An Analysis Into Why a Little Bit of "Overselling" Could Benefit You and Your Host
Overselling is when a host advertises more disk-space and bandwidth than they could actually provide to all of their customers.
In many ways this is a good thing since the average customer doesn't use up all of their disk-space and bandwidth, meaning that other customers may then use up more disk-space and bandwidth than a host can provide to all of its customers.
This is in many cases a win-win situation because some customers will be able to use up more disk-space and bandwidth than they may otherwise have been able to use (under a host that doesn't oversell), and the host is also able to sell its spare capacity (i.
e.
the amount of disk-space and bandwidth not used up by the average customer who only uses a small amount of their allocation).
This benefits the host since they aren't wasting their unused hard drive space and bandwidth.
In turn they probably will be able to get in more customers (since they can advertise more disk space and bandwidth than a host that doesn't oversell), which could (in theory) enable them to offer all their customers a better service.
To quickly illustrate this point with some numbers: imagine that a host's server has a 500 GB hard-drive (which would have around 450 GB usable space after the operating system and all is installed), with a connection allowing for 3,000 GB of bandwidth per month.
Clearly, if this host was offering (for example) 2 GB of disk-space and 20 GB of bandwidth for $7 per month, they could host 150 customers on this server (20 GB bandwidth * 150 = 3,000 GB bandwidth) - bringing in $1,050 per month for that one server.
(Of course, actual profit would be much lower than $1,050 due to server and software costs, staff costs, etc) However the average customer usually uses up a lot less disk-space and bandwidth than they are able to use.
Thus this host might be able to instead host 300 customers on this server.
Clearly, if all 300 customers then used up all of their disk-space and bandwidth allocations, the host's server wouldn't be able to handle this.
But since the average customer won't use up all their disk-space and bandwidth, the host will probably be easily able to host these 300 customers without running out of disk-space and bandwidth.
Therefore the host then goes from making $1,050 per month to $2,100 per month - which will increase their profits.
This host could then, for example, use this increase in profits to improve their services (e.
g.
through quicker replies to support tickets, perhaps offering live chat, etc).
Hence by overselling a little bit, this host could increase its profits and also its level of service - a win-win for customers and the host.
The problem, however, occurs when a host participates in what I call extreme overselling.
I talked about this negative aspect of overselling more in another article; this article is more for the positive aspects of overselling and a more general discussion about it.
However I'll quickly re-cap on what I said in that article: extreme overselling is when a host offers a lot more disk-space and bandwidth than they could usually offer even one of their customers, let alone all of their customers.
An example of this would be (as a purely made up example) a host offering "500 GB disk-space, 5,000 GB bandwidth, $5 per month".
This would be impossible to offer at $5 per month (especially since 500 GB of disk-space and 5,000 GB of bandwidth would cost a host $100 per month at least, on current rates) An extension of this is a host that offers "unlimited" disk-space and bandwidth.
Whilst there are some good hosts who do this (for example HostGator), this can be dangerous because people sometimes believe that "unlimited" disk-space and bandwidth actually exist (and by this point you'll hopefully realise that it doesn't exist).
On one of the forums I frequent, I see some people recommend various hosts for reasons such as "Go with [Some Host], they give you unlimited disk space and bandwidth!".
This is worrying since this isn't possible, but yet some people recommend hosts solely due to this "unlimited" offering.
(Of course, there's nothing wrong with recommending a host if they offer good service; I'm just saying that there's a problem when people believe that "unlimited" offers exist, and recommend their host solely due to this).
That covers the negative aspects of (extreme) overselling I feel.
I now want to go back to the more positive aspects of it, and the more general debate surrounding it.
As we seen earlier, when a host oversells a little bit, this can benefit both the hosts, and their customers.
Which - I think we all agree - is a win-win situation and there's nothing wrong with this.
To expand on this point slightly, overselling occurs in many industries.
For example if everyone in their country tried running their tap at the same time, there wouldn't be enough water available - this is a case of the water industry overselling.
But of course, there will only be a fraction of a country's population running their tap at any one time, hence such a situation (of water temporarily running out due to everyone using it at the same time) is incredibly unlikely.
Overselling is, in-fact, a good way for a company in nearly all industries to utilise their spare capacity (especially, as we have shown, in the hosting industry).
Having said that, overselling isn't just a case of a host plucking disk space and bandwidth numbers out of the air and hoping that they work.
Since it's essentially selling disk-space and bandwidth that most customers won't fully use, a host much ensure that they calculate everything correctly to balance things out well.
I have seen some hosts, for example, offer "50 GB disk-space, 500 GB bandwidth, $5 per month".
Whilst a host could definitely provide this much disk-space and bandwidth to at least a few of their customers, such an offer could possibly be a bad idea since it would only take a few customers using their full allocation to fill up a server's hard drives and bandwidth ('internet connection').
This could then leave the host in a difficult situation because - whilst they aren't overselling in an extreme manner - they could soon find that they are then struggling to provide even a small amount of disk-space and bandwidth to their customers who don't use up much.
This is more of a side-point though, but something I felt was worth mentioning.
Overselling is a good thing, when done efficiently and carefully.
So when choosing a host, I would suggest that there is little wrong with going with a host that oversells, as long as they don't oversell too much.
To conclude, hopefully you will now know more about overselling, an oft-discussed topic in the hosting industry.
It's important to remember that when done correctly, it is a good thing that will benefit both the host and its customers.
And also remember that - whilst overselling is important and (at least to me!) an interesting topic - it isn't the only factor that you should consider when choosing a host.
In many ways this is a good thing since the average customer doesn't use up all of their disk-space and bandwidth, meaning that other customers may then use up more disk-space and bandwidth than a host can provide to all of its customers.
This is in many cases a win-win situation because some customers will be able to use up more disk-space and bandwidth than they may otherwise have been able to use (under a host that doesn't oversell), and the host is also able to sell its spare capacity (i.
e.
the amount of disk-space and bandwidth not used up by the average customer who only uses a small amount of their allocation).
This benefits the host since they aren't wasting their unused hard drive space and bandwidth.
In turn they probably will be able to get in more customers (since they can advertise more disk space and bandwidth than a host that doesn't oversell), which could (in theory) enable them to offer all their customers a better service.
To quickly illustrate this point with some numbers: imagine that a host's server has a 500 GB hard-drive (which would have around 450 GB usable space after the operating system and all is installed), with a connection allowing for 3,000 GB of bandwidth per month.
Clearly, if this host was offering (for example) 2 GB of disk-space and 20 GB of bandwidth for $7 per month, they could host 150 customers on this server (20 GB bandwidth * 150 = 3,000 GB bandwidth) - bringing in $1,050 per month for that one server.
(Of course, actual profit would be much lower than $1,050 due to server and software costs, staff costs, etc) However the average customer usually uses up a lot less disk-space and bandwidth than they are able to use.
Thus this host might be able to instead host 300 customers on this server.
Clearly, if all 300 customers then used up all of their disk-space and bandwidth allocations, the host's server wouldn't be able to handle this.
But since the average customer won't use up all their disk-space and bandwidth, the host will probably be easily able to host these 300 customers without running out of disk-space and bandwidth.
Therefore the host then goes from making $1,050 per month to $2,100 per month - which will increase their profits.
This host could then, for example, use this increase in profits to improve their services (e.
g.
through quicker replies to support tickets, perhaps offering live chat, etc).
Hence by overselling a little bit, this host could increase its profits and also its level of service - a win-win for customers and the host.
The problem, however, occurs when a host participates in what I call extreme overselling.
I talked about this negative aspect of overselling more in another article; this article is more for the positive aspects of overselling and a more general discussion about it.
However I'll quickly re-cap on what I said in that article: extreme overselling is when a host offers a lot more disk-space and bandwidth than they could usually offer even one of their customers, let alone all of their customers.
An example of this would be (as a purely made up example) a host offering "500 GB disk-space, 5,000 GB bandwidth, $5 per month".
This would be impossible to offer at $5 per month (especially since 500 GB of disk-space and 5,000 GB of bandwidth would cost a host $100 per month at least, on current rates) An extension of this is a host that offers "unlimited" disk-space and bandwidth.
Whilst there are some good hosts who do this (for example HostGator), this can be dangerous because people sometimes believe that "unlimited" disk-space and bandwidth actually exist (and by this point you'll hopefully realise that it doesn't exist).
On one of the forums I frequent, I see some people recommend various hosts for reasons such as "Go with [Some Host], they give you unlimited disk space and bandwidth!".
This is worrying since this isn't possible, but yet some people recommend hosts solely due to this "unlimited" offering.
(Of course, there's nothing wrong with recommending a host if they offer good service; I'm just saying that there's a problem when people believe that "unlimited" offers exist, and recommend their host solely due to this).
That covers the negative aspects of (extreme) overselling I feel.
I now want to go back to the more positive aspects of it, and the more general debate surrounding it.
As we seen earlier, when a host oversells a little bit, this can benefit both the hosts, and their customers.
Which - I think we all agree - is a win-win situation and there's nothing wrong with this.
To expand on this point slightly, overselling occurs in many industries.
For example if everyone in their country tried running their tap at the same time, there wouldn't be enough water available - this is a case of the water industry overselling.
But of course, there will only be a fraction of a country's population running their tap at any one time, hence such a situation (of water temporarily running out due to everyone using it at the same time) is incredibly unlikely.
Overselling is, in-fact, a good way for a company in nearly all industries to utilise their spare capacity (especially, as we have shown, in the hosting industry).
Having said that, overselling isn't just a case of a host plucking disk space and bandwidth numbers out of the air and hoping that they work.
Since it's essentially selling disk-space and bandwidth that most customers won't fully use, a host much ensure that they calculate everything correctly to balance things out well.
I have seen some hosts, for example, offer "50 GB disk-space, 500 GB bandwidth, $5 per month".
Whilst a host could definitely provide this much disk-space and bandwidth to at least a few of their customers, such an offer could possibly be a bad idea since it would only take a few customers using their full allocation to fill up a server's hard drives and bandwidth ('internet connection').
This could then leave the host in a difficult situation because - whilst they aren't overselling in an extreme manner - they could soon find that they are then struggling to provide even a small amount of disk-space and bandwidth to their customers who don't use up much.
This is more of a side-point though, but something I felt was worth mentioning.
Overselling is a good thing, when done efficiently and carefully.
So when choosing a host, I would suggest that there is little wrong with going with a host that oversells, as long as they don't oversell too much.
To conclude, hopefully you will now know more about overselling, an oft-discussed topic in the hosting industry.
It's important to remember that when done correctly, it is a good thing that will benefit both the host and its customers.
And also remember that - whilst overselling is important and (at least to me!) an interesting topic - it isn't the only factor that you should consider when choosing a host.
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