don’t go for the cheapest.

    Most resellers are private label, so unless you sell to very technically savvy users they won’t realize you are a reseller.

    Good luck!

  • Interesting article series. You seem to be a busy guy on the net. Keep up the good work.

  • Just finished reading your three parter on how you have made money online.

    I found this to be a good story which will serve as an inspirational guideline for anyone starting out making money online.

    I am currently myself experimenting with the Google Adsense program and am slowly building visitors to my site, hopefully to the extent that sometime in the future i am making a decent income from it.

    Im off now to read some of your other articles.

  • Steve

    I am fresh out of high school and due to start college at WMU this fall. I want to obtain my goal in running my own business. I am an abid gamer and enjoy playin games on my free time. I was wondering if i could attain small earnings on a blog by posting my game reviews. I always tell my friends what games are good and which are bad. I hear I am good at reviewing movies as well. The dilema is that i dont know anything with html or blogs. The closest thing i know is my myspace account were i copy and paste codes provided by web sites that do so. Is it even possible for me to get started without any expeirence with web development??? I just want to make pocket money by reviewing games to help people not waste $50 on trash. i need your help Yaro lol email me back with advise!

  • Hey Steve, you certainly can start blogging without needing any web development skills. I suggest you go to wordpress.com and set yourself up with a free blog to get used to the system. Later on you can advance to a wordpress.org blog on your own server with your own domain if you keep your motivation going.

    If you need any further help you should come join us in the forums and ask any questions you have.

  • I’ve just read all three parts, and found your story interesting. Are you still a student, or do you do this full time?

  • Richer Brat – if that is your real name – have a read through my Business Timeline and you can learn all about how old I was when I started my online income earning and how many hours I work, etc.

  • Hi Yaro,
    It was great to read about you, your family and your online history.

    I have tried many ways to make money online. I currently make a little on my website (Adsense). I had great google ratings (109,000)a few months ago but started going downhill ever since I got disinterested in online network marketing. Many people are wasting a lot of valuable time trying to make money online but many more are making it. I am glad you are making money online and enjoying it.

    I noticed you are looking for writers for your blog. I never quite got into the blogging scene myself. I did get into online learning and love every minute. I finished my MA in Education and technology and am currently doing a doctorate program in education and leadership online, too. I hightly recommend it.

    I hope you continue enjoying the business world and inspiring others as you do.

    Best wishes,
    Nellie Deutsch

  • Thanks Nellie, I appreciate the kind comments. It sounds like the academic life is right for you at the moment. Good luck!

  • Jim Savage

    I like your styole. I’m still trying to figure out what I want to be when I “grow up” :D Want to start some kind of business but not sure what, so these articles have been good food for thought.

    Thanks,
    Jim

  • russ

    hi. gr8 article

  • Hi Yaro
    A great little article on the web hosting business. I could not have said it better! I am not just a reseller, I own the entire headache. I bought the servers, do the designing and everything in between. There are always those customers that stretch that small amount of dollars you try and get to the limit. It is true what you said about people just stumbling on your site and buying from you. Doesn’t really happen all that much. The customer base does come from monstly friends and family or a network you happen to be working. I have started finding grace in another part of this biz, and am trying to get out of the designing and marketing the hosting very much. Other avenue go much smoother and pay far better. Blogging being one of those!
    Great article!

  • Hi Deborah,

    Thanks for the positive feedback and I’m glad you liked the article.

    Yaro

  • [...] After talking with Collis and his success with a blog about freelancing I started thinking more about the whole freelance industry. I suspect there are quite a few freelancers who read Entrepreneurs-Journey.com given that working as a freelancer is often considered running a business. Personally I have never wanted to be a freelancer, although I have certainly worked from time to time on freelance projects, especially during the days when I ran a web hosting company. [...]

  • Yaro! A trully great blog. I should be burried in my books now studying for ACCA egzams on mondaz, but just cannot stop reading one post after another.

  • Matt

    Hey, Yaro. I found your site about a month or two ago and I think it’s great. A lot of helpful information here. Anyway, I’ve been interested in web hosting for some time now, but never knew where to begin until now. My question is about the “template designed hosting site”. Is the template something provided by the hosting company when you buy a reseller package or would I have to find a template elsewhere? Thanks for the help!

  • Matt – I just purchased some template packages, which are everywhere, or directed people to a site like template monster and told them to pick a template which I would insert their content into.

  • I have been a hosting reseller for years and I have had to change servers several times for one reason or another. Usually the problem has been email.

    It really gets ugly when you have business clients and their email goes down.

    One tip is to stay with a host that uses Cpanel for their control panel, that way a new host can move your whole reseller account in one shot.

    Ken

  • One other ‘upgrade’ is to build your own server and have that colocated. If you build the right team of marketing and technical people, your customers will be the evangelists of your brand and send you business from all over. A great article, thanks for sharing.

  • Hi Yaro, a very honest post indeed! What you described was more or less how we started in the web hosting business. It started getting more complex when we hit around 100+ clients and we had to build a system to handle renewals. Plus the fact that web hosting in Malaysia sells for as little as RM80/year (around US$25), you can imagine how competitive it is. As a hosting company, you need to be a lot more than just reliable… we started going into the market as a price competitor and were one of the first to sell at the RM100 level. We have since increased pricing because you also need to make a decent profit and reinvest that to grow!

  • Hmm, I have never taken the time to try promoting Web Hosting, but from what I’ve heard the Affiliate commissions are pretty generous. (some $100+).
    My concern however is the competitive-ness of the niche; ‘web hosting’ would be a very challenging Ranking to obtain in Search Engines.
    Perhaps targeting a less competitive term would be the key.
    Needless to say, I am really considering giving it all a go, now what Web Host should I use for my new website?!……

  • I had experience in transferring some 30 hosting accounts from one provider to another and that was truly a nightmare, it basically destroyed my web hosting “venture”(the other devastating factor was the dropping Aussie dollar late last century, as I charged my client Aussie dollar and had to pay my service provider US dollar, profit margin squeezed to almost zero). Choose a reliable wholesale service provider from the beginning(best locally as you wont be impact by the currency exchange risk later on) is crucial if you attempt to earn money from web hosting.

  • Making money from reselling hosting plans is very hard. i have tried a couple of years ago and did not make even a $1.

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