I have been googling for various places from where i can purchase a dedicated server for one of my projects.

I find there are very few server providers with whom you can directly purchase servers. Most others are just reselling servers from one another. Now another thing which confuses me is that these resellers are able to offer servers for substantially lower prices along with managed support. Evenif they purchase in bulk, how come they provide such?
For ex:- I found one server provider selling server for $250 but same configuration is available with a reseller for $150 and along with managed support. Is there such a huge profit margin or what?
I need help in understanding, which is better option and why?

Resellers obviously get discounts depending on how many servers the reseller has. I don't think 80% of Resellers have a max of a 20% Discount and 20% of them have a 25% Discount.

Not all resellers are reliable and depend on the provider way too much. If the reseller was however from someone like Softlayer or ThePlanet they each have strict regulations to become a certified reseller, however some of the entry-level-low-pricing resellers tend to rely on their provider way too much.

However what kind of server are you looking for and what is your budget maybe one of the members can advise you to a provider.

What are the specs and budget you are looking for?

What Marks says is absolutely true. It depends on who the reseller is and who they are leasing there servers from. You can always run thorough checks on details such as who they are reselling from, how long they have been around, the reputation they hold on the internet, to make sure your leasing from a reputable web host.

Well, Management is 100% needed if you dont know anything about Linux

On a dedicated server, your profit is less unless you've got enough clients. and for reseller account, its fine unless you are on a unreliable, unprofessional webhost.

SImmply say, dont go with profits or budget, if you want quality, you will need to empty your pockets a little but that doesnt matters for your sites/business giving you many times the expenditure..

Some server provider change their charges when you renew the contract. Their initially prices are very low. So be careful from those.

As a word of caution, sometimes you only qualify as a reseller if you already own a number of their severs.

It all coes down to budget really. Everyone would love to have a Quad Xeon Server with 8 Gb ram and unmetered 100mbps pipe but VERY few can afford that, those costs hundreds per month at minimum.
If you dont know Linux most sellers offer free or cheap server management plans when purchase form them so you have all the functionality without all the potential headaches.
You can get dedicated servers with an easy to use control panel for as low as $39/month unmanaged these days but if want better quality you will have to pay better money. CPANEl liscenses for servers are up around $40 per month now but most would agree still worth it, that is just the panel
If moeny is real tight and want to get started or if just want to try the business then by all means use a good reseller account to see if is something really want to do and if you can make any money at it.
Everyone has to start somewhere..

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Be careful when u select. normally u need to go back to ur reseller for support and the actual company will turn u away too