Are you familiar with the concept of booking a plane ticket for a trip, then arriving at the airport and being told that you cannot board the flight since it is full? How is that possible if you have booked and paid for your ticket?
Welcome to the world of overselling.
Everyone oversells - from the air travel companies to the cell phone operators. Overselling is a business model where the business sells more of a resource than they actually have to a group of customers since they know that a large percentage of these customers will never use 100% of the resource.
For example: Airplane companies regularly overbook their flights since they know that not everyone will pitch for the flight. In this way they can make sure that their flights are full regardless of the fact that a percentage of people will cancel or not arrive.
Cell phone companies oversell their talk time - offering huge packages of possible talk time minutes to customers for a very low price since the know that it is not humanly possible to utilize all those talk time minutes in a month. Why do they do it? It offers a very attractive and competitive package to potential clients (Wow! Look at how many talk time minutes I have, for only $very-little).
During the past couple of years the concept of overselling has also started to take place in the hosting world. What, you mean you thought you were REALLY getting 350GB of hard disk space and 3000GB bandwidth for $5 a month?
Basically overselling in the hosting arena is what makes it seems like you are getting a really good deal - tons of hard disk space and bandwidth for very little money. Hosting companies know that the average web site probably do not use more than about 150Mb to 250Mb of hard disk space for a website, so why offer 350GB? And can you really use the full 350GB?
Firstly, they offer it because it makes them stand out as offering exceptional value for money. A good deal, or getting something for practically nothing is always irresistible, even though most people, in the back of their minds, know that if the offer is too good to be true, it probably is not true.
Let us see if a hosting company can offer such huge packages and still be true.
1. It is definitely true that not everyone is ever going to use all that space. The trick then comes in with calculating the odds and working with the averages. If they have enough clients and have been in business long enough, they can soon determine what percentage of clients tend to use what percentage of disk space. They can then base their overselling features based on these numbers.
2. On the other hand, they have to be prepared for the small percentage of clients who WOULD use the space. Maybe someone buys the package to do off-site backups, or they upload large videos or images. The hosting company needs to be prepared for those customers and be able to provide them with the space if they really require it. The hosting company therefore needs to be able to quickly scale up and bring in extra hardware in the form of additional hard disk space or servers to meet this demand.
3. Lots of hosting companies offer reseller services, where they sell a certain amount of hard disk space and bandwidth to a reseller, who then chops up the resources into smaller packages and sells it on again. The danger comes in if both the parent hosting company as well as the reseller do overselling! This can quickly lead to a lack of resources and the customer will suffer.
4. Most hosting companies, whether they operate on an overselling principle or not, have a Terms of Service that regulates how the account can be used. This is to protect the web host against abuse and practices that might harm their businesses or infrastructure. This normally includes practices related to spam, illegal websites, and what the web space and bandwidth can be used for. Some web hosting providers do not allow video streaming, for example. These Terms of Service can assist a web host to control the use of its infrastructure and can contribute to the good management of the packages and customers utilizing this infrastructure - whether they are overselling or not.
Unfortunately there is no way of really know whether a hosting company is operating on a reselling basis or not, unless use your common sense with regards to the prices on offer. Overselling in the hosting industry is not necessarily a bad thing, it is just something that you might want to be aware of when you buy a hosting package. If the hosting provider provides good service, monitors its server usage and is able to scale its resources when necessary - what more can you ask for?
If you are concerned about overselling, enquire from your hosting provider whether they have their own infrastructure of not - if they are resellers and they offer enormous packages you might want to be careful before you sign up.
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