More of the "market is saturated" stuff...
In any business worth being in, you are going to have competition, and probably lots of it.
Anyway, web designers can make a nice side revenue stream offering hosting to their clients. In my experience, most businesses are more than happy to have everything - domain, hosting, design, SE O, etc. - handled by the same person. Makes everything simpler for them, even if it's more expensive.
We typically charge around $25/mo for hosting. Our hosting is definitely higher quality than your average shared plan or something like that, but that's still a lot more than we could get as a standalone hosting company for the same package.
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Google isn't as dumb as you think.