Reseller Hosting Pricing Explained (Break-Even & Profit Calculator)
Featured-snippet TL;DR:
Your reseller hosting price should be set from the bottom up:
Retail Price ≥ (Unit Cost + Processing Fees + Support Time) ÷ Target Margin.
Find your break-even client count with:
Break-even = Fixed Costs ÷ (ARPU × (1 − fee%) − fixed fee)
Then pressure-test with churn, CAC, and your plan mix. A lean stack (white-label cPanel/WHM, CloudLinux, LiteSpeed, daily backups) keeps costs predictable and margins healthy.
Quiet plug: Tremhost keeps the base stack affordable (instant setup, free cPanel migrations, private nameservers), making it easier to price fairly and hit profit. See tremhost.com/reseller.html.
The Three Cost Buckets You Must Model
- Fixed monthly costs – paid whether you have 1 or 100 clients
- Reseller plan, billing software (e.g., WHMCS), status page, helpdesk.
- Variable per-customer costs – scale with customers
- Payment processor fees (e.g., 2.9% + $0.30/txn), occasional support time.
- Growth frictions – not monthly, but change outcomes
- Churn (customers leaving each month) and CAC (cost to acquire). These two determine your LTV and payback period.
If your upstream provider bundles performance (NVMe + LiteSpeed) and backups, you avoid surprise add-ons and protect your margin. Tremhost’s Reseller Hosting is designed with that in mind.
Formulas You’ll Actually Use (Copy/Paste)
- MRR revenue:
MRR = Σ(plan price × # clients) - ARPU (blended):
ARPU = MRR ÷ total clients - Processing fees (est.):
Fees = MRR × fee% + total clients × fixed_fee - Gross profit:
Gross = MRR − Fees − Fixed Costs - Gross margin %:
Margin% = Gross ÷ MRR - Break-even customers (est.):
Break-even = Fixed Costs ÷ (ARPU × (1 − fee%) − fixed_fee) - Gross LTV (simple):
LTV ≈ (ARPU × Margin%) ÷ churn - CAC payback (months):
Payback = CAC ÷ (ARPU × Margin%)
These are conservative, monthly formulas assuming one billable transaction per active client per month.
Worked Example (Replace with Your Numbers)
Inputs
- Fixed costs: reseller plan $40 + WHMCS $15 + overhead $5 = $60
- Processor fees: 2.9% + $0.30
- Mix: 20 Starter @ $9, 25 Business @ $15, 5 Pro @ $22
- Churn 4%/mo, CAC $25
Outputs
- MRR = (20×9 + 25×15 + 5×22) = $700
- Total clients = 50 → ARPU = 700/50 = $14.00
- Processing fees ≈ 700×2.9% + 50×0.30 = $32.30
- Gross profit = 700 − 32.30 − 60 = $607.70
- Margin ≈ 86.8% (before support time)
- Break-even customers = 60 ÷ (14×0.971 − 0.30) ≈ 5
- Gross LTV ≈ (14×0.868)/0.04 ≈ $304
- CAC payback ≈ 25 ÷ (14×0.868) ≈ 2.1 months
👉 Translation: with a lean upstream stack, you break even in single-digit customers and pay back CAC fast. After that, focus on retention and high-ARPU add-ons.
What Actually Moves Your Margin
- Performance by default (LiteSpeed + NVMe + HTTP/3) → fewer “site is slow” tickets.
- True white-label (private nameservers, branded cPanel) → you sell a platform, not a commodity.
- Backups + easy restores → minutes instead of hours when things go wrong.
- Deliverability hygiene (SPF/DKIM/DMARC + rDNS) → fewer email escalations.
You get these baselines out of the box at Tremhost: Reseller Hosting, plus stack pages for CloudLinux and LiteSpeed you can link from your pricing page.
Pricing Your Plans (Structure That Converts)
Offer three tiers and make the middle one the “best value.” Lead with outcomes, not just GB.
| Plan | For whom | Price idea (USD/mo) | What’s included |
|---|---|---|---|
| Starter | Basic brochure sites | 7–10 | Daily backups, AutoSSL, email setup (SPF/DKIM/DMARC) |
| Business | Growing sites | 12–18 | LiteSpeed/LSCache, on-demand restores, staging |
| Pro/Commerce | Woo/learning/membership | 18–29 | Priority CPU/RAM, object caching, WAF rules |
Annual prepay (e.g., 2 months free) improves cash flow and reduces churn.
Free Download: Break-Even & Profit Calculator (Excel)
I made a simple, editable workbook with all the formulas wired up. Change the inputs (prices, client counts, fees) and the Outputs sheet recomputes your MRR, fees, margin, break-even, LTV, and CAC payback.
Download: Reseller Pricing Calculator (Excel)
What’s inside:
- Inputs: fixed costs, processor fees, churn, CAC, plan prices and client mix.
- Outputs: MRR, total clients, estimated processing fees, fixed costs, gross profit, margin %, blended ARPU, break-even customers, gross LTV, CAC payback.
How to Use the Calculator (60-second guide)
- Enter your fixed monthly costs (reseller plan, WHMCS, overhead).
- Set your payment processor fees.
- Add churn (monthly) and CAC if you track them.
- Enter your plan prices and an estimated client mix.
- Read the Outputs panel:
- If break-even customers > 10, raise prices or trim fixed costs.
- If CAC payback > 3 months for a low-churn niche, improve onboarding/upsells.
- Use LTV to decide how much CAC you can afford.
Guardrails & Common Pitfalls
- Don’t sell only on GB. Clients buy speed, safety, and peace of mind.
- Test restores, not just backups. If you can’t restore fast, you don’t have a backup.
- Model support time. If heavy users burn hours, move them to Pro or upsell a care plan.
- Mind email. Most SMB pain is inbox-related—authenticate domains and consider a dedicated IP or a transactional service for stores.
FAQs (People Also Ask)
What’s a good gross margin for reseller hosting?
Healthy operators target 70–85% gross margin before support labor. The stack and your plan mix matter more than “unlimited GB.”
How do I pick prices without racing to the bottom?
Lead with outcomes (backups, speed, deliverability, security) and bundle smart add-ons (staging, care plans, premium backups) instead of cutting prices.
How many clients do I need to break even?
Use the formula here or the calculator. With a lean stack, many resellers break even around 5–10 clients.
Do I need WHMCS?
Not mandatory, but it pays for itself after ~10–15 clients via auto-provisioning, invoicing, and renewals.
If you want instant activation, private nameservers, free cPanel migrations, and a performance-first stack that simplifies support, start with Tremhost Reseller Hosting. Then plug your numbers into the calculator and publish a pricing page you feel confident about.
