The options most usually made available to
resellers include "volume discount" reselling, discount per
domain, affiliate and private label reselling. Learn more
about each.
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.
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.
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