The Web Hosting Blog of Host Color

There is a very interesting discussion about the price anyone should sell their web host going on in the Australian Web Hosting Talk forum. The thread is titled “60k+ worth of hosting customers“. “A business partner and I have been running a hosting business for about 5 years now. We have approx $60k+ of revenue per year and currently pay around $15k in colo fees at Primus. So I’d say the profit there is roughly $45-50k a year. Just wondering if we were to sell these customers off, what it would be worth? My business partner doesn’t have the time anymore and i am not really in a position to buy him out.”, posted in an new thread a forum member with the name “Napalm”.

I will not publish here all the answers. However you can see Host Color’s concept of how much and average web hosting company worth.

We have 2 posts in the thread. The firs one says:

“I don’t think you are ready to sell. Anyone who would buy your clients would be willing to pay no more than $45k and they might offer even less 6 months revenue. However your company costs much more. You should calculate the cost of the brand, and all the money you would make form this business within the next 2 years.

I would suggest you to standardize your business before going out to sell it. This means a control panel and hosting management tools that would allow any buyer easy to integrate your customers into their existing portfolio. Of course you have to be very careful and not to loose customers while transforming the company.

Finally… I wouldn’t see the business for less than $70k, but even this price is the bottom one. I think you should consider any price of $90,000 +”.

The secon one came after the WHT AU forum’s moderator responded “Very interesting insight fcolor (This is our forum name there). Is the high sale price due to the increasing costs of aquiring a customer?”. The answer or our representative was:

I wouldn’t say “increasing costs of aquiring a customer” not because it was not true, but because I preferred to explain it in a different way. Anyone who has a well-established web hosting provider in any of the competitive markets (U.S., CA, UK, AU, ets) know that it is harder to attracts new customers than it was a few years ago. the market is very saturated.

Those who want to enter the уеф гдяшсхж market should also know that, as well as those who want to “purchase customers”*.

I don’t see any reason anyone who worked hard to create value, to accept a business model which works against their interests. The whole concept of “selling customers” is wrong. It works good for those who would like to buy cheap and was probably given a birth in the head of any web-hosting-investment-banker-wanna-be, but it is killing the business. When someone says I’m “buying customers” they do not calculate the value of any web hosting business (brand recognition, the way the business was organized, popularity of the website (domain) and many other things).

At the bottom of the post Host Color’s representative said that he do not like the phrase “purchase customers” as far as they are not chickens.

“I honestly believe that anyone who want’s to buy customers should be purchasing companies. And if I would sell, customers to someone who does not want to keep the brand I would ask for more money if the brand (service mark) is well-known and many people appreciate it”, is the opinion of our representative.