Solution for Selling Virtual Private Servers
From Ubiquity Server Wiki
Ubiquity's services are used by a number of successful companies to sell VPS (Virtual Private Server) services. Over time, we have developed a complete solution that follows - fully detailing what we believe is the best way to succeed as a VPS hosting company - allowing us to work with you with the most mutual success.
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Foundations of your VPS Hosting Company
Before you get started selling VPS, you will need to make some decisions about the underlying software. Through years of experience in this industry and seeing what options work and don't work for our customers - we strongly recommend looking at each of the following before you get started.
Billing / Support / Automation
You will need a billing system to sell VPS. Many options will work, however Ubiquity recommends WHMCS as the solution for this. This costs roughly $20/month, and has fantastic support backing it. This will act as your billing center, signup system, account creation system, affiliate referral system, customer support center, and registrar / domain management system all rolled into one piece of software. Certain features - such as automation with web hosting control panels and registrar API features in the client control panel - we believe you'll find are far more advanced than all other options currently on the market. We strongly recommend also employing a fraud mitigation system as well - such as MaxMind - which plugs right into WHMCS and only costs a few pennies per transaction. This tool generally saves most web hosting start-ups hundreds if not thousands in lost revenue right away from charge-backs by looking at the legitimacy of the request, and even going so far as calling your customer to verify the order if you would like it to do so.
Payment Gateways
There are basically two methods of accepting payments. You can register for a free PayPal Business account on PayPal.com, or register for a merchant account with a company such as CDG Commerce to accept credit card payments directly - who allows you to use their Quantum gateway for free if you do (meaning no payment gateway fees - which competing services like authorize.net that you would otherwise need would cost you). Both of these systems of accepting payments work very easily through modules already built into WHMCS.
Domain Registrations
In order to sell VPS, you will likely want the ability to register domain names for your clients. There are a handful of ICANN-accredited registrars with fantastic reseller API's - that will work directly with major web hosting billing systems. Ubiquity recommends using Enom's domain reseller system for this, plugged directly into the WHMCS API.
Virtualization Technologies
In order to sell VPS services, you first need to choose an operating system. You can not sell Windows VPS off of a Linux server, however you can sell Linux VPS off of a Windows server. If you're going to be selling Windows 2003/2008 based VPS - you'll want a Windows 2008 server with Microsoft's HyperV pre-installed, otherwise you'll want Virtuozzo for Windows. Virtuozzo is quite pricy, however, is industry-known for their impressive support, and proven architecture.
On Linux, you have much more flexibility. The two primary virtualization technologies are OpenVZ and Xen. OpenVZ is the open source version of Parallels' Virtuozzo. It's the most popular solution, and best of all, free. Xen is the other free solution. Virtuozzo is available for Linux as well, however, is expensive.
When comparing OpenVZ to Virtuozzo, it's important to remember - you get what you pay for. Virtuozzo comes equipped with fancy Admin and Client control panels, as well as improved memory architecture (SLM) - while OpenVZ does not. However, there are many free alternatives to these features - so OpenVZ is still a contender.
OpenVZ and Xen are similar, however, with Xen - you can have custom kernels for each VPS, and each VPS has dedicated RAM and SWAP. OpenVZ does not use SWAP.
All in all, Ubiquity recommends using Virtuozzo on Linux/Windows when looking for a virtualization technology.
VPS Control Panel
Unless you are using HyperV or Virtuozzo, you will need a control panel to allow your customers to restart their VPS. Also in this control panel, they will be able to re-install the operating system, and access the shell in case they get locked out of the system. A control panel, while not-required, is a crucial part of your service offering. Ubiquity does not recommend using the long-time control panel solution, HyperVM, after an abundance of security exploits have been released. We recommend using solusVM. The solution costs $10 per month, per server, regardless of how many VPS are on it.
Recommended Ubiquity Server Solution
The server configurations below are Ubiquity's recommended options for selling VPS. A lot of companies don't say this - but it's not necessary to get in over your head early on. A lot of web hosting companies go under because they don't manage things well at the onset - and that's not in anyone's best interest. If it's within your budget however, the recommended full scale options at the bottom are what we feel the ideal server solution to be for once you really get off the ground and want your operations to be efficient.
Starter Solution (Virtuozzo)
Data Center: First Available Processor: Quad-Core E5520 (4x 2.26 GHz) Memory: 6192 MB (6GB) ECC-Registered RAM Hard Disk: 2x 500gb SATAII Hard Disk, RAID I (drive mirroring) Control Panel: Virtuozzo for Linux (10 VE's) OS: CentOS 5.2 (Add $30 for Windows 2008) Management: Unmanaged Bandwidth: 6000GB Data Transfer Port Speed: 100Mbit Monthly Rate: $379.00
Advanced Solution (OpenVZ)
Data Center: First Available Processor: 2x Quad-Core E5520 (4x 2.26 GHz) Memory: 12288 MB (12GB) ECC-Registered RAM Hard Disk: 2x 1tb SATAII Hard Disk, RAID I (drive mirroring) Control Panel: n/a OS: CentOS 5.2 x64 with OpenVZ Management: Unmanaged Bandwidth: 6000GB Data Transfer Port Speed: 100Mbit Monthly Rate: $524.00
Business Plan
It's important in any business, that a thorough business plan is in place that is sustainable for at least your first year in business. In the VPS market specifically, there has been a recent burst of fly-by-night (meaning, they go out of business in the blink of an eye.) hosts because of the simplicity of hosting VPS. It is important that your business distinguishes itself from these hosts.
Overselling
The issue of 'overselling' is a pressing issue in any hosting-related market, however, is heavily weighted in the market of VPS. Overselling is the concept of offering more resources than you have available, with the hope that users will never push anywhere near the limit - gaining the interest of many potential customers due to the large resources and small price-tag. However, on VPS - this can be a very bad issue. If you oversell RAM, and offer 1GB of RAM for $10 - you are in trouble if users use all of that RAM, you simply don't have enough RAM to sustain the server. If you have 6GB of RAM, you can only fit 6x 1GB users. If your pricing is $10 a month, you simply can't sustain the server on $60 per month - therefore you adjust the pricing accordingly.
Pricing
When factoring in pricing, you must look at three main concepts. You must first look at your overhead, you have to look at what your server costs - and how many of each plan you can fit on each server. If you have 6GB of RAM, and your server costs $379 - you can fit 24x 256MB VPS (6192/256) - and they each must cost a minimum of $15 (379/24) in order to break even. Now, you also want to make a profit - so therefore, you take a look at your competitor's rates. Most competitors offer 256MB VPS for roughly $20 - so, you mark up the prices accordingly to somewhere between $20 and $25 - and expect a profit of $10 /month per VPS. The profit margins increase with larger VPS.
How to Make your Services Truly Private-Label
It's easy to remove nearly all traces of Ubiquity Server Solutions and the control panel vendor from your services, creating the feel of a complex and completely in-house developed operation.
Branding
This can be adjusted by uploading custom branding to your solusVM master server. Your WHMCS client management can also be customized via the SMARTY template system.
Network and Whois
Ubiquity IP ranges are associated with the Nobis Technology Group rather than Ubiquity - making them as ambiguous as is technically possible by themselves from the on-set. Reverse DNS entries can be set to show your company name in both VPS and dedicated servers (see Modifying the Reverse DNS Configuration of an IP) and dedicated server clients can even place their own whois contacts on their IP ranges using SWIP (see Requesting your name be placed on an IP whois report (SWIP)).
