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When is a VPS / hosting business profitable

When is a VPS / hosting business profitable

RaymiiRaymii Member
edited August 2012 in General

**I'm not going to start one up mysqld, lets be clear, I've outgrown summer holidays... **

But I was wondering, when is a VPS / hosting business profitable? You need servers, colo, bandwidth, solusvm / whmcs / cpanel / directadmin etc licenses, pay for staff, pay for office (or parents cellar), and that all returns monthly. How do small businesses make it around? Maybe people can give some numbers?

Quis custodiet ipsos custodes?
https://raymii.org - https://cipherli.st
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Comments

  • It took 10 months for our business to become self-sustaining. Up to that point, it was a massive leech on our personal incomes.

    I am no longer affiliated with IPXcore.
  • Don't forget when you start actually paying yourself a decent salary.

  • gsrdgrdghdgsrdgrdghd Member without signature

    "profitable" depends on how much you want to earn.

    For example i (or anyone else) could just rent an OVH/Hetzner/whatever dedi, put some VPSses on it and make like 50% profit of the dedi costs.

    Some people think thats worth it (you see new OVh hosts popping up every other day) and some people don't think so. Its really up to you.

  • RaymiiRaymii Member
    edited August 2012

    Profitable as in you do not put your own money in it, and it makes at least 100 bucks a month (euros, dollars whatever you pay with, gold bars?) Maybe even Salary like assad mentioned.

    Quis custodiet ipsos custodes?
    https://raymii.org - https://cipherli.st
  • AlexBarakovAlexBarakov Member
    edited August 2012

    Depends on what you deem profitable.

    It has been one year since the launch of Liquid, It is profiting, but not profiting nearly enough for me. Personally for me profitable would be 3k+ monthly pure profit for me only (after paying for staff, servers, colo, network, IPs and everything). This is enough money to have a good life in Bulgaria. The same number would seem like nothing to someone living in Western Europe / USA.

    Hosting is not a get rich - fast scheme... It takes years. And I am prepared to keep it running for as long as it is needed, untill I reach my goal and I know that I will, someday. Actually if I count the investments I am making into it at the moment, I can not say that it is profiting.

    Disclosure: I work for Query Foundry LLC.
    I own DA International Group Ltd.
  • @Raymii said: But I was wondering, when is a VPS / hosting business profitable?

    I find having income that exceeds expenses helpful for being profitable.

    Hostigation High Resource Hosting - SolusVM OpenVZ/KVM VPS
    Thanked by 3Corey ElliotJ jamson
  • From the first month really, After I had everything planned and sorted, I went out and purchased the first server, I didn't think it was going to make our opening date, so I went out and bought another one in phoenix (Infinitie.net) and then 4 hours later, The first server got setup.(I was pretty annoyed) but never the less they both sold out quick within the first month.

    Aslong as you shuffle a node a month atleast and maintain a current client base(Long Lasting Customers), I would say it is profitable and a healthy business.

  • It all depends. For example, profitable means not only making a paper profit, but also counting your work in it. If we judge from the accountant perspective, yes, it is profitable if you make a cent more than what you put in, and the state will quickly take it's share from that. From a romanian point of view, if it makes 500 Eur I consider I earn a decent income, if you are in US/western EU 3000 Eur is probably little. Things differ in other aspects, is it profitable for everyone ? The society ? I mean, you help ppl make savings in power, ISP costs, hardware, time, worries, etc ? Is the power used less than if ppl were running some machines at home ? Is the risk lower ? This is one of the few areas of business where small investments can help ppl make a living, save energy and cut costs, while getting a more stable and secure service. I think it is profitable in general, I think some profit too much, while others work too hard for too little, good hosts are not really appreciated and many lies are going all ways including scams, but still, this is saving money overall, saving resources and creates added value. A pass mark from me. M

    Who's General Failure, and why is he reading my drive A: ?

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  • JarJar Member
    edited August 2012

    Different business plans are going to have a different time table for profit. There are a lot of factors here, and you also have to try your best to account for circumstances that are beyond your ability to predict.

    I can tell you that my business plan is about long term profit over short term, and the plan involves increasing quality of services and reducing overhead over time. For example, one spot in a rack is generally going to cost me more than a whole rack. Renting IPs is going to cost me more than owning IP space. Short term getting a rack and IP space would cost me more, and could drown me if I didn't build fast enough, but by moving up to that later on I can begin increasing my margin. It isn't common practice to share one's business plan openly, but I expect that nothing I said is at all unique to LEB providers.

    But the main thing comes down to this: It's profitable when it isn't hurting you, you are prepared for emergencies, and you love what you do. Just don't quit your day job too soon ;)

  • @jarland said: Just don't quit your day job too soon ;)

    It may never be profitable if you dont... It depends what your day job is. M

    Who's General Failure, and why is he reading my drive A: ?

  • From my point of view a vps/hosting biz is profitable one it covers its basic operational cost's, that would be: hosting servers or collocation license cost's 2 staff members communication/transportation in case of traveling to the data center if you collocation

    Thanked by 1EricCubixCloud
  • The first few months, don't expect to earn anything. You will indeed lose profit, but you have to lose some to gain some, am I right? Right now I earn about $30-$40/Month from extra profits.

    [email protected]
  • You also have to be prepared for bad times.

    4 months after the launch of Liquid, I was profiting over 2000$. 5 months after that I was on a loss. Now everything is getting back to normal.

    Disclosure: I work for Query Foundry LLC.
    I own DA International Group Ltd.
  • What happened Liquid then my I ask?

    Hosting is no way a get-rich fast business. It takes money, time and knowledge.

  • @apollo15 said: What happened Liquid then my I ask?

    Many sleepless nights, 14 hours per day working, new bussines plan developed and a lot of money from my pocket went into it. Now it is slowly, but steady growing, just as I wanted it to be :)

    Had some really rought months, that literally emptyed my bank account, however I was prepared for it, which saved my ass.

    Disclosure: I work for Query Foundry LLC.
    I own DA International Group Ltd.
  • @Jeffrey said: Right now I earn about $30-$40/Month from extra profits.

    that doesnt sound like much, even on romanian standards. M

    Who's General Failure, and why is he reading my drive A: ?

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  • flyfly Member
    edited August 2012
  • That buys my crates of coke every month, and constant supply of Rice Crispy Marshmellow Bars.(Mmm, yum..)

    @Jeffrey said: I earn about $30-$40/Month from extra profits.

  • JackJack Member

    @Jacob said: That buys my crates of coke every month, and constant supply of Rice Crispy Marshmellow Bars.(Mmm, yum..)

    Just think if you had saved that money instead of buying coke you could of paid your invoice @ BuyVM on time ;)

  • JarJar Member

    Coke? I buy red bull by the 24 pack. Staying awake costs me more than running my business...

    Thanked by 2Corey Randy
  • I prefer Relentless/Mountain dew, If I just want a energy drink.

    @jarland said: Coke? I buy red bull by the 24 pack. Staying awake costs me more than running my business...

    Thanked by 1Jar
  • 14-15 months for me.. :|

    Yes! I'm with Carstensz Pyramid Server Now stop asking me please :D
  • CoreyCorey Member
    edited August 2012

    Ours is profitable, but we only use the money if we absolutely have to... otherwise all the money goes back into YDGH.

    First year was slow for ydgh, the following year was great but then we had some issues that cost us money out of our pockets for several months after that.... just now getting back to that 'great' status. So I agree with Alex - you need some money to be able to stand a chance for when murphy comes at you (no not just server problems).

    BitAccel - OpenVZ VPS / IRC,VPN,Anything Legal & Unrivaled Support!
  • DamianDamian Member
    edited August 2012

    @Corey said: but we only use the money if we absolutely have to

    Same here. We will reach a point where we can have a monthly pay, but at the moment, everything gets recycled back into the company.

    We do spend a bit on ourselves; for example, I bought the latest Indie Gala game pack, Adam bought a new monitor, and we sent t-shirts to our new staff members. Gotta have some kind of 'reward' every now and then for the time and stress applied towards the business.

    I am no longer affiliated with IPXcore.
  • @Corey said: we only use the money if we absolutely have to

    @Damian said: Same here.

    So do I. Generally, I see this as the more reasonable action, to keep the money in the company, instead of withdrawing every single $ .

    This is competitive business - new things need to be introduced, hardware upgraded, etc. if you wish to have a chance to stand out of the norm.

    Disclosure: I work for Query Foundry LLC.
    I own DA International Group Ltd.
  • JarJar Member

    As long as you're having a blast and it's sustainable. When me and Ryan got into shared hosting I said "I don't care if this is a loss for the rest of my life, I don't care if I'm the only customer, this is what I want to do." Obviously I don't feel that way about vps, if I was the only customer on a node taking a small slice...I'd question my own sanity, but I'm in no hurry to pocket a dime from it.

  • @Damian said: sent t-shirts to our new staff members.

    How do you justify staff if you have a day job still? I keep my day job since I like it and I can work it and keep Hostigation going without issue, and still so much free time I get bored from time to time. But I have no reason to stay at my day job other than liking it, the money is less than 10% of my monthly income.

    Hostigation High Resource Hosting - SolusVM OpenVZ/KVM VPS
  • @miTgiB said: How do you justify staff if you have a day job still?

    If the staff costs less monthly than his daily job, it is justified, isn't it?

    Disclosure: I work for Query Foundry LLC.
    I own DA International Group Ltd.
  • @miTgiB said: How do you justify staff if you have a day job still?

    The business makes enough to cover staff (they're paid on a per-ticket basis, not on a base-rate basis), but not enough to cover our living expenses.

    @miTgiB said: I keep my day job since I like it and I can work it and keep Hostigation going without issue,

    Same here. My day job is giving me massive amounts of management and business experience, which I find I can apply to IPXcore.

    I am no longer affiliated with IPXcore.
  • @Jeffrey said: Right now I earn about $30-$40/Month from extra profits.

    I make more profit giving stuff away for "free".

    FreeVPS.us - The oldest post to host VPS provider
  • We've been doing pretty well from day 1. Covers living expenses for myself and some of our other staff, plus a decent little chunk going into the warchest.

  • RandyRandy Disabled

    to start a business:

    you need to have a good budget

    you need to know what you are doing

    you need to stop being lazy

    you need to stop being greedy and accept everything money from fruads (which is that lucky, it happens)

    yes, you will make profit, it takes time to get the ball rolling

    and it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep+it takes hard work and + effort + few hours of sleep.

  • @Randy That's the first post that i have seen from you that makes sense to me.

    Congratz.. =]

  • Yep, no more Ranty... M

    Who's General Failure, and why is he reading my drive A: ?

  • RandyRandy Disabled
    edited August 2012

    Thank you M And jacob;-)

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