Reseller VS VPS/Dedicated (Explained)

This is a very discussed questions as I see time and time again so I decided to create a complete thread explaining both sides.
of course i may always miss something so if I did post below and I will to thread with your name. other than state your opinion below.
I will make this as short as possible so lets get started.

Why choose Re-seller:
> Reseller is alot cheaper than Dedicated or VPS which could massively effect how you start off your hosting company. Starting a hosting company requires advertisement for a real good boost which is where those $ that you saved up come in to play.
> Reseller means you are not required to have any past experience as its all managed by your reseller provider and they will take care of all maintenance/upkeep.
> Resellers usually include many other features and services which come with the plan such as 24/7 support for questions that you do not know how to answer to your customers, very powerful servers which are not affordable for a startup, Daily backup and you can usually get help for questions you may have during set up.
> can be paid for even with no customers for a good amount of time before getting customers.

Why choose VPS/Dedicated:
> sell your own VPS.
> dont be dictated on what your customers can host and what they can not host (still a bit limited by VPS/Dedicated provider)
> provide your customers with features you want them to have.
> Gain more experience
> set your own limits on emails sending.
> Offer first month for free. (not allowed by Reseller)

Licenses
With Reseller you do not have to pay for Cpanel/WHM or any other admin panel except WHMCS, While you are required to pay for all of this with a VPS/Dedicated. In addition if you went down the VPS/Dedicated route you will have other Licenses or services such as daily backup, firewalls, DDOS protection to pay for which could cost a considerable amount every month.
Over all in regards to licenses the clear winner is Reseller as its cheaper.

Upkeep costs
Keeping a VPS/Dedicated up for enough time before getting enough customers to pay for the upkeep could be very expensive which is why low budget starters are not recommended to go down the VPS/Dedicated path.
Up keep of Reseller is very cheap and can be afforded by almost anyone as there are not may lincenses to pay for and in general is a lot cheaper.

Selling VPS
Selling VPS is one of the main factors which puts of reseller customers. Selling VPS can make a lot of profit however also getting VPS customers could be a difficult thing for startups.
with VPS/dedicated you can sell your own VPS and take all of the profit from it while with Reseller you sell your reseller provider's VPS for any price you want and they give you x amount of discount.
is selling VPS profitable? yes
will be worth paying for VPS/Dedicated? yes and no. yes if you have the money, no if you dont have the money. you can alwasy start your own VPS selling later when you started to make profit from your reseller and have gain some reputation.

Skills/ Experience
Very little skills/ Experience is required with a reseller which means almost anyone can start off their own hosting company using reseller and if they cant answer any questions most hosting providers including us provide help so that they can answer their customer's questions.
however if you do not have enough experience/skills , going down the VPS/Dedicated path is the wrong thing to do as it could cause massive issues, bugs, loss of data and down time.
@VirtuBox helped with this section.

Profit
profit is the main factor on everyones mind when choosing. Well this all comes down to how many customers you can reach and how long you would be able to pay the monthly costs with no customers.
if you can reach a good conversion rate with hundreds of customers then VPS/Dedicated will have very little loss for you (also depends on your prices.).
However due to the competitiveness of the market you may not be able to reach enough customers in less than x amount of months (depends on server cost) before starting to make profit.
So to break this down:
> Reseller makes profit in much shorter time
> VPS/dedicated makes profit in longer time however makes more profit from VPS sales.

More headings to be added...
if you see any mistakes let me know please

It seems correct, but selling VPS is harder than using a reseller, because you have ton configure yourself your visualization platform and there are more risk of downtime due to a bad configuration, an upgrade etc ...
For example, VMware vSphere is a very good platform to host windows server but if you haven't at the beginning a cluster with 4/5 dedicated, you will have downtime to update the platform because it require to reboot the hosts. You will not have these problems by using a reseller.

But I'm planning to sell very soon, reseller hosting on VPS. Which mean each reseller plan will have his own VPS. Do you think it could be a good idea ? After running some tests it's seems really more performant than a classic reseller, but I'm not sure if it can interest more people.

@VirtuBox
Completely agree with your point, ill add a topic in regards to experience and skills and add those points plus some of my own.

it is not a bad ideal as long as they get enough resources for the VPS. if you do that the customer will have to pay more as long as the price is not as much as a VPS/Dedicated then its fine other wise it defeats a lot of reasons why people get reseller in the first place.
so the question is will they have enough resources on the VPS to sell good specs and if yes then will it still be at a reseller price if not its more of a VPS which has a lot of features than normal VPS.

yes it's what I was thinking. I will never buy a reseller because it's not really fast.. For the price I'm working on it. If I'm able to get good price for the panel license as a partner , it should work. But I will ask at the forum what offer is the best solution.

I cant quite agree with "I will never buy a reseller because it's not really fast".
It all comes down to the Reseller provider's servers and how many resellers they place on one server.
We a have a complete 25% free in all of our servers to ensure that abuse from one user does not effect others. so if the hosting provider has good servers and values customer's needs reseller is much better than VPS/Dedicated.

One more thing to consider is how much resources is given to each account of the reseller. e.g. we give 1gb RAM and one CPU core to every account created under a reseller hosting . so if you purchased reseller from us, every one of your customers received 1GB RAM and one CPU core.

By taking in to account all of those factors, Reseller can be a much better option.

@Marc A
Well the VPS does always have its own restrictions as you are not renting bare metal servers
however the bare metal dedicated servers do still have their restrictions by law and data center.

Luxin Host said:

Licenses
With Reseller you do not have to pay for Cpanel/WHM or any other admin panel except WHMCS, While you are required to pay for all of this with a VPS/Dedicated. In addition if you went down the VPS/Dedicated route you will have other Licenses or services such as daily backup, firewalls, DDOS protection to pay for which could cost a considerable amount every month.
Over all in regards to licenses the clear winner is Reseller as its cheaper.

Click to expand...

What is the difference between WHM and WHMCS? I have not heard about WHMCS before. I used WHM with cPanel in a VPS package.

I want to ask why hosting provider can charge their customers for Cpanel/WHM Licenses on their site without leading customers to official site of cPanel?

Does it have a contact between hosting provider and licence provider?

I don't understand these, please elaborate it.

thansk

HI @David Makogon
of course ill try to be as understand able as possible if you are left with any more questions do not hesitate to ask.

Difference between WHMCS and WHM. WHM is as you know the admin panel where everything is managed. while WHMCS is an automation service which handles orders, support tickets, automatic emails, payments etc. its using WHMCS that straight after payment an account is created on WHM. WHMCS also provides the users with their login information which they can use to auto login to Cpanel and webmail.(there are a tone of more features however i have covered all of the main ones.). Most reseller providers give WHM and Cpanel for free including us. if you see WHMCS for free via a Reseller company, its actually not but they have added the cost of it to the package.

I want to ask why hosting provider can charge their customers for Cpanel/WHM Licenses on their site without leading customers to official site of cPanel?
They are a registered reseller with Cpanel. find out more here: http://cpanel.com/partners/

Does it have a contact between hosting provider and licence provider? Yes, if the process is automatic then a module is used and if its not automatic then they manual purchase it for the customer using their partnership with Cpanel.

@David Makogon if you need more information please let me know.
Kind Regards

Great article, @Luxin Host!

Luxin Host said:

Selling VPS
Selling VPS is one of the main factors which puts of reseller customers. Selling VPS can make a lot of profit however also getting VPS customers could be a difficult thing for startups.
with VPS/dedicated you can sell your own VPS and take all of the profit from it while with Reseller you sell your reseller provider's VPS for any price you want and they give you x amount of discount.
is selling VPS profitable? yes
will be worth paying for VPS/Dedicated? yes and no. yes if you have the money, no if you dont have the money. you can alwasy start your own VPS selling later when you started to make profit from your reseller and have gain some reputation.

Click to expand...

Can you explain a bit more about how split a dedicated server into multi VPS for selling? which software did hosting providers use to install for doing this job?

Also the admin can manage all the VPS's via their management tool?

I only want to know how this works

If I agree for the security/isolation purpose of OpenVZ, for the performance it's not the same level of virtualization than KVM or VMware, and you can't get "dedicated" resources with OpenVZ as it create only containers.
It's with OpenVZ, I have already seen several time VPS 2GB RAM + 1GB RAM Extra. Which means the web hosting providers use OpenVZ and haven't any idea about how much resources can be used by your VPS.
To provide an amount of resources dedicated for a customer, it's needed to use a virtualization platform like Proxmox, vSphere or Openstack. It require more resources but when you sell a VPS you can say VPS 2GB RAM, and not +50/-50%

Luxin Host said:

Skills/ Experience
Very little skills/ Experience is required with a reseller which means almost anyone can start off their own hosting company using reseller and if they cant answer any questions most hosting providers including us provide help so that they can answer their customer's questions.
however if you do not have enough experience/skills , going down the VPS/Dedicated path is the wrong thing to do as it could cause massive issues, bugs, loss of data and down time.
@VirtuBox helped with this section.

Click to expand...

I heard some hosting experrts, they have 10 year experience in web hosting field, how many years are required for a web hosting provider to manage a hosting site and selling packages to customers?

I'm sure this require a person a lot time to manage their own hosting company.

A lot have been said above. I would add that "Reseller Hosting" is term that lacks technical specification. From technical perspective it is a Shared (Virtual) Hosting. Web hosting automation software such as cPanel and other server automation panels just have a administration layer for the purpose to manage a number of Shared (Virtual) Hosting accounts.

Unlike Virtual Private Servers (created through virtualization technology) or Physical Dedicated Servers (also called bare-metal), the Reseller Account is just Shared Hosting. So it is not point of comparison from technical point of view. It is just to be explained to anyone who's new to web hosting.

Well, I did not even mentioned that "Reseller" would be applied as a term for any niche in the web hosting market. We would discuss a CRM automation for reselling dedicated servers or VPS for example. So this would either cancel or add to the current discussion. I would say it adds to it

Reseller is more for new companies who are starting out.

My advice if you are already proficient and able to use the VPS, then just use vps. Because VPS can install and uninstall the plugin according to your hosting needs, compared with reseller hosting should follow the features of the hosting company

As far as I am concerned if you are starting a hosting company and don't know anything about server administration, then you are in the wrong business. This is a very serious issue in our industry (that I am planning to create a new thread on specifically) that has been threatening consumer data security for a long time as well as defaming the industry as a whole. It just doesn't seem to make sense that one can sell a product and not really know a thing about it other than what a wikipedia article can tell them. It seems that people think that because they run an "internet business" that they don't need to have the know-how and knowledge of their product and industry as if they had a physical business where they have to face people in the real world. Quite scary to see how big the bandwagon for resellers has gotten, especially when it is appropriated by well known hosting companies and individuals in the industry.

You will benefit from the reseller hosting and do not need to think about security along with managing servers. But my question is, Are you going to continue to be a reseller hosting?