A reseller's dubious machinations and my behaviour

AGXL · January 20

Hello everyone,

I manage the website for a number of clubs, local pharmacies and doctors' surgeries. I also do the accounts for some of them. I noticed that they were spending a lot of money on web hosting. Then I looked up how much money one club was spending per month on web hosting for a static website that was not even 100MB in size, and I was almost blindsided: this club was paying €99 per month for a dedicated root server. I investigated further and found out that the customers are all on one server, but the whole server is charged for each one. I can also prove that the same IP address but supposedly different servers. More interestingly, the server is only purchased as a reseller and costs less than €49 per month. According to my documentation, my admin customers alone transfer around €1000 per month to the reseller company.

Now comes the dilemma I find myself in. The hosting company that runs the servers used to be a good friend and colleague of mine.

The question is what should I do with the information, should I inform the customers or should I make it public by naming names or should I just stay out of it? I spoke to the host, my ex-colleague, yesterday and he said you have to exploit people's stupidity to maximise your profit. He pointed to his Porsche. He also subtly threatened me that my hosting company could get into trouble if I said anything.

Maybe you can help me or give me some advice? Thank you so much!

DrNutella · January 20

You can run dedicated VMs on a single server. Maybe go build your own business instead for wishing for someone else’s. That’s all I hear.

Go look at WPEngine and more. They make your friend look cheap.

wankel · January 20

@AGXL said: He pointed to his Porsche. He also subtly threatened me that my hosting company could get into trouble if I said anything.

He wouldn't ram his Porsche into your server room, would he?

@AGXL said: you have to exploit people's stupidity

Luckily enough, those innocent people hired you to cover their lack of acumen in this regard. Do you get paid for your services? Could your task be described as "manage the website and give advice in that regard"? How much management does a static site involve, anyway?

I'd say 100 euro per month is negligible for a good running business, but for a club that is in my experience mostly run by volunteers, a saving of 1100 euro per year makes for a nice dinner at the end of the season.

With the pharmacist and the doctor I'm in limbo: health care is expensive enough without additional parasites, but would your customers return savings to their patients or to their pockets?

Your customers probably have a contract with their provider; in a free market, customers are free to look for the best deal they can get.

@DrNutella said:

Go look at WPEngine and more. They make your friend look cheap.

You seem to imply that WPEngine is more expensive. They don't offer a "dedicated root server" for 99 euro per month, but their smallest managed plan, at 25 euro, offers far more space than the 100 MB needed.

Whichever solution they may go with, "someone" will have to manage the migration.

AGXL · January 20

Thanks for your reply.

@wankel said:
He wouldn't ram his Porsche into your server room, would he?

Wouldn't work as I have my server room on the fourth floor

@wankel said:
Luckily enough, those innocent people hired you to cover their lack of acumen in this regard. Do you get paid for your services? Could your task be described as "manage the website and give advice in that regard"? How much management does a static site involve, anyway?

No, I do not get paid for this work. The effort is relatively small; design adjustments, content adjustments, etc.

legendary · January 20

A machinations? Please listen to legendary Kain and Raziel dialogue.

ralf · January 21

@AGXL said:
... I also do the accounts for some of them. I noticed that they were spending a lot of money on web hosting. ...
Now comes the dilemma I find myself in. The hosting company that runs the servers used to be a good friend and colleague of mine.
The question is what should I do with the information, should I inform the customers or should I make it public by naming names or should I just stay out of it?

In your role as acting as their accountants, you could just say that they can probably get a much cheaper deal elsewhere. However, taking that business yourself could very well be seen as being a conflict of interest, and if you can't easily find a migration path to the cheaper alternative, then them knowing that information might just make the situation worse. If you can recommend something they can do easily, that's the best option

I spoke to the host, my ex-colleague, yesterday and he said you have to exploit people's stupidity to maximise your profit. He pointed to his Porsche.

The amount of profit he's making seems a bit excessive, especially as if he got the contracts through friends - which I'm guessing at if you share the same social circle. If it's just that his business is local and they organically found him through advertising, and they were offered a price for a service and they accepted it, he's not really done anything wrong. They wanted something and he's providing it at a price they're happy to pay.

He also subtly threatened me that my hosting company could get into trouble if I said anything.

I think that's true if your company takes the work. Although if he was causing the trouble, I'd recategorise him as an ex-friend.

TLDR: tell them they can probably save money, but only if you can recommend a neutral 3rd party company that you're not connected with in any way. Alternatively, offer to take the work but stand down from any decision making or accounting role with those societies. Or alternatively, offer to host it for free.

The other thing is ethically, it's not your place to nosey into the transactions beyond making sure they're in the accounts correctly unless they specifically ask. It's kind of OK to say "for the kind of website you have, this seems like a lot of money", but to investigate the margin their supplier is making and then speak to the supplier about it seems to be overstepping. You also know that if they leave their current supplier for any reason, even if you don't say anything, the supplier will think you put them up to it. If they all leave and he looses a big chunk of easy profit, there's definitely a chance he'll try to cause you problems.

rcy026 · January 21

@AGXL said:

@wankel said:
He wouldn't ram his Porsche into your server room, would he?

Wouldn't work as I have my server room on the fourth floor

That is only a matter of angle and enough speed.

MichaelCee · January 21

Google AI describes a Dedicated Root Server as "A dedicated root server is a server that is not virtualized and is exclusively assigned to a single user or task. It's also known as a bare metal server." If they are paying for a Dedicated Root Server and are not receiving a Dedicated Root Server then surely you can inform them that they are being scammed.

Jab · January 21

except you have no idea what they pay for. SLA? Support? Content management?

HostSlick · January 21

Advice is just dont give a shit about anyone elses Business. Move on make money yourself.

And Trouble? What Trouble? It sounds like fun for me
If i was you i would chase him for threaten me and make sure the customers will move to me. Just for the fun and make some competition. In a way he cant do anything. (Be silent ..)

He threaten you. He is not your friend.
You shouldnt have talked to him anyway regarding this.

But thats just me. I took Off 30 bare Metal Servers from competition just last week. And thats not a cheapskate customer as well. I rip off the competition all The time. Because same its what happen everywhere. Business means competition.

Just do it.

Just dont talk. Keep it for yourself.

Business is Business. Sometimes its done a hard way.

HostSlick · January 21

@ralf said:

@AGXL said:
... I also do the accounts for some of them. I noticed that they were spending a lot of money on web hosting. ...
Now comes the dilemma I find myself in. The hosting company that runs the servers used to be a good friend and colleague of mine.
The question is what should I do with the information, should I inform the customers or should I make it public by naming names or should I just stay out of it?

In your role as acting as their accountants, you could just say that they can probably get a much cheaper deal elsewhere. However, taking that business yourself could very well be seen as being a conflict of interest, and if you can't easily find a migration path to the cheaper alternative, then them knowing that information might just make the situation worse. If you can recommend something they can do easily, that's the best option

I spoke to the host, my ex-colleague, yesterday and he said you have to exploit people's stupidity to maximise your profit. He pointed to his Porsche.

The amount of profit he's making seems a bit excessive, especially as if he got the contracts through friends - which I'm guessing at if you share the same social circle. If it's just that his business is local and they organically found him through advertising, and they were offered a price for a service and they accepted it, he's not really done anything wrong. They wanted something and he's providing it at a price they're happy to pay.

He also subtly threatened me that my hosting company could get into trouble if I said anything.

I think that's true if your company takes the work. Although if he was causing the trouble, I'd recategorise him as an ex-friend.

TLDR: tell them they can probably save money, but only if you can recommend a neutral 3rd party company that you're not connected with in any way. Alternatively, offer to take the work but stand down from any decision making or accounting role with those societies. Or alternatively, offer to host it for free.

The other thing is ethically, it's not your place to nosey into the transactions beyond making sure they're in the accounts correctly unless they specifically ask. It's kind of OK to say "for the kind of website you have, this seems like a lot of money", but to investigate the margin their supplier is making and then speak to the supplier about it seems to be overstepping. You also know that if they leave their current supplier for any reason, even if you don't say anything, the supplier will think you put them up to it. If they all leave and he looses a big chunk of easy profit, there's definitely a chance he'll try to cause you problems.

+1

host_c · January 21

@AGXL said: The question is what should I do with the information, should I inform the customers or should I make it public by naming names or should I just stay out of it? I spoke to the host, my ex-colleague, yesterday and he said you have to exploit people's stupidity to maximise your profit. He pointed to his Porsche. He also subtly threatened me that my hosting company could get into trouble if I said anything.

Listen to your own advice - should I just stay out of it - yes, not your problem to solve.

fact that he managed to invoice a large $$ on some folks and spend little as a few $ on infrastructure - it is called business now days. Your "friend" managed to sell he's product with low expense and high profit, I will not debate if this is moral or not, this is done since the dawn of ages.

The only thing you can do, if you wish, is to report your "friend" to the IRS if the transactions are done off the books - as this outposts morality here, other then this, just stay out of it, not your fight, regardless of how much you do not like it moraly.

Other then the moral problem here, I see no harm done. MSFT, Google or AWS will charge you insane amounts for a High Spec KVM that you can get from a Premium Hosting company 10x-20x cheaper, it is up to the customer to inform himself if the value he pays is the right one or not, but again, if the customers are pleased with what they get, it is called "a legitimate deal".

One will build your house for 100K, other for 500k ( we assume the same quality and specs ), should we bully the one that asks 500k and has a Porsche?

There is a saying in RO ( sure it is in other countries also ) - Foolish is not the one who asks, foolish is the one who gives.

I am pretty sure the above might not be the answer you are looking for, but sincerely, if the fella's business is legit, not your problem to solve.

EDIT:

You could follow his approach and offer lower prices and compete fairly to attract his customers.

DrNutella · January 21

@DrNutella said:

Go look at WPEngine and more. They make your friend look cheap.

You seem to imply that WPEngine is more expensive. They don't offer a "dedicated root server" for 99 euro per month, but their smallest managed plan, at 25 euro, offers far more space than the 100 MB needed.

Whichever solution they may go with, "someone" will have to manage the migration.

Give them a call and ask for custom quote. Don’t assume. They want your money

A reseller's dubious machinations and my behaviour

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