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Is there still any demand in the budget VPS market?
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Is there still any demand in the budget VPS market?

hohlhohl Member
edited June 9 in Help

Hey there,

I'm running a small software development business for about 10 years now. (Providing different things such as web development to enterprise applications.) We are also usually providing hosting of the applications for our clients ourself. That means, we run a 1/3 rack in Germany and operate a Proxmox HA cluster on some HP ProLiants. So, we are by no means network experts, but running these servers for our clients was no big deal so far (virtualisation and high-quality hardware does most of the job anyhow).

Granted that there is quite a bit of spare capacity available right now - both server equipment and humans - I played with the thought of spinning up a small sub-brand for low-budget VPSs. I could for example provide KVM with 4GB, 1 Xeon-core, 40 GB SSD (RAID 10) and daily off-site backups for ~6€ per month which seems about the price range of the cheaper competitors, while still making some profit. SEO and web advertisement knowledge would be available in-house too. Creating some fancy branding (better than some of these discounters which still look like they got their design back in 2000) and spinning up a billing panel based on Blesta wouldn't be too hard either.

The more important question though is, is there still demand for such services in the budget-VPS area? That's why I'm asking you guys: would you buy from a newcomer instead of one of the established ones if it would be just a few cents cheaper each month? Or, would there be anything you are missing from existing budget-VPS providers?

Happy to hear your opinion. Feel free to be direct, I'm happy with an honest answer, even if it is just "forget it, no chance".

Thanks already for any feedback!

Thanked by 1o_be_one

Comments

  • vyas11vyas11 Member
    edited June 9

    there are many offers in recent months from new ( < 1 year in business) providers

  • AC_FanAC_Fan Member

    Custom solutions is still an untapped market, unmanaged services are dime a dozen now.

    Thanked by 1hohl
  • AlwaysSkintAlwaysSkint Member
    edited June 9

    then=than :|
    For me, budget VPS means storage space more than RAM and 40/2;80/4 are better ratios, IMO.
    Plenty of demand by the looks of things, even if just to idle. That often happens to be a good way to build confidence in a new supplier. ;)
    Germany doesn't have any appeal for me but I'm sure HA is a good selling point.

    Thanked by 1hohl

    Long live LowEndInfo.com

  • xinzi3213xinzi3213 Member
    edited June 9

    hi
    Glad to give you feedback, please learn vir, 1 xeon core, 512mb 5gb-40gb ssd, Network line, the price is lower, there is a good market

    Thanked by 1hohl
  • WSCallumWSCallum Member, Provider

    Yes there definitely is for quality services - If you are looking to expand just make sure your prices are sustainable enough that you can expand in the future too if you need to, its fine selling spare capacity but if it becomes mainstream down the line you might want to expand as you grow.

    Thanked by 1hohl

    Clouveo - SSD Cloud Servers & Hosting
    AMD EPYC Powered | DDoS Protected | Snapshots | Auto Backups

  • raindog308raindog308 Moderator

    Keep in mind that once you sell one, you're on the hook for support, DDOS issues, copyright complaints, mandatory tithing to LET moderators, etc.

    For LET support, please visit the support desk.

  • ViridWebViridWeb Member, Provider
    edited June 9

    I'm sure someone will definitely disagree with me.

    But in my opinion (personal) provide must concentrate on quality not quantity.

    You can't fill people's stomachs. No matter how and which package you offer.
    Some will still looking for a better deal.

    If you can't make money from your offer then no points to run the business.

    So don't concentrate the lowend market solely. Calculate your expenses and then offer.

    Don't forget it's your business and not a charity

    Edited: If your offer is affordable (depends on individual's budget) and good quality then I'm sure people will love to trust you.

    ViridWeb.com - cPanel Web Hosting | Litespeed + SSH Access + Free Backups + Free Transfers.
    CIN: U72900WB2018OPC226882 | GST: 19AAGCV4976R1Z4

  • pbxpbx Member

    ViridWeb said: If your offer is affordable (depends on individual's budget) and good quality then I'm sure people will love to trust you.

    This. Don't bring more crap, there is already too much of it. If you can do custom panel + HA + good network and stable node at a fair price, some people might like it.

    With Hetzner & Netcup though, the DE market is probably not the easiest one to start in. If your rack is in a good DC, well connected and you're not in a hurry to fill up the node (which sounds like it is the case) I'd say you have high chances to succeed.

    Thanked by 1hohl
  • deankdeank Member, Troll

    Summer is here, eh.

    I have not created a single thread. Verify it if you dare.

  • jhjh Member

    We're in almost exactly the same situation. Software engineering company working on bespoke stuff. Most clients host with us and we have some rack space we use for this. We have some spare space in our rack and a lot of spare IPs, and some spare capital to invest in something that would generate some recurring income. I've been considering the idea.

    On paper it seems great but as @raindog308 said "once you sell one, you're on the hook for support, DDOS issues, copyright complaints...". I've sold budget hosting before. It's a brutal market with razor thin margins, huge competition from mostly homogeneous service providers (seems like there are more providers than customers sometimes), very demanding customers etc. Everyone I knew in the budget hosting industry has sold up and moved on to something else, and they're doing better.

    Then add on the impact it could have on your core business - using profitable software engineering time to clean ip blacklisted IPs, telling profitable software clients that their system is down because someone is DDoSing one of your budget hosting clients, the risk of a software client wondering why they're paying more for hosting than one of our budget clients etc.

    Even with interest rates stupidly low, this seems to me too much risk for not enough reward.

    Thanked by 1hohl
  • raindog308raindog308 Moderator

    jh said: On paper it seems great but as @raindog308 said "once you sell one, you're on the hook for support, DDOS issues, copyright complaints..."

    Hey, you forgot to quote the most important part!

    raindog308 said: mandatory tithing to LET moderators, etc.

    Thanked by 1scooke

    For LET support, please visit the support desk.

  • seriesnseriesn Member, Top Provider
    edited June 10

    raindog308 said: mandatory tithing to LET moderators, etc.

    A life time FatPal subscription is a must!


    @hohl

    hohl said: The more important question though is, is there still demand for such services in the budget-VPS area? That's why I'm asking you guys: would you buy from a newcomer instead of one of the established ones if it would be just a few cents cheaper each month? Or, would there be anything you are missing from existing budget-VPS providers?

    My man, will you really be cheaper though? Have you actually seen some of the insane offers that shows up here?

    Budget VPS or web hosting in general, is a big market, but a tough one to break into. Why?

    • This is one of those industry, where it doesn't take thousands of dollars or months of planning before opening the "business". Becoming a host is as easy as picking up a cheap dedicated server from hetzner or some where else, signup with buyvm, us or someone else for a simple VPS/Reseller hosting, that comes with pretty panels and billing software, purchasing a premade theme from theme forest and boom, within 48 hours, one is a CEO of "Mama's Basement Hosting".
    • You do the math, You can sell 30 VPS for $7/mo, on a $50 server and you will be bawling in money in no time! I mean how hard is it right? I would buy my service for $7/mo! Why wouldn't thousands of others would?
    • You might not be Mama's Basement Hosting. But you need to prove that.
    • Now comes your target market. You can either be "niche", "budget" or "premium" host. N

      • Niche market is easy to get into. Since you know your product, you have an existing "relationship" with the potential client base. By Niche, please be rest assured, I am not talking about MineCraft servers.
      • Budget market is a fun one. Now you are competing with 4 types of businesses.
        1) Those who are here to make quick money, by selling unsustainable plans (circa 2019, LEB)
        2) Those with mega deep pocket, who sees the market as an advertisement platform and "budget" plans are part of their marketing budget and has other income streams, that pays for it.
        3) Those who does this as a hobby.
        -You can not compete with above 3. You just can't. Don't bother trying.
        4) The "premium" budget brands such as BuyVM, Ramnode and many other great hosts. They bring more Value and usually aren't you cookie cutter "host" with Yet Another Panel. Their customer service is amazing, their product is perfect, they are equally knowledgable and they make you wonder, why the F are they priced so low when they are this good.

      • Premium : Well now are competing against big boys with reputation, that is hard to beat and harder to match. You will need big investment and man power before you get into that industry.

    • So now back to your question, is there a market for budget hosting? Yes there is. Assuming you bring something nicer and unique to the market :). But this is no longer a get rich quick business.

    You will be spending countless hours and sleepless night, fixing issues and answering ticket while making negative profit. It will take time to build trust. It takes a thick skin to withstand trolling. It gets tiring super quick. If you get lucky, along the journey, you pickup some amazing user base, that loves you and cares for you/your business as much as you do. They kinda become you virtual family <3. But that is also a blessing you get, by showing them, why you are not Mamas Basement Host.

    Otherwise, you become just another host posting the same 90% off discount code every 10 days, with sale that never ends. You 300% profit margin becomes a "break even" game to pay the server rent. After 6 month of trying, you say F it. I will log out of LET and never come back and you shut down your "business". As @deank says, @EndIsNeigh.

    If you are going to do this, do it right. Treat is like any other business/Job. Dedicate time, be prepared to sacrifice a lot while you build your brand. Sacrifice time going on a date, hanging out with friends, exercise, money, because you are on call, 24/7, till you make it. If you can't do that, spend that money and time, on something else that will make you happy :).

    Also forgot to add, there is a difference between "Cheap", "Budget" and "Affordable". Aim for the last one, if you are really serious about starting your business.

    All the best boss.

  • vyas11vyas11 Member
    edited June 10
  • @ViridWeb said:
    I'm sure someone will definitely disagree with me.

    But in my opinion (personal) provide must concentrate on quality not quantity.

    Yeah, I'll disagree, that's wishful thinking, not realistic. When selling ANY low profit product or service, quantity is MUCH MUCH more important than quality. That's just numbers. Selling one high quality server with $3 profit makes less than 10 servers that make $0.50 each.

    Like, where in the world do you live without McDonald's?

    I buy $18 burger and fries in restaurants. I also buy $7 burger and fries in restaurants. The $7 burger isn't near good as the $18 one, but no one will pay $18 for the $7 one nor can anyone sell the $18 burger for $7. Sometimes, I just need to eat. Other times, I want a motherfucking tasty burger.

    Tl;dr budget stuff needs quantity for it to have a chance of being worth the effort for the seller.

    Thanked by 1hohl
  • ViridWebViridWeb Member, Provider

    @TimboJones said:

    @ViridWeb said:
    I'm sure someone will definitely disagree with me.

    But in my opinion (personal) provide must concentrate on quality not quantity.

    Yeah, I'll disagree, that's wishful thinking, not realistic. When selling ANY low profit product or service, quantity is MUCH MUCH more important than quality. That's just numbers. Selling one high quality server with $3 profit makes less than 10 servers that make $0.50 each.

    Like, where in the world do you live without McDonald's?

    I buy $18 burger and fries in restaurants. I also buy $7 burger and fries in restaurants. The $7 burger isn't near good as the $18 one, but no one will pay $18 for the $7 one nor can anyone sell the $18 burger for $7. Sometimes, I just need to eat. Other times, I want a motherfucking tasty burger.

    Tl;dr budget stuff needs quantity for it to have a chance of being worth the effort for the seller.

    Agree with you. But then you can't complain if you find a cockroach inside your $7 burger.

    Anyway it's 6.52 AM here and I'm hungry so give me your burger.

    ViridWeb.com - cPanel Web Hosting | Litespeed + SSH Access + Free Backups + Free Transfers.
    CIN: U72900WB2018OPC226882 | GST: 19AAGCV4976R1Z4

  • @ViridWeb said:

    @TimboJones said:

    @ViridWeb said:
    I'm sure someone will definitely disagree with me.

    But in my opinion (personal) provide must concentrate on quality not quantity.

    Yeah, I'll disagree, that's wishful thinking, not realistic. When selling ANY low profit product or service, quantity is MUCH MUCH more important than quality. That's just numbers. Selling one high quality server with $3 profit makes less than 10 servers that make $0.50 each.

    Like, where in the world do you live without McDonald's?

    I buy $18 burger and fries in restaurants. I also buy $7 burger and fries in restaurants. The $7 burger isn't near good as the $18 one, but no one will pay $18 for the $7 one nor can anyone sell the $18 burger for $7. Sometimes, I just need to eat. Other times, I want a motherfucking tasty burger.

    Tl;dr budget stuff needs quantity for it to have a chance of being worth the effort for the seller.

    Agree with you. But then you can't complain if you find a cockroach inside your $7 burger.

    Ugh, I sure as hell will. There's basic and minimum standards even for cheap. A dry burger is sufficient to be low quality, it doesn't need that extra protein.

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