Strategy for Selling off VPS?

HostMayo · December 2020

It might sound a little newbie for a hosting provider but I need to know what guys are actually doing in industry. I am selling off KVM VPS through a dedi having 92 GB of RAM. But I only mange to sell ~55 VPS and ram gets fully utilized. Most of the VPS are 1 GB or 2 GB ram only. The server barely makes the break even. The Virtualizor control panel doesn't even shows ram usage per vps so I can't even bifurcate the ones using a lot of ram. What am I doing wrong here? How do VPS sellers make a dedicated profitable.

deank · December 2020

You have to oversell to some degree.

HostMayo · December 2020

but the virtualizor doesn't allows to provision when ram gets fully utilized.

deank · December 2020

They are actually utilized? As in being used by jerks?

Ganonk · December 2020

[listening]

alwyzon · December 2020

@Billa said:
(...) I need to know what guys are actually doing in industry. (...)

A good advice for any kind of venture is to start it with many hours weeks spend on Excel sheets.

deank · December 2020

Or purchase an established business and happily run into ground.

HostMayo · December 2020

Looks like this is the way https://www.virtualizor.com/docs/admin/memory-overcommit/

lentro · December 2020

Same here - I'll write about it in one of my VPS hosting adventure rants soon.

Turns out ZFS has a ton of RAM caching by default. Maybe your filesystem does too.

Try running top to see which processes other than KVM processes are using up most of the RAM.

seriesn · December 2020

@Billa said:
It might sound a little newbie for a hosting provider but I need to know what guys are actually doing in industry. I am selling off KVM VPS through a dedi having 92 GB of RAM. But I only mange to sell ~55 VPS and ram gets fully utilized. Most of the VPS are 1 GB or 2 GB ram only. The server barely makes the break even. The Virtualizor control panel doesn't even shows ram usage per vps so I can't even bifurcate the ones using a lot of ram. What am I doing wrong here? How do VPS sellers make a dedicated profitable.

Price the product differently?

If you are maxing out the node and not breaking even, you are not pricing it right brother man. At any given time, I can look at a node and know exactly how much profit I am making simply based on the Memory being sold. No need to oversell . Just sell the right way.

If your dedi includes 92 GB ram, take out 3 GB for the OS/system. Leaves you with 89GB of sellable (assuming no overselling).

Calculate your cost /GB based on those 89GB and figure out your margin after paypal fees

Word of advice man, don't overcommit unless you have a way to properly manage it, when your userbase needs/wants/starts to use up what they paid for. Otherwise, you are going to have a horrible time.

P.S the above works for any business.

Net cost of Good/Qty + % of profit = Final sale price.

seriesn · December 2020

@alwyzon said:

@Billa said:
(...) I need to know what guys are actually doing in industry. (...)

A good advice for any kind of venture is to start it with many hours weeks spend on Excel sheets.

I have 3 notebooks filled with scratches of plans, $ and numbers before saying that was it. Ahh the excitement.

deank · December 2020

U r nuts.

The way to start a hosting biz is -

Steal a template.
Buy the cheapest tld domain.
Change nothing but a logo on the stolen template. Of course, your logo will be heavily inspired by someone else's. (AKA stolen)
Spam crazily on L.
Watch initial wave of changes flow in.
Buy one or two steam games. My word, games are expensive nowadays.
Realize a little too late that you have to pay bills? What is this? I've never had to pay bills! Of course, your parents have been paying.
Lifetime deals!
More changes flow in.
Then realize that you might as well beg at a bus stop.
Fold.

Francisco · December 2020

Selling VPS on a rented platform is just a bad time. The costs are crazy high between the server itself, IP's, etc.

You need to be either getting some crazy deals (datacenters that are trying to keep the lights on short term) or colocate your own servers.

Francisco

SGraf · December 2020

So here go some of my ramblings....

@Billa said:
It might sound a little newbie for a hosting provider but I need to know what guys are actually doing in industry. I am selling off KVM VPS through a dedi having 92 GB of RAM. But I only mange to sell ~55 VPS and ram gets fully utilized. Most of the VPS are 1 GB or 2 GB ram only. The server barely makes the break even. The Virtualizor control panel doesn't even shows ram usage per vps so I can't even bifurcate the ones using a lot of ram. What am I doing wrong here? How do VPS sellers make a dedicated profitable.

This may sound harsh. But.....by having a plan before entering business.

So lets say you want to sell vps:

What is your target market/audience
How do you reach them
What is their budget
What specs do they expect at what price level.
...

Then you have the expense-side:

Server/Hardware
Traffic+IP-Addressing
(Software Licenses if applicable)
Misc expenses (if you have an office, phone, domain,...)
Payment Processing Feeds (incl. chargebacks,...)

AND

Support
Admin-Time for Maintenance,...
....

This means you have to know how much you expect to make per hour worked
(don't forget to add business- | legal- | and personal insurance ).

Add to this:

Accounting Cost
Taxes

In the end you also want to set aside some money, for investments later down the road....

=> Then a guess has to be made on what the sales numbers and unused resources will be.
(Based on your target market, competition, amount of time it takes you to fulfill,.....)

Once you have done all the math, you know if you can offer a product or if it will make you a loss.

As for your vps/dedi problem:

you claim you have around 55 customers with 1 to 2 gb of ram each.
=> averaging this to 1.5gb per customer as i do not know your sales numbers. (result 55*1.5 => around 82gb ram),
so i am guessing you sold more 2gb plans than 1gb plans. (or your host-system uses 14gb of memory)

This makes me believe you have one of 3 problems (or all 3)

Barely making money/loosing money => your pricing is off or you are missing a proper plan/calculation.
Server spec insufficient for what your target spec it. => do you have upgrade options? how does this affect your business viability?
You mis-understood the market segment you are trying to enter. (in terms of resources used by the avg. customer if you insist on overselling...)

@deank said:
You have to oversell to some degree.

Overselling is not a solution to poor planning.

@deank said:
Or purchase an established business and happily run into ground.

the end is nigh!

@lentro said:
Turns out ZFS has a ton of RAM caching by default. Maybe your filesystem does too.

whilst i agree one should place a reasonable limit on zfs, setting the limit too low will hurt performance dramatically.

@seriesn said:
No need to oversell . Just sell the right way.

I strongly agree on this.

Word of advice man, don't over-commit unless you have a way to properly manage it, when your user-base needs/wants/starts to use up what they paid for. Otherwise, you are going to have a horrible time.

Not allowing users to use that, what they paid for, would be considered fraud....

Net cost of Good/Qty + % of profit = Final sale price.

Pretty much the short version of my ramblings above

InceptionHosting · December 2020

Simply a combination of these factors, only you know which ones are true.

You are paying to much for the server.
You are not charging enough.
You failed to do any work to configure the server to maximise density and expected virtualizor to do that for you.
You have not spent enough time reading the virtualizor docs to understand the important but easily overlooked functions.

If all 4 are true, you just need to take a step back and really consider things again.

SGraf · December 2020

@Francisco said:
Selling VPS on a rented platform is just a bad time. The costs are crazy high between the server itself, IP's, etc.

You need to be either getting some crazy deals (datacenters that are trying to keep the lights on short term) or colocate your own servers.

Francisco

Even with pretty good data-center deals, and owned hardware, its guaranteed to be an interesting/viable business venture.

i have done the math based on various vps configs/... that i would consider to be interesting/enjoyable for several potential target audiences....

For me personally,...

for "online" audiences/Markets such as leb,let,..wht,... there is really low pricing with lots of potential for support cases, abuse and so on.
=> This is petty much not of interest to me.
(I prefer to leave this segment to people like Francisco, seriesn,... and so on. that specialize on this and are able to provide sustainable offers.)
for my local market (city/country/...) => it is a different story... most of the vps customers are from various it-projects/work i carry out and are at the stage where web-hosting is insufficient and a dedicated server is above their needs.
=> That being said, here vps is just an add-on to a different service/product.

@AnthonySmith said:
If all 4 are true, you just need to take a step back and really consider things again.

10/10

HostMayo · December 2020

@SGraf said: for "online" audiences/Markets such as leb,let,..wht,... there is really low pricing with lots of potential for support cases, abuse and so on.

=> This is petty much not of interest to me.
(I prefer to leave this segment to people like Francisco, seriesn,... and so on. that specialize on this and are able to provide sustainable offers.)
Well said.

yoursunny · December 2020

@Billa said:

@SGraf said: for "online" audiences/Markets such as leb,let,..wht,... there is really low pricing with lots of potential for support cases, abuse and so on.

=> This is petty much not of interest to me.
(I prefer to leave this segment to people like Francisco, seriesn,... and so on. that specialize on this and are able to provide sustainable offers.)
Well said.

Virmach has been selling to fraudsters and spammers for years on rented platform, and they haven't deadpooled yet.

@AnthonySmith said:
Simply a combination of these factors, only you know which ones are true.

You are paying to much for the server.

You are not charging enough.

You failed to do any work to configure the server to maximise density and expected virtualizor to do that for you.

You have not spent enough time reading the virtualizor docs to understand the important but easily overlooked functions.

If all 4 are true, you just need to take a step back and really consider things again.

Business is hard.
Looks like I shouldn't attempt to enter this market as a provider.

@SGraf said:

for my local market (city/country/...) => it is a different story... most of the vps customers are from various it-projects/work i carry out and are at the stage where web-hosting is insufficient and a dedicated server is above their needs.
=> That being said, here vps is just an add-on to a different service/product.

In this case, the VPS could be free. Customer pays monthly website maintenance fees.

SGraf · December 2020

@yoursunny said:
In this case, the VPS could be free. Customer pays monthly website maintenance fees.

Still lists the vps with spec on the invoice. otherwise its harder to argue different vps-spec upgrades or switching to a dedicated server if they start out-growing it.

Brueggus · December 2020

@yoursunny said:
Virmach has been selling to fraudsters and spammers for years on rented platform, and they haven't deadpooled yet.

...and I still don't get how they do that. CC doesn't rent servers THAT cheap, do they? I'd also expect Virmach being hit by a decent amount of chargebacks considering their target audience and their strict AUP enforcement.

Francisco · December 2020

@Brueggus said:

@yoursunny said:
Virmach has been selling to fraudsters and spammers for years on rented platform, and they haven't deadpooled yet.

...and I still don't get how they do that. CC doesn't rent servers THAT cheap, do they? I'd also expect Virmach being hit by a decent amount of chargebacks considering their target audience and their strict AUP enforcement.

Sure.

HiFormance was getting E5 2650v2's w/ a /24 included for $180/ea/month outta CC. Virmach is paying at most that, but likely lower.

There's a good chance CC is doing 5 year leases on their gear, that way they get the price pretty damn low.

Francisco

Unixfy · December 2020

@Brueggus said: ...and I still don't get how they do that. CC doesn't rent servers THAT cheap, do they? I'd also expect Virmach being hit by a decent amount of chargebacks considering their target audience and their strict AUP enforcement.

Some information in The Cesspit thread on this forum suggests that VirMach has some special arrangements with ColoCrossing to say the least. Plus it's pretty clear that they are big on overselling and/or strict resource limiting. For instance, I can hardly get above 100 MB/s in YABS I/O test on my supposedly SSD VirMach box.

wdmg · December 2020

If you’re trying to sell VPS, do it on owned and colocated hardware.

FAT32 · December 2020

The more I read, the more I feel sorry for the Providers that I pushed for special deals

Sorry if I caused your service to run at a loss

deank · December 2020

Ban @FAT33?

j/k

SGraf · December 2020

@FAT32 said:
The more I read, the more I feel sorry for the Providers that I pushed for special deals

If a provider makes an unsustainable package or offers a product at a loss - its their own fault, not yours.
(Or they may do it on purpose, to set up for a sale of a higher priced service later, but that is a strategy that i personally wouldn't do)

localhost · December 2020

@FAT32 said:
The more I read, the more I feel sorry for the Providers that I pushed for special deals

Sorry if I caused your service to run at a loss

I look at it as a way for Providers to give something back to the community! Nothing you did.

K4Y5 · December 2020

@FAT32 said:
The more I read, the more I feel sorry for the Providers that I pushed for special deals

Sorry if I caused your service to run at a loss

You can't be responsible for actions of other adults.
At the end of the day, if I can't sell something at a certain price, I simply won't. No amount of coaxing is going to change that and force me to literally pay out of my own pockets for an individual to use a certain service - unless ofc, it was a part of my marketing strategy all along.

Besides, no one put a gun to these providers' heads, asked them to mortgage their houses for a handful of loss leaders that were supposed to be nothing more than a part of a collective Marketing / PR campaign, or an easy way to monetize unused resources / inventory and at-least break even.

cybertech · December 2020

download more rams, isn't it uncommon to provision on 92GB ?

usually cheaper 32/64 , or 128 upwards

Anon · December 2020

When will providers switch to DDR4? Looks like around 90% of providers use DDR3 in 2020.

dahartigan · December 2020

@Billa said:
It might sound a little newbie for a hosting provider but I need to know what guys are actually doing in industry. I am selling off KVM VPS through a dedi having 92 GB of RAM. But I only mange to sell ~55 VPS and ram gets fully utilized. Most of the VPS are 1 GB or 2 GB ram only. The server barely makes the break even. The Virtualizor control panel doesn't even shows ram usage per vps so I can't even bifurcate the ones using a lot of ram. What am I doing wrong here? How do VPS sellers make a dedicated profitable.

No RAM? No problemo. Swap til death. /S

Strategy for Selling off VPS?

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