The Maths of a Web Hosting Provider

Published on Sep 17, 2020

I'm wondering whether it's possible to make a profitable web hosting business as a side project in 2020.

A website cannot exist without web hosting, so you have to pay a certain amount of money to keep it alive. Static websites that do not change very fast (weekly) can use free hosting in the form of services like Netlify, Github Pages, or Vercel, but you are bound to pay at some point if your project sees any growth.

Being a sysadmin demands a whole skillset, but there are things where you can do yourself if you niche down: setting up a web server like Apache or Nginx is a well-documented process, for example. As long as you're willing to learn and don't chew more than you can bite, there are a few things you can do for money.

If you specialize in Wordpress hosting, you can already address a huge market—Wordpress representing 35% of all websites. But you need quite a lot of RAM to make it run: at least 1Gb per website according to hosting provider SSD Nodes

If I were to do this, I would focus on increasing my Return on Investment by investing in cheaper yet performant Raspberry Pi single-board computers, from 2 to 8 Gb, turn them into server clusters, and focus on static hosting with headless content management systems. 

A Raspberry Pi 4 Model B with 8Gb costs $75. If I were to host 8 Wordpress websites with it at $5 per month, I'd cover my initial investment in 2 months. On the other hand, I could drastically increase profitability by leveraging a JAMStack architecture: shared back-end micro-services, one common administration platform, and static web pages served to the end-users. I would need less RAM, since resources are shared among my customers, while increasing performance.

I also need to take into account the electricity bill, but I wouldn't need cooling tech since Raspberry Pi don't seem to need any (embedded architecture). The electricity bill could be reduced by using an off-grid network running on renewables, but I'd still need it for any emergency measure.

The big pain point in this business are the Service-Level Agreements: you need to be up at all time, and this is where a background in engineering comes handy because you would need to design secure, redundant systems. It's incredibly hard. Of course, I'd also have to stay close to the servers to perform maintenance tasks and make sure the hardware stays safe.

In conclusion, web hosting is a job and it's very unlikely I could do it part-time, let alone provide business-level SLAs. The alternative could be to make it a hobby and use it to host small websites where risks are low (e.g, my personal website or web experiments).