Best Way to Monetorize and Run your Free hosting!

[enoughhosting]

Alright, I am setting up my free hosting service.
Its cPanel, 180+ Free Scripts installer, Sitebuilder 1000+ templates.
20gig disk space and Unlimited every thing (practically).
Proposed Domain and subdomain hosting. Ad free hosting.

Now I cant run this hosting for ever if I am not generating revenue from it.

I thought of several ways to cover up the costs and even make profit.
Please advise on my ideas and put your serious comments! No joking here! I am serious about this biz!

1) I can do Forum Post2Host service. But I am not sure how much revenue this model can generate.
Bcs, If my server costs $100 per month and hosts 5k people. I have serious doubts that this much users can generate the required costs even if they give 10 posts per month. I also find it boring on users part to keep on posting on a forum to keep their site up.

2) I can offer only subdomain hosting only. In this model, there is hope. Lets say, my $100/mo server can serve 50,000 visitors per day. all of them are seeing my top domain and a percentage of them visits my top domain site and see my google ads and clicks there. If I assume out of this 50k visitors, 1000 visits my main site, then I can expect a revenue of $100+ from google sponsorship. That is BREAK EVEN!

However, this does not say how I can do domain hosting in this model. Bcs they will be a waste for me as the domain hosting accounts wont bring any profit for me.

3) This is my most promising method. I dont do banner ads on my clients site. But I add branding ad on every page that I host, domain or subdomain. At the end of every page, I willl add a small link saying POWERED BY ABC FREE HOSTING.

Unlike my second plan, I can do both subdomain and domain hosting in this model and expect $100 plus revenue per month/server.


SO TELL ME WHATS THE BEST DEAL TO START UP MY FREE HOSTING ?

 

[wswd]

Your first fundamental problem, is that there is absolutely no possible way you are going to get anywhere close to 5k users on a $100/mo. server. Not going to happen. You're going to have issues putting any more than a few hundred sites on a server without RAID10, etc., and you aren't going to get that for $100.

Ads don't work, because there are 100 other hosts who provide hosting without ads. Your best bet are paid upgrades (people looking for free hosting are usually looking because they don't want to pay for hosting), but you can't count on many people upgrading. The next best bet is P2H.

 

[Seraphim]

For advertising on forums, a two-banner setup will yield about $0.45 per gigabyte of traffic used based on the statistics of my existing clients. But that assumes that your server can handle that kind of traffic, and that you can get enough consistent traffic to make that kind of revenue without blowing your server to bits from surge loads. How many posts per person per month to make that kind of traffic is highly variable, mostly depends on the type of forum and how it is structured. But considering most plans are based on 1GB of space and 10GB of bandwidth each month, you either need a really low-cost backend to make a post2host profitable, or your post counts are going to be annoyingly high and drive users away.

But if you're worried about short term profitability, let me give you this one short tip:

Don't start a host at all.

I've been doing this for three years, and I right now while writing this have in front of me the first check I have ever gotten from Google Adsense, a payout of $100 that cost me 3 years of running my company and $1500 of out of pocket covering operating costs in order to get. Not at all profitable or economical, but that's how this type of business is in your early years when you don't have a large client base.

Now if you sell paid hosting as well as doing ad driven hosting, your paid clients will be a valuable stable income to help build up your finances. At this point in time about half of my monthly expenses are paid for using the income from my paid clients, so I don't have to put in as much out of pocket each month to keep the servers powered. In fact this month is actually the first time in 3 years that I've been able to operate on 100% of my company's own profits, mainly because of the ad payouts that have taken place from Adsense and Adbrite.

Free users are fairly easy to get signups for, without any advertising at all I'm pulling 2-3 new signups a day. But plan on for every thousand signups, only one of them actually uses the service. The others are all spam signups searching for exploitable services to use sending junk mail or other misdeeds that can get you in a lot of trouble if you are not vigilant about removing them. Probably the worst offenders are the phishing sites, and if you leave one of these alone for more than a day it can get your server's IP blacklisted as a malicious site.

Hosting is a highly saturated market. Not only will you be hard pressed to come up with a good sales pitch to get noticed at all, but you also will constantly be undersold by shady people that advertise unlimited services knowing full well they can't actually deliver on them. There is no such thing as unlimited, advertising such is blatant lies. Only reason it gets overlooked is because the terms of service is packed full of clauses that say they can kick you out for whatever reason they see fit if you ever actually do use more than a few gigabytes of bandwidth at a time.

Also there is a scale effect involved. The smaller you are the harder it is to make ends meet, that's just how this kind of thing works. But if you can find a comfortable minimum and make enough money at that point to move up, you'll end up with a very robust platform and can maintain a good reputation that will lead to further growth.

 

[Sitebee]

It`s not easy to make a free hosting provider profitable, I built up a free hosting provider on a post2host model and it took 2 years to break even.

Adsense does not pay enough to run a free hosting provider.

I used other advertising programs aswell:

Text Link Ads
Infolinks

To qualify for those programs you also need to have a good amount of traffic coming to your website and reputation (A minimum pagerank and page authority)

If your planning a post2host model try and diversify your website with lots of additional good content, that will rank in the search engines and will bring in more traffic. Just having a few pages about the web hosting and forum are not going to cut it, believe I know!

Lastly though when the global recession hit I saw ad revenues drop significantly and they never recovered to a profitable state again.

I would also suggest your staart small, maybe start with a reseller account, then jump to a VPS. Theres no need for a dedicated server for atleast a year unless your can quite comfatably afford so, then there is the amount of time you will need to dedicate in managing the hosting provider and support requests.

 

[sander k]

Don't start a free host if you can't affort it, I have been a webhost for 15 years, the first 11 years I was just staff of 2 companies and the last 4 years I was a (paid) webhost myself. I have had my own free hosts next to the paid host tho.

But it has been a very hard couple of years putting lots and lots of money in with not as much comming out of it. The last year or so I had a monthly profit of around €200, but thats taken over 19 dedicated servers!

Every 11 year old can start its own "company" now a days. The real companies can't fight their prices and the client doesn't know that his host is just some random kid.

I sold my company and got a nice amount of cash for it, but not ever close to the money I put into it in those 4 years.

 

[enoughhosting]

Hmm, so every one is even against the idea of opening a free host!
I find it pretty profitable, based on my calculations.

It does not matter, how many clients I put on a server.
My $100/mo server can easily sever over 50k unique visitors daily and over 100's of thousands of page views.

Now If I brand all those pages with my small link at the bottom of every page and point them to my hosting site, then I can break even if only 1000 of them visits my main hosting site. That is break even for one server. Now I can setup 1000's more

Any objections? Eye openers ?:cool2:

 

[wswd]

You sure about that? You would be amazed at how quickly even very basic WordPress sites chew up I/O...especially in a single drive setup, like you are planning on using. You're also assuming you're going to get that kind of traffic, and that 1000 of them will visit your main site every month. Sure, it's only 30 a day, but how many people are really going to click on the link going to your homepage? Will other people's users really be that interested in visiting your site?

If you think you have the answers, then do it! 10 months from now, when you're close to $1,000 in the hole, come back and let us know how things turned out for you.

 

[Seraphim]

Hmm, so every one is even against the idea of opening a free host!
I find it pretty profitable, based on my calculations.

Calculations are usually just idealized estimates too.

According to my calculations back when I was getting started, I was going to make close to $500 a month per server, putting between 50-100 people to a server doing paid hosting only.

In reality, 3 years of hosting has managed all of 4 paying clients, and perhaps 20 free clients that legitimately use their services. Most of the signups you get every day? Spam. Bots that attempt to sign up to anything that has a html form on it, and of these that actually do use the resulting account almost all of them instead abuse it and have to be deleted again.

The other thing is most users get highly conditioned to seeing ads on sites. Although 1 in 1000 might sign up on your site if you can get them there, less than 1 in 10,000 are going to click off of a content page they are looking at to look at your stuff.

Oh and we haven't even brought up the best part.

At regular intervals, you will be contacted by people who want you to simply give them untold amounts of space and bandwidth in exchange for a mere linkback or even nothing at all. And many of these people have an attitude like they are entitled to doing this, since you own a business you must be rich enough to simply give them whatever they want.

Tell them yes and they'll suck your business dry, you'll go bankrupt trying to provide for them.
Tell them no and they give your company poor reviews and a bad name to discourage other people from signing up.

Are you prepared to deal with the consequences of that?

Do you have sufficient money to register your business according to your local laws? For instance my host is a registered LLC, filed with the Secretary of State for my region. If you don't do that and keep track of your income and expenses as a business, you could get yourself arrested for tax evasion and other financial crimes depending on where you live.

So many people look at this kind of business as a source of easy money. It's really not, in fact any money you do make in hosting will be the hardest earned money you'll ever get. It's no wonder that all kinds of startups find themselves short lived, people realize it isn't all they thought it was and give up.

There will be people who want you to give them 100GB of space and 1TB of bandwidth, but don't want to post2host or put your ads on their site or want all that for their pornsite in exchange for a link back to your own site. Do you honestly think someone browsing a pornsite will ever click off that pornsite to check out a sponsor link? The traffic sources for your own stuff start getting really thin really fast when you actually measure the numbers.

 

[enoughhosting]

Ok. All ideas are now in the drain as per your suggestions. I do appreciate and value your ideas though.

One more thing to think about. How is x10hosting and 100 others big hosts doing it for free and growing in a profitable way. Anyone knows their secret ?
Their business model Feels very unclear.

 

[sander k]

They kick websites of their services that use to many recources. x10hosting is a very good example by the way. They use spambots to keep their good name in Google.

As there are more possitive posts on forums (bots) about them then negative posts.
They are a terrible host tho.

 

[wswd]

Ok. All ideas are now in the drain as per your suggestions. I do appreciate and value your ideas though.

Not to discourage you, rather we just want to let you know what you are getting yourself into. If you want to do it, and have the finances to do it, go for it! You have to remember as well that even if you would hit the numbers you are projecting, how long as that going to take? It's not going to happen in a month, or two, or three, or perhaps ever. So you have to have that $100 to spend every single month.

Many free hosts (the successful ones) are backed by paid hosts. When we ran a free host, the $250/mo. for a server wasn't a big deal. We had capital and cash coming in to support that without any difficulty. When you are running a business and can show a $3000/year business expense, that's not a bad thing for taxes. We also already had support staff to manage the servers, etc. The reason we got out of the business was exactly as Seraphim mentions...the abuse. The abuse from some people got ridiculous, and our techs. were spending much of their time combatting abuse, and porn, and warez, and everything else.

Another option for you would be to start with a VPS and work up from there. A decent VPS from a reputable provider with cPanel is still going to cost a good amount of money, but certainly not $100/mo. When you outgrow your VPS, moving to a dedicated server is a fairly easy process. With cPanel, moving the accounts is completely automated.

 

[Seraphim]

One more thing to think about. How is x10hosting and 100 others big hosts doing it for free and growing in a profitable way. Anyone knows their secret ?
Their business model Feels very unclear.

Lots of fine print that allows them to get rid of anyone that doesn't make money for them, and cheap tricks used to prevent anyone from smearing their reputation over that fine print.

Economy of scale is also huge in this business, with larger providers simply having high enough cashflow to go and drop $5000 on a brand new server that will let them sell hosting cheaper than their smaller competitors can break even on. Starting from the small scale like you'll be doing you don't have that luxury, expect to have to really work at it to make a profit at all and count on investing your own money for many years to get anywhere.

It is possible to do it, but it's a long road with a lot of hard work. Make sure you have a plan and stick with it or you'll get yourself in trouble.

Because the worst nightmare for a small host is to get a phone call from your provider at 2AM that your server got attacked and had to be shut down, and they want $1500 in bandwidth overages from you before letting you get your stuff back- by that point getting your server put back online is out of the question. And it does happen, it happened to me a few years back. Sometimes I wonder why I stuck it out.

I do know though that you can get a decent quality VPS with CPanel for all of $30 a month, that will be more than enough for you to get started with. Then if you decide not to go through with it, you aren't out quite as much money.

 

[enoughhosting]

Personally I am some one who made good profit out of free and paid hosting both.
My initial investment was not more than a reseller account, $300/year!
Even back then no one told me, that I would even make a dime.
Every one discouraged, But I had to be on my own belief and biz ideas.

But more than five years back, I shut down completely as profits started drying up.
The main reason why I shut down was due to the fact that my business model went bust as lots of big free hosts (initially small at that time most likely) started offering both domain and subdomain hosting without ads.

I know however, that its still possible to make good money out of free hosting if you have a good business model and put a lot of hard work into it. Yes, your business model is the secret recipe, no one is going to share that on this forum. I dont believe that you will need a lot of money though, bcs u will end up wasting it in most cases. If a small model works out, only then you can put in the big cash and grow it over night, thats the easy part.

What surprises me is that, on this forum, there are only pessimists, the ones who are making any profit wont open their mouth here. Maybe laugh at my brain storming efforts.

Thats ok but makes me feel lonely, a bit!

I think, now I have a good business model as I discussed on the first post. The one where I give branded hosting, so that people know who is hosting the site for me and let me grow.

The problem now is that I cant put up a banner ad on all my freely hosted account, I tried with mod layout , installed the mod but due to some htaccess issue, its not working.

Anyone has got any ideas how I can put up a small link on the end of every page that I host ? I am even willing to pay if some one would help.

 

[Sitebee]

I think Ipanel has a mod where you can force a link on account users pages but be warned if you do that you do that your probably going to affect the google SERPS of your main website. (too many c class links)

If you do I recommend making the link a nofollow.

 

[enoughhosting]

I am not thinking about usint iPanel. Their support wont even reply to my questions. I think they are dead. No point in risking on their panel.
I am about to use www.thehostingtool.com instead. It sounds nice, but looks a little buggy. Also dont have forced ads built in. Got a addon, that sounds buggy too.

 

[wswd]

What surprises me is that, on this forum, there are only pessimists, the ones who are making any profit wont open their mouth here. Maybe laugh at my brain storming efforts.

I opened my mouth. I made all sorts of profit as a free host. In fact, I'm still indirectly involved with one that gets over 10 million page views a month. I gave you my opinion, but you didn't like what I had to say.

I'll say it again, if you think your system is going to work, then go for it! Nobody here is stopping you from opening a free host and giving it a try.

 

[Seraphim]

What surprises me is that, on this forum, there are only pessimists, the ones who are making any profit wont open their mouth here. Maybe laugh at my brain storming efforts.

Thats ok but makes me feel lonely, a bit!

It's not so much a matter of being a pessimist, in fact I tend to run on the other side of the spectrum and look at the possibilities.

What you are seeing is a very harsh reality about the world of business, that there is no such thing as an easy ride.

If you really want to do well in this and have the dedication to keep at it, you can indeed make it possible. Just the fact that I'm still standing after all I've been through shows that I still believe I can do this. But people should know what is really involved before getting into it, because a lot of people think that hosting is easy money.

There are mods for cpanel and the like to force ads, and also a few htaccess tricks exist to do the same thing. But you'll find a lot of site layouts break when using these, and the ads often end up in less than ideal placements.

I usually just place mine manually, and on some sites even let the client decide where it will fit in their layout within a defined set of placement guidelines. That way I know it fits smoothly on their site for better turnaround. Ultimately my free clients make more money out of a given unit of bandwidth than I get from my paying clients, but I do not yet have enough traffic for the ad revenue to pay out at regular intervals. Mind you that is changing- as the sites I host grow and I add new ones my monthly traffic counts continue rising.

 

[enoughhosting]

I opened my mouth. I made all sorts of profit as a free host. In fact, I'm still indirectly involved with one that gets over 10 million page views a month. I gave you my opinion, but you didn't like what I had to say.

I'll say it again, if you think your system is going to work, then go for it! Nobody here is stopping you from opening a free host and giving it a try.

Noo, I really value your comments and agree that you are telling the hard truth. I am no come and go free hosting provider. I sustained years of free hosting before shutting some of my free hosting but I know, its still profitable, if it can be done properly. But the challenges are daunting.

 

[wswd]

Noo, I really value your comments and agree that you are telling the hard truth. I am no come and go free hosting provider. I sustained years of free hosting before shutting some of my free hosting but I know, its still profitable, if it can be done properly. But the challenges are daunting.

I say do it then! Absolutely go for it. As long as you know the potential issues and can afford the server in the meantime, absolutely do it.

 

[Sitebee]

Are you going one man band or do you have some staff/volunteers on board?

I don`t mind helping you out with advice and i`m sure some of FWS users on here would too, from what I gather you have the dedication.