[luckyisgood]

Web agency founder with a decade of experience in selling websites here. I wrote a book on the subject of recurring revenue for web agencies and web professionals, all based on our experience.

Here's what worked for us:

- after selling a website, we sold the mandatory support and maintenance contract. We considered this service the foundation, or level one of our recurring revenue stream. This is fairly easy to sell and renew. The recurring revenue we got from this was enough to keep us afloat.

- after selling support and maintenance, we upsold the client to "levele two": services which grow our client's online business. The types of services we offered in this plan: everything that needs to be done to reach client's business goals, and that we could deliver well. This was harder to sell (because the type of client needs to be just right for this kind of service), but the amount of money coming in every month is substantial. This is what makes the agency grow in long term.

Here's what didn't work for us:

- web hosting. We've been offering this for more than a decade and in the end, all things considered, it is just not worth it. A combination of support + maintenance + growth-oriented services is a much better bang for the buck. We sold most of our servers and hosting accounts to a specialized hosting company and focused on what we did best.

For the exact details about building, pricing and selling support and maintenance services, check out my book: https://www.simpfinity.com/books/recurring-revenue-web-agenc... (the part about growth-oriented services is coming soon, matter of weeks)

I love talking about the subject of recurring revenue, it's a passion of mine. I'll gladly answer any questions you might have.

Edited: typo.

[NicoJuicy]

I think selling hosting to a customer is wrong, but selling services based on hosting could do well (email app,invoicing app, website, dropbox alternative, booking services (restaurant, hotel) ...). There's no money in the hosting without a webapplication part (my 2 cents)

Currently, a lot of my clients don't need the monthly support option. That doesn't seem to sell very well, because they mostly have no problems.

What can be sold is the support for 3 months (during the start)... But that is where the most problems are, so i'm wondering if it's financially interesting to do that :) . I also mention that i'm a busy guy, but with a monthly support fee. They can call dibs on me anytime.

[luckyisgood]

The way I see this "clients do or do not need support" is this (and this metaphor faired well with clients, to help them understand why support and maintenance is absolutely crucial): I personally don't need medical insurance either because I'm healthy most of the time. But what happens when I get sick? I need fast remedy and I want to live my life assured that there's a team of experts on standby, ready to take me in.

In my experience, it made no sense to argue with the client about maintenance when the website was "sick". All the client wanted was for us to fix it. I knew that, so I made sure I sold them a maintenance package in advance, when they "didn't need" it. A website is just like a bridge: if you build it, you're responsible for it, but it's not for free. Everything I put in the world, I am responsible for, but the client needs to pay for it.

Here's how we sold support: - 30 days guarantee period (after launch) - we were selling only annual contracts. A lot happens every month. Frameworks and libraries need updating, 404 links happen, browsers update, CMS systems get new security updates... There's a ton of things to keep an eye on as a developer, and you could create an annual plan which your client pays for monthly (give her a discount when she signs a contract).

[luckyisgood]

"There's no money in the hosting without a webapplication part (my 2 cents)" - totally agree, that was my experience too.

So you actually asked about selling services and apps hosted in the cloud? That is a good business, if you make it your core business. For example, we resold Google Apps to clients. Since clients were local and preferred to call our phones for support, we sold them our support services too. So, the client bought Google Apps for Business licenses through us and bought added-value services like support, installation, migration, consulting etc.

That's a good business. Specialization and focus helps here, so that you don't spread yourself too thin.

[stef25]

I used to work for an agency that charged the client for hosting their site (sometimes 100s of EUR a month) and all the clients ran on the same Hostgator reseller account type thing which cost almost nothing.

The client didn't care, they just paid us for not having to worry about it and not having the skills the buy the correct config, size etc.

Surely every web dev should do this, unless the client already has a perfectly fine hosting package?

Just never host client emails.

[luckyisgood]

It depends whether every web dev / web agency should do this. If the agency grows big enough to hire an administrator (in-house or outsourced), and the agency is capable of adding value to the hosting service, then why not. Customers love to get everything at one place, but you really need to be able to resolve issues. For example, if the agency serves as a glorified email forwarding service between the hosting provider and the client, then there is really no value in this, the agency is only wasting clients' time, and the client would be better off dealing with the hosting provider directly.

In my experience, small agencies (up to 20 people) usually cannot afford or justify giving substantial resources to web hosting. My agency is now fairly small (five people), and web hosting is so complex and fast-growing, that we decided not to deal with it. We found a good partner a few years ago and we refer some of our clients to them. Some of our clients do pay hosting to us, but it's more of an application hosting type of service (they rent apps from us and pay annually). We have our own dedicated server on which we only allow websites we've developed ourselves. This is a legacy thing: we've been doing that before and we're still billing some of our past clients for app hosting, but stopped selling any new web hosting.

If I was starting an agency from scratch today, I would steer away from web hosting and let the specialized partner handle that for my clients. There are simply too many things that could go wrong if a small agency does not have the necessary expertise. One wrong step and you can lose a six-figure client over a $10 domain. And since there are too many things to keep up with in your core business (web development), your time is better spent learning about your core business, not about the web hosting business.

[BorisMelnik]

Hi lucky - I've been in the same industry for 4-5 years and have been offering hosting (as a reseller) for 1 year. We broke 100 hosting clients recently and are hoping to own our own infrastructure one day. We recently put an admin in house who is able to handle all support and day to day server admin of the servers we lease. The way I see it, all of our clients need hosting and I'd rather be the ones charging for it then someone else. I think one of the reasons we've had so much success with hosting is that our clientele are mainly very small biz clients, many of them on static HTML sites, Wordpress themes, or Magento carts which require very little ongoing maintenance.

I definitely am not trying to argue any of your points, but rather chime in with some of my experience.

[stef25]

if you have to spend substantial time & effort on it then obviously don't. The scenario I was talking about involved nothing more than logging in to cPanel to create a new site, making an FTP account, DB + user and that's about it. The beauty of it was that there was almost no work involved in hosting those relatively small LAMP sites.