From what I've seen of regional ISP's offering web hosting is that their prices generally aren't super competitive with the national hosts, so the average account has a bit more of a profit margin. Like any other local business, what you offer your clients is a face to face relationship. If the client wants to come in and bitch to you personally, they've got that option. Hell, they can even come in and pay you in cash if they want, Local marketing can be relatively inexpensive. Newspaper ads are a lot cheaper than ads in PC Magazine.
Word of mouth is even more valuable.
Make sure the relationship between yourself and these developers is mutually beneficial. Go the extra mile to support those folks, offer them free hosting of their own web site, or create a reseller type of financial agreement. And that's with no employees or office space.