Web hosting reselling entails renting a server from another web hosting company and leasing out bandwidth, hard disk space, and processing power to other customers at a lower rate. For example, if you need a private server to host your website yet you do not want to pay the price for one, you can lease out partitions of the hard drive and divisions of the bandwidth to other people and divide the cost of the whole server between them. As a business, the idea is to make a profit by leasing out the entire server to multiple clients until the cost is exceeded by the income.
An Alternative to Paying Clients
You don’t necessarily need your clients to pay you directly for their space. I’m sure you’re familiar with seeing advertisements on websites, and you’re most likely aware that those ads can be the primary source of income for a website or at least a significant source. In turn, you can place ads on the websites of people you host on your private server. Of course, no one would want to pay for space on a hosting reseller’s server when their page will have ads on it. Instead, you can offer a limited amount of space and bandwidth to your clients for free, and all of the traffic they receive to their websites will generate revenue for you, possibly more than if the clients were paying you!