I've been running a web design business for a couple of years and have offered hosting as a part of the service to make it an all in one service. But I see a lot that people offer reselling without any other service, and I am not really sure how that would work.

I can see from the point of view of the reseller that you would make a profit by selling on small chunks of your hosting. But for the person buying, what are the advantages? Could they not find cheaper hosting (from the prices I have seen reselling packages going for) by buying their own hosting?

I don't mark up my hosting, so don't make more than pennies profit, so can you tell me-does this really work?