Many web designers and freelancers who have 20 + customers use Reseller Accounts, VPS or dedicated servers to host their own customers. If this works for one, that's fine. If I was a designer I'd wouldn't bother myself to host my customer's websites and to get myself involved in providing customer support for things which a web hosting provider would do.
I know some guys use to make additional money out of hosting their own customers, but if one calculates the lost of time, they'd outsource this and would focus on web design and development.
As far as for the smaller and bigger, I'd say that anyone who;s working hard and could prove the company's reliability deserves support should have a good business.
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