Why Web Hosts Abandoned Resellers

For a while now, hosting providers have been giving resellers the cold shoulder. Some, like Hostgator, have taken them off their front page. Here’s a complete list of reseller hosting coupons from those that still exist. Others like Bluehost have outsourced their reseller business to companies like ResellerClub as shown here:

Bluehost Abandons its Resellers
Bluehost Dumps its Resellers onto Someone Else

Resellers also receive less attention, features, and customer support compared to ordinary web hosting customers. Buy why?

The Exception: NameHero Hosting

One web host that still extends its full support to resellers is NameHero. Unlike others, they take care of their resellers. Find out what makes NameHero reseller hosting so special.

Click below for the highest NameHero reseller discount:

So what has driven the others to abandon resellers?

1. Lower Profit Margins

Resellers purchase web hosting in bulk. As a result, the typical reseller account is a lot more expensive in terms of storage, bandwidth, and CPU. Many web hosts operate on pretty tight margins because the industry is so competitive. So when resellers lower their ROI, they’re understandably concerned.

The reason why hosting providers give resellers these discounts, is because the resellers need to make a profit too! If web hosts simply provided bandwidth and storage space at the same price that they give to everyone else, how would resellers make a profit?

So at a fundamental level, web hosts and resellers are at cross purposes. Resellers make a profit out of selling a web host’s resources, that the hosting company would rather sell directly to customers.

2. Resellers are a Strain on Customer Service

Customer support is the single most expensive component of web hosting. So when an account issues an inordinate number of support requests, it’s less profitable for the web host. A single reseller account has a huge number of underlying customers. And this generates a proportional number of tickets.

This would be bad enough by itself. But combined with the fact that resellers are less profitable in general, this is a double whammy to web hosts. A low ROI resource that generates more than its fair share of support cases – up to four times as much according to one web host I spoke to.

Given all this, is it any wonder that resellers have gotten the shaft, and that web hosts are not too keen to either promote them, or treat them with the same urgency that they show their regular customers?

3. cPanel Licensing – The Nail in the Coffin

In mid-2019, cPanel announced a change in its cPanel pricing that made it so that web hosts would be charged on a per-account basis instead of a single license for the entire VPS or dedicated server.

In one stroke, this sounded the death knell for reseller packages. Since a single reseller uses so many cPanel licenses, a web host would now have to pay for each of them! As it was, resellers were less profitable for the reasons mentioned above, but the cPanel licensing change coming on top of that, broke the business model entirely.

You could almost say that it was no longer worth the time and effort to maintain resellers, and web hosts slowly started to phase out their plans to focus on more profitable services.

So What do Resellers Do?

As mentioned earlier, NameHero is a rare web host that still takes care of their resellers. They have extremely personalized customer service, and offer a bunch of features that resellers can transfer over to their own customers for free. Such as:

  1. Automatic backups and restore (About NameHero backups)
  2. LiteSpeed web server (What is LiteSpeed?)
  3. Free malware scanning
  4. Free server caching on all their plans, and more

Once again, here’s the deal for NameHero reselling:

With a little bit of elbow grease, you can grow your reseller hosting business and turn a regular profit every month. Just make sure you choose the right web host!

About Bhagwad Park

I've been writing about web hosting and WordPress tutorials since 2008. I also create tutorials on Linux server administration, and have a ton of experience with web hosting products. Contact me via e-mail!

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