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How Reseller Programs Work

Reseller programs are quite popular for web hosting and other technology-based services. If you are considering using or becoming a reseller, it is helpful to understand how reseller programs work.

Understanding how reseller programs work can be helpful for those deciding if they should use a reseller program or become a reseller themselves. Reseller programs are frequently used for web hosting services, though there are other types of reseller programs. There are three main groups of people needed for a reseller program to work:

  • Those who provide a service, such as web hosting providers
  • Resellers, often web designers or other people who work in a technology-related business and want to provide more services to their customers and earn some extra income
  • Customers, who may already have a business relationship with a reseller, or who may just be looking for the services they provide

Using the example of web hosting, here is a break down of how reseller programs work:

  • The web hosting provider offers a dedicated server or a large amount of space on a shared server for resellers to rent. This is much more space than the average customer needs for web hosting. As is the case when buying goods in bulk or wholesale, the resellers get a quantity discount for renting large amounts of server space.
  • The reseller rents the space on the web hosting provider's server. The reseller then creates their own web hosting packages at the price they choose and offers these packages to customers. The web hosting provider usually provides tools to help the reseller set up their web hosting plans, so the reseller may not need very much technical expertise to do this.
  • Customers sign up for the reseller's web hosting plans, paying the reseller directly.
  • The web hosting provider takes care of maintenance on the server and provides support for the reseller, while the reseller deals directly with the customers if they have any problems. The customer does not deal directly with the web hosting provider.

Reseller programs can offer advantages to all of the people involved. The web hosting provider has an income from the rental of their server without needing to deal directly with customers. The reseller has a chance to offer customers a service without the expense and hassle of maintaining servers. The customer can often find inexpensive plans from resellers that are more tailored to their needs, especially if the reseller also provides other services like web design.

The potential down side of reseller programs for resellers and customers is that the quality of their service depends on a third party, the web hosting or other service provider. If, for instance, a web hosting provider does not have a good uptime, the customer will be angry because their web site is not online as often as they expect, and the reseller cannot do anything about it, which will probably cause them to lose customers and income as a result. For this reason, resellers and customers should do thorough research on a web hosting service before they sign up for it.

Sometimes the term reseller program is also used to describe affiliate marketing, but this is an entirely different type of program. In affiliate marketing, an affiliate, or reseller, refers customers to a related business, often using ads or links, and the business pays a commission to the affiliate for the customers' business. In this program, the affiliate or reseller is paid by the business, not the customer, and the customer deals directly with the business.

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