Thanks for the answer ryanpq, I will test out both options but I might go along with the first option for my first few customers. I have another question thought, dont know if its the right place to ask, but for each of my customers I would like to assign a custom subdomain such as customer1.example.com and customer2.example.com I understand that I can assign it from my godaddy account but from my previous experiences it usually takes around 24-48 hours to propagate unless I have purchased the domain through the webhost itself. Is there a way to assign a custom subdomain to a new droplet immediately? without having to wait 24-48 hours?

Yes. Here is what I would recommend.

1.) Repoint your domain on GoDaddy to our nameservers
ns1.digitalocean.com
ns2.digitalocean.com
ns3.digitalocean.com
We don’t charge for DNS services.
2.) Set up your main (example.org, www.example.org) records to point to your site.
3.) When you set up a new user’s droplet if you are using the API you can create the new subdomain A record that way (or you can do so via the control panel). Our DNS system should have your record responding almost instantly.

Thank you so much, again for the help. I will check it out now. Also if there are any tutorials on how to set up the subdomains throug the API or the control panel could you share it with me? I already know how to create droplets and change the name servers. Thanks

This tutorial will walk you through setting up the initial records for your domain. The portion on creating an A record is also what you would do for the new subdomains.

This section of our API documentation details how to add additional A records using the API so you can automate the process.

What would be the best way to update the codebase for each customer? Would I have to go into each VM and pull the newest code from github, or is there a way to do it for all of them at once?