Passive Income as VPS Provider?

gks · December 2024

@paroxsitic said:
Thanks everyone for all the feedback, I think passive income in this business probably isn't possible but I wanted to at least share my brainstorm on what I came up with that could be a loss-leader for a startup to later on switch to colocation with own hardware to squeeze more profit out.

I was targeting this price point / market:

https://search.ponyhost.xyz/?region=northamerica&country=&virtualization_type=&os=&cpu_brand=&cpus_shared=0&cpus_dedicated=2&memory=8000&disk_type=nvme&disk_size=2&bandwidth=5000&port_speed=1&ipv4=true

TLDR

I wanted to try to target budget VDS instead of VPS in North America. With the main competitive edge is offering budget but with 10/gbps. It's doable at very cheap labor, Maybe. Not for me though, not unless it's risk-free.

Core concept

The core concept is to operate as a transparent broker of dedicated server resources.

We would be fully upfront about which dedicated server providers we use and the pricing and specs the machine is from. This transparency allows customers to understand exactly what they're getting, including provider-specific benefits like DDoS protection and all the things that set dedicated providers a part.

The business would effectively split dedicated servers among multiple customers who want high-performance computing but don't need an entire server. For example, customers might purchase 2-4 dedicated virtual CPU cores instead of an entire machine.

For new hosting providers the funding model could use a waitlist system with escrow payments. When enough customers commit funds for a specific server configuration at a chosen provider, we would purchase and partition the hardware among them.

These numbers are back of the napkin numbers, with some of the deals not even being offered anymore and some assumptions about add-on pricing. The labor estimate is where I and most will undervalue how much time 15 or 30 customers can take.

Intel

Target:
2 dedicated Intel vCores
8GB ram
50GB+ NVMe SSD but expandable
10 Gbps
$7/mo
Dedicated base:
Limited time BF deal: https://blackfriday.fiberstate.com/
Intel Dual Xeon GOLD 6230 @ 2.10 GHz (40 cores/80 threads)
    256 GB Memory RAM
    2TB U.2 NVMe
    1 IPv4 Address Included
    /64 IPv6 Address Included
    10 Gbps 660 TB Transfer
    Included (reboot, install, console) IPMI
    Custom Deployment
    Location Salt Lake City UT USA
$119.95
Per Month
Breakdown:

$120/mo base server
$55/mo /27 (29 usable) additional IPv4s
$10/mo labor estimate (this is the issue)
$7/mo baseline host resource cost

$192/mo sub-total before 10% return
$211/mo total expenses

Requiring 31 VPS' @ $7 to hit $211/mo, but remember you want to dedicate 1 VPS worth of resources to the host, so you really will divide resources by 31+1 = 32, this multiple of a power of will help in dividing RAM just right but when you do have to you do so as it makes sense taking into consideration how partitioning VPSs will work w.r.t unused resources.

2 dedicated vCore check: PASS
32 VPS' is lower than the amount of physical cores (40) so there is enough to allow 1 dedicated physical core (2 dedicated vCores) per VPS. In fact you could add in a shared core similar to how HostHatch does

8 GB RAM check: PASS
256 GB divided by 32 VPS' allows 8 GB RAM

Final Specs:
Intel Dual Xeon GOLD 6230
2 dedicated vCores + optional shared vCore(s)
    8 GB Memory RAM
    60GB U.2 NVMe (additional 1 TB NVME $8/mo)
    1 IPv4 Address Included
    /64 IPv6 Address Included
    10 Gbps 20 TB Transfer
    Location Salt Lake City UT USA
$7/mo
Issue: Not enough IP addresses initially but need could be filled with existing nodes buying additional IPs to offset needed upgrade.

AMD

Target:
2 dedicated Ryzen vCores
8GB ram
50GB+ NVMe SSD but expandable
10 Gbps
$9/mo
Dedicated base:
Limited time BF deal: https://blackfriday.fiberstate.com/
AMD Ryzen 9 7950X (16 Cores/32 Threads)
128 GB DDR5 Memory
2TB NVMe Samsung Evo Plus
1 IPv4 Address Included
/64 IPv6 Address Included
10Gbps 660 TB Transfer
Included (reboot, install, console) IPMI
Custom Deployment
Location Salt Lake City UT USA


$119.95
Per Month
Breakdown:

$120/mo base server
$25/mo /28 (13 usable) additional IPv4s
$10/mo labor estimate (this is the issue)
$12/mo baseline host resource cost

$167/mo sub-total before 10% return
$184/mo total expenses

Requiring 15 VPS' @ $12 to hit $180/mo, but remember you want to dedicate 1 VPS worth of resources to the host, so you really will divide resources by 15+1 = 16, this multiple of a power of will help in dividing RAM just right but when you do have to you do so as it makes sense taking into consideration how partitioning VPSs will work w.r.t unused resources.

2 dedicated vCore check: PASS
16 VPS' is same as the amount of physical cores (16) so there is enough to allow 1 dedicated physical core (2 dedicated vCores) per VPS.

8 GB RAM check: PASS
128 GB divided by 16 VPS' allows 8 GB RAM

Final Specs:
AMD Ryzen 9 7950X (16 Cores/32 Threads)
8 GB DDR5 Memory
125GB NVMe Samsung Evo Plus
1 IPv4 Address Included
/64 IPv6 Address Included
10 Gbps 20 TB Transfer
Location Salt Lake City UT USA
$12/mo
Issue: Not enough IP addresses initially but need could be filled with existing nodes buying additional to offset upgrade. Price couldnt approach $9/mo and only worked with 12/mo

Conclusion

There is a gap of unknown size (warning!) in the market for budget VDS with high Gbps. If one can replicate how the dedicated hosts are making a profit, then it could be worth it given the 10% return could be used as corporate debt to expand and it's only used to pay off interest on loans.

The specs are given in such a way that it is safe to cut in half or double the prices and resources together. That is for $12/mo you can get 4 dedicated vCores and 16GB or
Dedicated 1vCore with 4GB RAM and 10 gbps (IPv6 only) for $3/mo is something to consider as well.

Finally, there is an option for an AI play because fiberstate and these higher quality dedicated providers offers a graphics card add-on which is something these lower budgets possibly can't offer in addition to their dedicated cores.

I think, as many German youths doing same, living near a data center, you can avoid remote hand expenses, having buying old servers/in-expensive hardware to host or hire, still have possibilities to cover up the expenses. If you are single person, having not to pay rents for home, having sufficient savings, have some expertise with CEPH like clusters, offering cloud VPSs that neutralize one single hardware failure, still providing reasonable cloud VPS for LET pricing. Oversell helps a lot, as many idle, when someone use the CPU/RAM lot, they will raise complain, move them to a not so crowded server. It will be double the bonus, if you could work somewhere, earn daily/monthly payroll, do this VPS stuffs along as side would be most beneficials . If you could pair up the business with like minded persons (+1 or +2 persons) would help to reply to tickets, solve customers problems until you have decent revenues.

cmeerw · December 2024

@yoursunny said:

@huntercop said:
IPV4 and IPV6 please or @yoursunny will put you on the IPv6 shame list. We like his list. It’s satisfying to read when it’s updated.

New requirement is at least /64 IPv6, because /64 is the smallest sensible IPv6 sub-assignment size.
Anyone with even smaller allocation size are being added to the upcoming IPv6 less than /64 Hall of Incompetence, now accepting submissions.

and Reverse DNS for both IPv4 and IPv6, or you get on my naughty provider list

BlaZe · December 2024

This sounds more like a sleeping partner/investor.

You need someone with equal equity to run the business for you while sharing the ownership of the business. Profits split up 50-50 since you are investing money & the other person is investing their time/expertise. Is it so?

ProHosting24 · December 2024

@gks said:
@paroxsitic said:
Thanks everyone for all the feedback, I think passive income in this business probably isn't possible but I wanted to at least share my brainstorm on what I came up with that could be a loss-leader for a startup to later on switch to colocation with own hardware to squeeze more profit out.

I was targeting this price point / market:

https://search.ponyhost.xyz/?region=northamerica&country=&virtualization_type=&os=&cpu_brand=&cpus_shared=0&cpus_dedicated=2&memory=8000&disk_type=nvme&disk_size=2&bandwidth=5000&port_speed=1&ipv4=true

TLDR

I wanted to try to target budget VDS instead of VPS in North America. With the main competitive edge is offering budget but with 10/gbps. It's doable at very cheap labor, Maybe. Not for me though, not unless it's risk-free.

Core concept

The core concept is to operate as a transparent broker of dedicated server resources.

We would be fully upfront about which dedicated server providers we use and the pricing and specs the machine is from. This transparency allows customers to understand exactly what they're getting, including provider-specific benefits like DDoS protection and all the things that set dedicated providers a part.

The business would effectively split dedicated servers among multiple customers who want high-performance computing but don't need an entire server. For example, customers might purchase 2-4 dedicated virtual CPU cores instead of an entire machine.

For new hosting providers the funding model could use a waitlist system with escrow payments. When enough customers commit funds for a specific server configuration at a chosen provider, we would purchase and partition the hardware among them.

These numbers are back of the napkin numbers, with some of the deals not even being offered anymore and some assumptions about add-on pricing. The labor estimate is where I and most will undervalue how much time 15 or 30 customers can take.

Intel

Target:
2 dedicated Intel vCores
8GB ram
50GB+ NVMe SSD but expandable
10 Gbps
$7/mo
Dedicated base:
Limited time BF deal: https://blackfriday.fiberstate.com/
Intel Dual Xeon GOLD 6230 @ 2.10 GHz (40 cores/80 threads)
    256 GB Memory RAM
    2TB U.2 NVMe
    1 IPv4 Address Included
    /64 IPv6 Address Included
    10 Gbps 660 TB Transfer
    Included (reboot, install, console) IPMI
    Custom Deployment
    Location Salt Lake City UT USA
$119.95
Per Month
Breakdown:

$120/mo base server
$55/mo /27 (29 usable) additional IPv4s
$10/mo labor estimate (this is the issue)
$7/mo baseline host resource cost

$192/mo sub-total before 10% return
$211/mo total expenses

Requiring 31 VPS' @ $7 to hit $211/mo, but remember you want to dedicate 1 VPS worth of resources to the host, so you really will divide resources by 31+1 = 32, this multiple of a power of will help in dividing RAM just right but when you do have to you do so as it makes sense taking into consideration how partitioning VPSs will work w.r.t unused resources.

2 dedicated vCore check: PASS
32 VPS' is lower than the amount of physical cores (40) so there is enough to allow 1 dedicated physical core (2 dedicated vCores) per VPS. In fact you could add in a shared core similar to how HostHatch does

8 GB RAM check: PASS
256 GB divided by 32 VPS' allows 8 GB RAM

Final Specs:
Intel Dual Xeon GOLD 6230
2 dedicated vCores + optional shared vCore(s)
    8 GB Memory RAM
    60GB U.2 NVMe (additional 1 TB NVME $8/mo)
    1 IPv4 Address Included
    /64 IPv6 Address Included
    10 Gbps 20 TB Transfer
    Location Salt Lake City UT USA
$7/mo
Issue: Not enough IP addresses initially but need could be filled with existing nodes buying additional IPs to offset needed upgrade.

AMD

Target:
2 dedicated Ryzen vCores
8GB ram
50GB+ NVMe SSD but expandable
10 Gbps
$9/mo
Dedicated base:
Limited time BF deal: https://blackfriday.fiberstate.com/
AMD Ryzen 9 7950X (16 Cores/32 Threads)
128 GB DDR5 Memory
2TB NVMe Samsung Evo Plus
1 IPv4 Address Included
/64 IPv6 Address Included
10Gbps 660 TB Transfer
Included (reboot, install, console) IPMI
Custom Deployment
Location Salt Lake City UT USA


$119.95
Per Month
Breakdown:

$120/mo base server
$25/mo /28 (13 usable) additional IPv4s
$10/mo labor estimate (this is the issue)
$12/mo baseline host resource cost

$167/mo sub-total before 10% return
$184/mo total expenses

Requiring 15 VPS' @ $12 to hit $180/mo, but remember you want to dedicate 1 VPS worth of resources to the host, so you really will divide resources by 15+1 = 16, this multiple of a power of will help in dividing RAM just right but when you do have to you do so as it makes sense taking into consideration how partitioning VPSs will work w.r.t unused resources.

2 dedicated vCore check: PASS
16 VPS' is same as the amount of physical cores (16) so there is enough to allow 1 dedicated physical core (2 dedicated vCores) per VPS.

8 GB RAM check: PASS
128 GB divided by 16 VPS' allows 8 GB RAM

Final Specs:
AMD Ryzen 9 7950X (16 Cores/32 Threads)
8 GB DDR5 Memory
125GB NVMe Samsung Evo Plus
1 IPv4 Address Included
/64 IPv6 Address Included
10 Gbps 20 TB Transfer
Location Salt Lake City UT USA
$12/mo
Issue: Not enough IP addresses initially but need could be filled with existing nodes buying additional to offset upgrade. Price couldnt approach $9/mo and only worked with 12/mo

Conclusion

There is a gap of unknown size (warning!) in the market for budget VDS with high Gbps. If one can replicate how the dedicated hosts are making a profit, then it could be worth it given the 10% return could be used as corporate debt to expand and it's only used to pay off interest on loans.

The specs are given in such a way that it is safe to cut in half or double the prices and resources together. That is for $12/mo you can get 4 dedicated vCores and 16GB or
Dedicated 1vCore with 4GB RAM and 10 gbps (IPv6 only) for $3/mo is something to consider as well.

Finally, there is an option for an AI play because fiberstate and these higher quality dedicated providers offers a graphics card add-on which is something these lower budgets possibly can't offer in addition to their dedicated cores.
I think, as many German youths doing same, living near a data center, you can avoid remote hand expenses, having buying old servers/in-expensive hardware to host or hire, still have possibilities to cover up the expenses. If you are single person, having not to pay rents for home, having sufficient savings, have some expertise with CEPH like clusters, offering cloud VPSs that neutralize one single hardware failure, still providing reasonable cloud VPS for LET pricing. Oversell helps a lot, as many idle, when someone use the CPU/RAM lot, they will raise complain, move them to a not so crowded server. It will be double the bonus, if you could work somewhere, earn daily/monthly payroll, do this VPS stuffs along as side would be most beneficials . If you could pair up the business with like minded persons (+1 or +2 persons) would help to reply to tickets, solve customers problems until you have decent revenues.

You wouldn‘t beliebe how many started out exactly this way including me, that‘s btw one of the reasons some to LET new providers are getting into heated discussions.

They had a long way to fight to get up to the point where they are able to dump prices for LET offerings.

Some of them invest otherwise earned money through big customers, their 9-5 job or savings to scale their hosting business.

Those providers are used to rather good paying silent customers that are happy with their VPS. LET >5€/m low budget VPS dudes will bei their first customers in years of operation to tell them that their storage, cpu or uplink is to slow.

They will for the first time in years experience people demanding a refund because they have another CPU showing up in the VPS after every restart of that said VPS.

Those are the customers that basically register an account, order a 5€ vps, create several tickets because they have questions only to then ask for a refund because they found a cheaper offering.

I am not saying that LET is bad, or that such providers are dumb to extort them selves to be fucked by some random LET dudes, but i can’t imagine this being a healthy long time strategy and would therefore suggest to not build a business which has it’s primary focus on low budget LET deals.

Another thing that you will experience is that the first big wave of abusers are first going to use your servers for hacking, spaming, c****porn, ddos and phising as soon as you have some cheap offerings up that made their round in the respective criminal forums or communities.

There are a lot reasons to not start this way, rather focus on premium services and then once in a while drop something on LET to make up for 1/3 of a 50k€ investment with one deal in a short time. (That can’t be scaled indefinitely as well btw)

You have to look at your hosting like at a cup of beer.
You are filling it up with several customers and as you do that sometimes you will spill something and you will notice a lot foam.
But as you slow things down, keep adding beer to the cup (improving processes) steadily you will notice the foam disappearing slowly while you are making sure that things are going well and in the end you will end up with a big nice cup full of beer, or to be more clear: happy long time customers valuing your efforts.

Reliability/stability is key!

dev_vps · December 2024

@paroxsitic

Have you done marketing study for this package? The vps market is highly competitive

2 dedicated Intel vCores
8GB ram
50GB+ NVMe SSD but expandable
10 Gbps
$7/mo

Also, you need to add staff cost for technical and billing support.

dev_vps · December 2024

@ProHosting24 said:

You have to look at your hosting like at a cup of beer.
You are filling it up with several customers and as you do that sometimes you will spill something and you will notice a lot foam.
But as you slow things down, keep adding beer to the cup (improving processes) steadily you will notice the foam disappearing slowly while you are making sure that things are going well and in the end you will end up with a big nice cup full of beer, or to be more clear: happy long time customers valuing your efforts.

Reliability/stability is key!

I can’t think of better analogy example.
👍🏼👍🏼

nohavps · December 2024

Hello,

I think that this server/hosting business is all about offering quality and good customer service because without customers there is no business. As some people tell you, you have to see where you want to take your business. Sometimes there are days and weeks when you don't sell anything, but the other week is full of orders. That's when you see the light at the end of the tunnel.

Sometimes I personally wonder why there are some companies that offer plans at low prices. I do the math and it's not possible.

For example, if I buy a supermicro Ryzen 9950x server with 192 GB RAM / 2 X 4TB NVME, it costs you $4,324.99 + TAX + COLOCATION + IPs block + support + time to manage + taxes. Where are you located?

https://store.supermicro.com/us_en/as-1015a-mt.html

You see your server with plans of 4 - 5 $ you would see it in a year without profits

8 GB RAM / 100 GB NVME plans 8 $, even some 6 $

192/8 = 24 servers x 8 = 192 $ at cost without profits

Colocation per rack that comes out 30-40 $ taking into account that you have a full rack or per unit would it cost you 50-60 $ per month? You are putting money on your part

You say no, I'd rather rent servers and a Ryzen 7950x - 9950x would be profitable for me at $7 plans with 8 GB RAM / 100 GB NVME features

Rent: $200 + IP/24 ($150) it would cost you around $350-$400 for a single server, you have to look at your employees' salaries or just you having this business

You would have to sell 192 GB RAM / 8 GB = 24 PLANS AT $8 (AT COST)

You look outside at other large companies with Intel infrastructure offering plans from $40/$50/$60 per month with less space, you say you're doing things right?

Some of us want premium plans at a price of $5 but there are a lot of expenses behind it that only you have to manage.

LET is an excellent community that allowed us to make ourselves known and we will always be very grateful and we offer promotions for all our clients, but sometimes the quality and service is a bit uncompetitive with most providers.

When we started publishing we launched an intel xeon e5 2690v4 line with plans starting at $2.50

https://lowendtalk.com/discussion/194859/nohavps-dallas-vps-intel-xeon-2-50-2-gb-ddr4-ram-40-gb-disk-ssd-10-tb-transfer/p1

We had many people who said the quality was not good, that it is not like the ryzen, but today you see companies offering those same features and they consider it as premium quality knowing that in the end 1 - 2 years they will make Deadpool because they are not profitable, but one year it will be totally free, it is not a business.

Good luck and those who don't dare to have a business will never realize it and will ask themselves daily why they didn't do it.

Howdy, Stranger!

Categories

In this Discussion

Passive Income as VPS Provider?

Comments

TLDR

Core concept

Intel

AMD

Conclusion

TLDR

Core concept

Intel

AMD

Conclusion

Howdy, Stranger!

Quick Links

Categories

In this Discussion

Passive Income as VPS Provider?

Comments

TLDR

Core concept

Intel

AMD

Conclusion

TLDR

Core concept

Intel

AMD

Conclusion