Introduction to the Reseller Model
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.
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