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| Overselling Information |
What the heck is it?
Overselling refers to the ability to sell more bandwidth and disk space than we have purchased. We do hosting based on allocation which means if you have a 1,000 mb's of space and you assign out 100mb you only have 900mb’s left to assign. We’ve yet to see a hosting company pull this off successfully. The truth is if overselling worked we wouldn't run our own servers, we wouldn't need to! It would be far cheaper and much easier for us to purchase hosting plans from hosting companies with overselling.
Here are some stats for you…
Our average server has a 200 gig hard drive. Guess how full that drive is before the server is completely full? 30-40 gigs!!! So basically the server has 160 gigs of space left on it but we can’t use it because the server is full. Servers run out of cpu and memory way before they run out of disk space. Our lowest server has 2 gigs of ram and is a dual xeon 2.4
Bandwidth
All of our servers come with at least 1500 gigs of bandwidth each. We use on average 1000 gigs of bandwidth per server meaning 500 gigs of bandwidth go unused every month. This allows our sites to servers to use more bandwidth if needed.
What would happen if we used the full 200 gigs of disk space and 1,500 gigs of bandwidth?
It would be called overselling and we would eventually go out of business. Almost all overselling hosting companies start out the same… Clients have great uptime, servers are fast etc. As time goes by the server becomes more and more filled from customers using what they purchased and downtime and the speed of the service gradually gets worse. People who purchased plans from hosting companies who have overselling enabled are going to use all of their disk space and bandwidth, given enough time. The hosting company has no control over future growth. You might have gotten a good deal to start with but as your customers and visitors get tired of waiting for your site to load, they end up going to your competition.
Scenario if we did overselling...
Our smallest hosting plan is $3 a month and comes with 100 mb of disk space. If we had 300 customers on a server and we had overselling enabled, eventually they will be using 29 gigs of disk space and we will be making a total of $900 a month off them. Our bandwidth cost would be much higher than this just to transfer that much data every month! This means we would have to pack more than 800 clients ( 78 gigs of usage) to break even. If the server is full at 40 gigs of usage, try and picture how great the server response will be with 800 customers (78 gigs of usage). Even with 800 clients we wouldn’t be making a profit, by the time you add all the support to keep the server running and the calls from all the customers complaining, bandwidth and everything else is factored in. So to sum it up to make money off overselling we would have to offer less support, tell you tough luck, don't answer your emails and pack servers FULL. Even then the business model only lasts until all the customers start trying to use what they paid for at which point we would have no choice but to disappear over night. This what some of the larger companies do, for example, offering 1 gig of mail storage. When everyone starts using their full share, watch the fireworks!
When is overselling ok?
Overselling can work when selling to shared hosting customers since you have the power to limit the amount of sites and space used on your servers. It's how all you can eat buffets stay in business. The average website isn't going to use much, just like the average person won't eat more than they pay. Some hosting companies business plans aren't like this. It would be as if the buffet owner sold a buffet to someone and allowed him and his friends to eat all he can eat and the owner sold that same deal to as many other people as he could without ordering more food. He could be selling the buffet for $5 and sell it to 1,000 people however the owner of the buffet still hasn't ordered more food. The buffet owner is eventually going to run out of food and have a mob of people really ticked off. This is the same with some hosting companies, they sell to 1,000's of people without buying more servers or bandwidth. They are playing russian roulette with their company. So be careful out there...
Conclusions
Overselling is a hot selling point to the uninformed hosting company, but is not a long term business plan. It's a great way for hosting companies to make a quick buck leaving their customers without a host when they close shop. You might find bigger deals out there, but are you really getting what you are paying for? Probably not.
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