Web Hosting - Overselling

[temi]

What is overselling?
Overselling, put simply, is a term used in the hosting industry where a company advertises plans that are unsustainable if every one of their clients was to use the full resources of the package.
For example, a host may have a server with 300GB of storage space and offer plans with 50GB of space each at £5 per month. As soon as 6 clients sign up for an account, all space on that server has been allocated, however the company can see that those clients are only using around 10GB in total.
Here’s where the overselling comes in.
It is pretty much a certainty that not every client will use the full resources allocated to their account. With only 6 clients using 10GB of storage space, the hosting company can carry on selling accounts until the server starts to show signs of becoming full.
Of course, there are other factors that need to be taken into account here and not just disk space. Each client will use other resources too, bandwidth and processor usage for example. It’s down to the hosting company to monitor their servers to make sure they can provide the level of service that was stated in the agreement.


So why would they do this?
Basically, it’s a marketing strategy, and a very good one. Everyone wants as much disk space and bandwidth as possible, while paying the lowest price – even if they have no intention of using hundreds of gigs of storage. Greed gets the better of people and seeing a plan with 100GB of disk space looks allot more appealing than one with 1GB.


Can I use all of this space?
Each hosting company has different terms and conditions that limit what you can do with your account. I have seen one company setting a limit of 1% processor usage per account, some companies disallow you from uploading certain file types, i.e no video, archive or video files are allowed. Therefore they are limiting you to just images and html – it’d take allot of images to fill the 500GB that some companies advertise, and even if you did get close they would probably hit you with the processor usage clause and terminate the account.


So overselling is a con?
If you are looking for somewhere to setup the next Facebook or YouTube, you’re out of luck. There’s virtually no chance of you being able to use your full quota and will be suspended before you get anywhere near your limit.
Overselling isn’t just used in the web hosting industry and is probably more common than you realise. For example, your telecommunications company probably has millions of customers, but if all of them were to make a call at the same time you would certainly have trouble getting through – something often seen at New Years Eve.
Having the resources to allow this would cost them a fortune, which they would have to pass onto their clients. Overselling not only keeps costs down for the end user, but also allows the hosting company to attract many more clients.
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A big thank you to Daniel Butcher, MD EZPZ Hosting for writing this article for UK WW.
If you will like to write an article for UK WW, please use the contact form or send a PM to Temi

 

[camp185]

Saw your blog post about this. Tons of companies do this, even the big ones like Netflix or Blockbuster. Those two particular companies don't make money on clients that rent 15+ movies a month through the mail in service. They only make money on the once and a while renters.

 

[temi]

This show they have a flawed business model, some companies over compete on price not leaving a decent merging for profit hence end up in all kinds of financial difficulties.

 

[Gorkfu]

Those two particular companies don't make money on clients that rent 15+ movies a month through the mail in service. They only make money on the once and a while renters.

Yea they don't make any money off me!

This show they have a flawed business model

I don't think it's flawed, at least not until some other competition starts to hurt them.

 

[SoulTech]

Yea they don't make any money off me!



I don't think it's flawed, at least not until some other competition starts to hurt them.

well said.

 

[Vilice]

first of all, you need to know whether the domain is blacklisted by famous search engine. else you will wasting your money buying this.
I would think it would be more about the topic or topics than the member count. (Not that the member count is insignificant, but a high member count it more a brute force way to get message board to gain you income.)

 

[DanielEZPZ]

Why are none of your posts making any sense?

 

[Midwest]

Why are none of your posts making any sense?

If you were talking about Vilice's posts, then I was wondering the same..

 

[[Tsohost] Darren]

Just remember: your bank is overselling quite considerably. (It only holds in reserve a small fraction of the money deposited)

This works fine for 99.99% of people who are usually able to withdraw all the money they need at short notice without a problem.

 

[temi]

Not quite sure the bank over selling and web hosting companies over selling are good comparison.
When hosting company oversell customers pay for it in slow access time to your site which could be fatal to your business.

When banks oversell, they just borrow more money from other banks or bank of England.

Just remember: your bank is overselling quite considerably. (It only holds in reserve a small fraction of the money deposited)

This works fine for 99.99% of people who are usually able to withdraw all the money they need at short notice without a problem.

 

[neilrbowen]

I agree its an unfair comparison, a better way of showing it is;

When a host oversells all customers are effected
When a bank oversells normally nobody notices any change in service.

 

[[Tsohost] Darren]

Overselling with banks can affect everyone or it can affect a tiny minority.
Overselling with hosting can affect everyone or it can affect a tiny minority.

It depends how it's done entirely. The only difference as I see it is that the banking industry is highly regulated (in most western countries) and that in the web hosting industry people can practically "make up" numbers and put them next to a price with no intention of providing that service.

Overselling is what makes hosting and servers affordable to the masses. It's what makes broadband available to practically everyone, it's what makes mobile telephones available to everyone (do you think your phone provider has enough capacity for everyone to send a message all at the same time...? Think about New Years Eve).

Getting the balance right is the tough part - most mobile phone networks seem to have it together, because 99.9% of the time, you can call and send messages instantly with no "network busy" messages.

 

[Midlandi]

Overselling has become a requirement of most host providers, though the term is a little misleading.
Ok so they are selling space and bandwith that they have not nor ever will have, but without being able to utalise this most providers would not be able to operate.
As already stated, its a fact that 99% of users will never use the masses of resources they buy, from the large number of clients I have now and in the past, I have never had one come even close.
The fact that this is driven not only by the greed of the customer but the downright stupidity of those companies who started it in the first place.
Part of the problem is the market is so flooded with hosting companies, a huge number of which are individuals who buy "off the shelf" Hosting sites with little or no experiance in this genre, and to attract new customer feel it appropriate to offer what they can never deliver.
Having said that, was it this area of the market that initiated overselling, or was it the bigger copmanies?
My only advice is if you need the amount of resources that are offered, dont buy it, but then if you have a site that size you will know that already.
Either way overselling is a way of life in this industry and it looks like its here to stay, the question is how outrageous will the packages become?

 

[davidSclek]

i my self do admit if at overselling but you find that once you use about 3 gb of webspace u find the customer then wants their own server so it does not make much of a difference realy.

But its a sneaky way of getting clients lol

 

[temi]

Its nice to be frank like you are but I think this is and unethical way to acquire clients.

i my self do admit if at overselling but you find that once you use about 3 gb of webspace u find the customer then wants their own server so it does not make much of a difference realy.

But its a sneaky way of getting clients lol

 

[krystalpaul]

We have a policy of not overselling, which makes it impossible for us to compete with the cheaper hosts. Amazing packages are being sold at ridiculous prices, until you realise that one way or another the host will find a way of terminating your account through a loophole in the contract (as the OP pointed out with the CPU usage) should you use too much resource.

Responsible overselling is fine, though, and makes good business sense if pitching to the cheaper end of the market.

 

[temi]

We have a policy of not overselling, which makes it impossible for us to compete with the cheaper hosts.

I am sure you customers will appriciate it, I am happy to pay extra for quality hosting.

 

[krystalpaul]

I am sure you customers will appriciate it, I am happy to pay extra for quality hosting.

I'm not sure whether many of them are even aware that this is our policy to be honest. I think for us it's more a matter of principle than a selling point.

 

[temi]

I am sure you customer will not be aware of the policy but if they have hosting with multiple providers they will notice that the sites hosted on your servers are faster.

 

[krystalpaul]

Yeah that has been the feedback we've been getting. It's potential customers like you, those who are willing to pay a little bit more for a better service, who we are targeting.