Many hosting resellers set prices by looking at competitors and going €1 cheaper. That is a race to the bottom. Here is how to actually calculate margins and price for sustainable profit.
Understanding Your Costs
Infrastructure Cost
Your base cost is what you pay your upstream provider. For reselling VPS-based hosting:
| Resource | Typical Cost | Example |
|---|---|---|
| VPS with 8GB RAM | €11-15/month | Enough for 3-4 Minecraft servers or 1 FiveM server |
| VPS with 16GB RAM | €20-30/month | 6-8 Minecraft servers or 2 FiveM servers |
| Dedicated server | €60-120/month | 15-30 game servers depending on resource needs |
Overhead Costs
Don't forget non-infrastructure costs:
- Domain and SSL: €15-30/year
- WHMCS license: €15-20/month
- Website hosting: €5-15/month
- Marketing: Variable, but budget at least €50-100/month if running ads
- Your time: The most undervalued cost
Support Cost
Calculate your support cost per customer per month. If you spend 2 hours on support per week for 30 customers, that is about 25 minutes per customer per month.
Calculating Margins
Simple margin formula:
Margin = (Revenue - Cost) / Revenue × 100
Example: You sell a 4GB Minecraft server for €8/month. Your cost for 4GB of VPS RAM (proportional) is about €4/month.
Margin = (8 - 4) / 8 × 100 = 50%
That looks good, but it doesn't account for overhead, support time, or idle resources.
Realistic margins
After accounting for all costs:
- 30-40% margin - Healthy for budget hosting
- 40-60% margin - Good for mid-range hosting
- 60%+ margin - Premium/managed hosting territory
Pricing Strategies
Cost-Plus Pricing
Add a fixed markup to your costs. Simple but ignores market positioning.
Value-Based Pricing
Price based on the value customers receive. A FiveM server that runs a popular roleplay community is worth much more than its resource cost.
Tiered Pricing
Offer 3-5 tiers from budget to premium. The middle tier should be your best margin - it is what most people choose.
Annual Discounts
Offer 10-15% off for annual billing. You get cash upfront and reduce churn.
When to Invest More
Signs you should upgrade infrastructure (even if it reduces short-term margins):
- Customers complaining about performance
- Support tickets about lag or downtime increasing
- You are overselling resources and it is affecting quality
- A competitor at the same price point offers better specs
Common Pricing Mistakes
- Racing to the bottom - There is always someone cheaper. Compete on quality instead.
- Not accounting for support time - If a €5/month plan requires 30 minutes of support per month, you are losing money.
- Ignoring idle resources - If you buy a 32GB VPS and only sell 20GB worth of plans, the remaining 12GB is pure cost.
- No price increases - If your costs go up but prices stay flat, margins shrink invisibly. Review pricing annually.
- Free plans - They attract the highest-support, lowest-conversion customers. Avoid them.
Running the numbers before setting prices is the difference between a hobby and a business. Know your costs, set your margins, and review regularly.
