Anyone else seeing margin squeeze on reseller plans?

Been in hosting for 8 years now and I'm genuinely concerned about where reseller margins are heading. My costs with Hetzner and Netcup keep creeping up—disk space, bandwidth overage fees, support tickets. Meanwhile customer expectations haven't changed and they won't pay more.

I've got 300 accounts spread across 5 reseller subscriptions. Used to clear 40% margin easy. Now I'm looking at 25-28% after all the infrastructure costs. That's before my own support time.

Are other providers seeing this? Am I just inefficient with my resource allocation or is this industry-wide squeeze real? Thinking about consolidating to bare metal but that's a whole different headache.

How are you guys staying profitable?

Yeah, the reseller game's getting squeezed hard. I pivoted away from raw reseller plans 2 years ago and went hybrid—kept my best 50 accounts but moved the rest to managed VPS with containerization (LXC/Docker). Margins actually went UP because I could charge for the management layer instead of competing on hosting alone.

The real issue is resellers are commoditized. Your customers don't care who the upstream is, they just want cheap + reliable. If Hetzner won't budge on costs, maybe your differentiation isn't in hosting anymore. Managed backups, migrations, security patches, uptime monitoring—that's where the margin is. Took about 6 months to retool but worth it.

FYI there's good thread on WebHostingTalk about this exact problem if you want to see how others handled it: https://www.webhostingtalk.com/

Thanks for that perspective, dcops. The managed VPS angle is interesting—I've been hesitant about the extra support overhead, but if it's actually tighter margins-wise I should look harder. Did you find your churn rate changed much when you moved customers over?

Have you looked at overage fee structures more carefully? Sometimes the fine print is where providers are getting you. I negotiated custom overages with Netcup—they won't advertise it but if you're moving decent volume they'll work with you on bandwidth tiers. Might reclaim 3-5% right there without touching your service model.

The real problem is you're still competing on price with providers who have zero support model. Have you considered tiering your reseller accounts by support SLA? Charge a flat +15% for "managed" tier with guaranteed response times, keep budget tier lean. Worked for us—margin went from 26% to 34% because the good customers are willing to pay for actual support. The budget crowd gravitates toward Bluehost anyway. Might be worth segmenting your 300 accounts and seeing who'd actually convert.

Netcup's been hiking their wholesale bandwidth costs every quarter—honestly might be worth looking at smaller regional providers if you can manage multi-provider complexity.