There are actually two uses for reseller hosting accounts. Selling web hosting services, and hosting multiple of your own domains under one account.

What this article is mostly about is the selling part. Reseller hosting is a cheap way of starting your own web hosting company. You purchase a reseller hosting account, set up some payment solution, and sell web hosting packages. Your job, besides selling is to provide support to your customers. The actual web host stays in the background, running the servers, and provide support to you whenever you need it. Your customers will never have any direct contact with the actual web host, they don't even have to know that you are not running the servers.

Different reseller accounts

There are basically 2 types of reseller accounts. One (traditional) where you purchase separate accounts at a discount, and resell them. With the other type (bulk), you purchase a big web hosting account, where you can divide the disk space and data transfer into smaller accounts. You can also specify the accounts exactly like you want.

With the traditional type, you don't have to buy anything before it is sold, but with a bulk account you have more options. The price of a typical entry-level bulk account is around $30/month. This normally includes 1 gb disk space and 20gb of data transfer. So you can sell 20 accounts with 50 mb disk space, and 1 gb data transfer. With a price of $5/month per account, you can see the potential profits.

Your own web hosting business

A reseller hosting plan can be the first step towards a lucrative business. The market for web hosting is huge, just as the possible profits. But the competition is extremely hard and advertising your web hosting business is expensive. So it is easy to disappear in the crowd, and hard to get your web hosting business of the ground.

If you already have access to customers (f.ex. if you are a web designer) you can start by hosting your clients' websites. This can create a nice income in addition to your design services. Getting those first customers is also a major step for new hosting businesses, as word of mouth is the cheapest and most effective marketing there is.

A web hosting business is not for all of us. Offering support to your customers, setting up new accounts, monitoring servers etc. can easily become a 24/7 job. Good planning and automation of tasks help, but running a web hosting company is definitely not a nine to five job.

Name servers

One thing you should know about is name servers. Name servers are essential for pointing a domain name to a web hosting account. You can normally use your web host's name servers, but it looks unprofessional to have ns1.acmehost.com and ns2.acmehost.com as nameservers, because your customers will then know that you are reselling for acmehost.

There are 2 solutions to the problem. Anonymous name servers, which does not contain any web host's name. One example is ns5.edns1.net. The other, and best solution is your own nameservers. They will typically be ns1.yourdomain.com and ns2.yourdomain.com, so they give no signs that you are a reseller. You can also change web hosts without having to change name servers, so a move to a new web host does not have to affect your customers. There is sometimes a small cost associated with this, but it is a good investment.