What is “overselling”, and what does it mean for you?

In the hosting industry, you will see this term come up a lot in one form or another. Overselling, Oversold, etc. Or the opposite Undersold, non-oversold, etc. We even use it on our about us statement. So what does it really mean?

Simply put, the definition of overselling is to sell more than you have to offer. Usually, this is referring to Disk Space or Bandwidth, but can also refer to CPU, RAM, or any other item that has a hard limit. The most simple example would be as follows (the sizes and prices are used to illustrate the example only):

Let’s say that a provider has a server with a 1000GB of storage. Now they want to cut that up and sell shared hosting on it. Let’s say that the provider wants to offer each customer 100GB of storage for say $10/month. The maximum number of accounts we could put on that server without overselling (and not counting any other incidentals like the OS, services, logs, etc) would be 10.

Now let’s assume that this server costs $100/month to lease/collocate/whatever. This would mean that the provider can only hope to break even based on this assumption, without overselling. Obviously, this wouldn’t be worth their time, as the point of a business is to make money, not lose money.

So this leaves a provider to choose between, making more realistic offerings, or overselling. I’m not going to name any names here, because that would be in bad taste. But lets just say that most of the large hosting providers don’t offer realistic plans. Most these days, are offering unlimited or unmetered disk space and bandwidth. Obviously, there is no such thing as unlimited disk space or bandwidth, or anything for that matter (even air is limited).

Why do they do this? Simple, because they know that the average site is only going to take a few Mb of disk space, and hardly any bandwidth to run. So let’s take our above example. If each customer gets 100GB disk space, and only uses 1GB, that means that 99% of this server’s resources are still available right?

So rather than do the smart thing and size their plans according to actual usage, they have decided to capitalize on a market that doesn’t know any better. To the uneducated, more for less is better. What does this mean to you? While it may be true that there is plenty of disk space left on a server, the more customers/domains running on it, the more resources (RAM/CPU/Disk Input/Output) are being used. This results in slow/sluggish performance of your website.

Sure, any one site could easily saturate an entire server in shared hosting. However, that one site would be breaking the TOS defined by most hosts, and could be dealt with. How do you deal with hundreds of customers who are only using what you sold them? Well, if you are one of the big companies, you make up other reasons to kick them off your servers.

So if we know that there are physical limitations on disk space, and bandwidth, no matter how high those limitations may be. And we know that each server has it’s own resource limitations… Why would we sell more than we could provide? And more importantly, why would you consider paying for it?

At serve-you.net, we structure our plans and pricing based on realistic limits, with realistic prices. We do this so that we can truly state that we do not oversell, and we can stand behind that. Our plans are structured based on years of experience managing web sites. We know that the average user has no legitimate use for 1TB of web space. We are not in the business of being a storage depot. We host web sites.

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