In that thread I explained that I earn roughly 30% per sale as a reseller with my store Website Palace.
That doesn’t sound like a lot of money if you consider web hosting and domains are pretty cheap, right? So a $10 hosting package is only going to earn about $3.
Someone asked why resell when I could earn much healthier commissions as a hosting affiliate.
While it is true, hosting affiliate programs can be very generous (I’ve seen commissions as high as $150 per sale.) However, the benefits to reselling outweigh regular hosting affiliate programs by far, and here’s why…
1) Many hosting affiliate programs pay a flat rate commission. No matter how much a person orders, your commission remains the same.
And once the cookie expires, you won’t earn anything else if that person comes back to buy additional products.
When you resell, that customer becomes yours for life because they are purchasing from your branded reseller store.
As they continue to renew their domains/hosting and buy additional products from your store, you continually earn with every purchase for every product.
As your customer base grows (mine has been growing since 2002), your earnings will continually snowball — even though you are only earning a small percentage per sale.
2) Many reseller programs allow you to customize portions of your store (header, receipt, etc.) This allows me to offer incentives (freebies) that help drive more business to my store.
3) More control. Set your own prices so you have full control of your profit margin.
Reselling has been the lifeblood of my business since 2002, and it’s all because of the residual/passive income. It was the main reason I was comfortable quitting my 9 to 5 back in 2006.
A lot of you probably assume my business is based on AdSense or SiteSell (Site Build It!). Not even close. The residuals from reselling domains and hosting make up a substantial part of my earnings.
I chose Wild West Domains (GoDaddy) because they were one of the only reputable reseller programs back in 2002, but there are many others to choose from today. Hostgator also has a very popular reseller program, so you should check them out too.
I’ve been pretty happy with GoDaddy. They handle all my customer support and the perks for top resellers are nice too. In January, I was invited to an all-expense-paid trip to the FireSky Resort in Arizona for a reseller conference.
Quick Note: As I’ve said in other posts about reselling, I don’t want you running over to sign up as a reseller just because you’ve been wowed by this blog post. The main reason I have been able to do well is I have an audience that fits the hosting reseller business.
If your site is about fashion, it’s obviously not going to convert the way mine does. However, if your site targets Webmasters/Bloggers/Internet Marketers, this is something you may want to consider.
Downsides to Reselling
Just like any program, there are upsides and downsides…
1) As a reseller, you cannot charge anything lower than the parent company. So of course, you may lose business to more popular, well known companies because your prices are higher.
This has never been much of an issue for me because I offer incentives (free templates, a getting started guide, etc.) and I try to provide value to make up for the markup. It’s important that my customers get value for their money.
2) You won’t have the brand awareness of many of the larger companies so people may be skeptical of purchasing from you. This is where building up your own credibility and integrity through teaching and informing comes into play. When people trust and like you, they don’t mind supporting your business.
3) You have more control, but not total control. Even though reselling provides you more control than being an affiliate, you never have total control if you don’t completely own the company/business.
In spite of the downsides, I have no regrets about becoming a reseller. In my opinion, the positives outweigh the negatives.
So while those $100 hosting affiliate commissions may sound tempting, if you are looking for long-term/passive/residual income, you might want to consider reselling.
I’m all about portfolio diversification and building multiple streams of income. This is just another way to add a component of passive income to your monetization mix!