How to Build a Profitable Business Model Around Web Services and Hosting

Building a profitable business model around web services and hosting involves a differentiated offering, strategic pricing, and reliable services with add-ons. Attract customers with current content, Google ads, and referral bonuses.  

Narrow down your market 

You might decide to serve small businesses, startups, ecommerce sites, SaaS providers, developers, or all of the above. Once you’ve made that decision, research your target market’s pain points. These might include high uptime, speed, scalability, or cost-effectiveness. For example, website speed and performance can be major challenges for ecommerce platforms. In 2024, pages that load within two seconds typically exhibit the best conversion rates. However, this is below the average load time of 2.5 seconds for desktop and 8.6 seconds for mobile! 

Slow speeds can lead to cart abandonment and lost sales. Adequate bandwidth and RAM will keep customers happy and paying. 

Define your service

Shared hosting is an affordable, entry-level hosting business suitable for small websites. VPS is ideal for growing businesses, offering more resources and control than shared hosting. Reseller web hosting is a good option if you don’t have much technical expertise. You’re buying hosting from a company that takes care of support and maintenance. You don’t buy a server and aren’t responsible for managing it. 

It’s a good idea to offer value-added services such as SSL certificates, domain registration, or website builder tools. 

Set prices

Research competitors’ prices to get an idea of how much to charge and don’t price your services too low as you’ll be forced to cut corners on quality. Ideally, set an average price for the niche with additional features to stand out, such as extra storage, email hosting, or advanced security features. Around 40% of cyberattacks target small businesses, and almost two-thirds (60%) of small businesses that suffer from a cyberattack go out of business within half a year. 

You’ll attract small businesses with reliable backups. Customers who need extra help with updates and security patches will appreciate managed hosting.

A further pricing option is the freemium model. This is where you offer basic services for free, with the option to upgrade to a premium version for more resources or features. You might attract small customers who later convert to paid plans. While the ideal freemium conversion rate is 2–5%, the actual rate ranges from just 1% to as much as 10%. 

You could create hosting packages with domain registration, SSL, or email services, making it easier for customers to manage all aspects of their web presence through a single provider – you. If you already offer web-based services like web design and programming, adding hosting to the mix is an intuitive approach that can increase your profit. 

Recurring revenue through monthly or yearly subscriptions ensures a stable cash flow. Offer discounts for long-term plans to encourage commitment. A recent survey revealed that almost 70% of millennials look for a discount before making a purchase, and two-thirds of people say they will purchase if they have a discount.

Market and acquire customers

Create blog content, tutorials, and guides that answer common hosting-related queries to attract organic traffic from potential customers. Keep your content current: content updates saw 53% of marketers increase engagement. 

Existing customers could refer people they know if they were offered discounts or account credits for successful referrals. 

More than 80% of buying journeys start on search engines, which is why a lot of businesses run Google ads to convert searchers. An analysis of over 17,000 campaigns from April 2023 to March 2024 showed that most industries saw higher click-through rates. Specifically, 70% of industries saw an average increase of 5% from the previous year. 

The cost per click increased for almost 90% of industries. Sports, real estate, and personal services saw increases of over 25%. The average increase overall was 10%.