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When starting a Web site, most businesses go the traditionalroute and pay a monthly fee for Web hosting services. While thisfee isn't overbearing for small, informational sites, it canbecome a goliath when you want to start adding enhanced featuressuch as streaming video, database integration and downloads--orwhen you start to experience high-traffic volume. Each of thesethings can drive your hosting charges through the roof to the pointthat your Web site actually becomes a liability rather than anasset. Under the right circumstances, it may be more cost effectiveto host the company Web site yourself. Believe it or not, thisalternative is not nearly as difficult or expensive as you mightthink.
Contrary to what many people believe, the most expensive part ofin-house hosting is not the equipment, it's the bandwidth. Agood Web server can be purchased these days for around $800--almostless than a personal computer. After purchasing the server,however, you need enough bandwidth to make your Web site loadquickly and handle all the traffic. A T1 line (broadband internetaccess about 27 times faster than 56k dial-up) is probably thelowest speed you should go, although you might squeak by with afractional T1 (only part of the speed a full T1 provides). Theproblem is a T1 costs between $500-$1,500 per month, which knocksthe wind out of most new entrepreneurs. However, there are ways tobeat the price.
If you already have a T1 in place for your office, thenpurchasing a Web server and attaching it to your router makesperfect sense, and it's a great use of the bandwidth you arealready paying for. If you don't have a T1 in your office--ormaybe you don't even have an office--you may benefit from whatis known as "co-location."
Most Internet service providers (ISPs) provide co-locationservices, which means you buy a Web server and send it to them, andthey will actually set it up in their facilities. As an example, XOCommunications provides co-location services for $375 a month. Thisprice includes rental of their rack space and bandwidth speedsequivalent to a T1 line.
Paying $375 per month is still quite a hit to the budget, butyou can find ways to justify and even leverage it. First, figureout how much hosting your own content is worth to you. For example,if your company sells software, you might find that you could makean additional $2,000 a month by allowing customers to download thesoftware right off of your Web site. This would require that youhost 900MB of files. Having your own Web server gives you literallyunlimited, free space, whereas traditional hosting charges for900MB would be extremely expensive.
Once you've determined out how much in-house hosting isworth to you, figure out ways to help leverage the costs byproviding hosting to other companies or individuals with whom youhave a strong relationship. You can offer low prices that will drawthem away from their current ISPs, and while you're addingmonthly cash flow to help pay off the co-location charges, you arealso strengthening your relationships as you are providing a greatservice.
So, if your company relies on a Web site that is rich inmultimedia, has high traffic, or requires large amounts of diskspace, you should consider hosting your own Web site if you canjustify the cost. You'll be amazed at all you can do when youhave your own server.
Joel Holland, age 17, has been starting and runningbusinesses since he was 12 and is currently the chief marketingofficer for Nortel Networks Kidz Online, a digital studio thatcreates educational content about technology for schools nationwideand in Canada. Holland is ranked in the top 10 nationwide for hismarketing skills through DECA, a national organization with morethan 300,000 teen members, and was named Business Student of theYear by the McLean, Virginia, Chamber of Commerce. To contactHolland, write to joel@joelkentholland.com.
