What is overselling when it comes to web hosting?

According to Wikipedia, "Overselling or Overbooking refers to the selling of a volatile good or service in excess of actual capacity." Basically this means selling more than you actually have. This is very common in the travel industry and the amount they overbook depends on the time of year, this is to take up the slack caused by cancellations. But what does this have to do with hosting? Let me clear that up with an example.

Hosting has been around for years, and many have jumped on the bandwagon to try and grab a slice of this lucrative market. This has made web hosting a highly competitive market with margins shrinking year after year. Every company tries to maximise profits and one of the ways web hosts do this is by overselling.

Take for instance a web hosting company X, they've just launched their services have a brand new out of the box server with 3TB hard drive space and allotted 6TB bandwidth these are the two factors web hosts use most when trying to sell their plans. Most importantly it's to show you that these resources are finite and are not unlimited!

Hosting has been around for years, and many have jumped on the bandwagon to try and grab a slice of this lucrative market. This has made web hosting a highly competitive market with margins shrinking year after year.

Hosts first started selling plans with fixed disk space and bandwidth. This made it easy to determine how many clients they could place on one server. With the above example, if you placed 75 clients on one server they each client would have access to 40GB disk space and 80GB of bandwidth. So once reaching 75 users you may think the host would move new clients onto a new server? This is not always the case, the web host continuously monitors usage on the server and if they determine resources aren't being used to their maximum they place more clients on the server. They are then selling resources they don't actually have.

Is this ethical?

How can web hosts be allowed to do this you ask? Simply, it's called subsidizing. Not every client is going to use the maximum resources they have been provisioned and usually only a few percentage do. By increasing the amount of clients on a server this increases the economies of scale and allows these hosts to provide you with services at a fraction of what you would normally pay. This is not the problem and if managed correctly these hosts usually provide very acceptable service.

However, the internet has made web hosting a cut-throat and highly competitive market with many hosts doing whatever they can to increase sales. How desperate are they? Affiliates can earn more from one sale than the host does after offering the services for that sale for an entire year. In fact it can take them up to two years to recoup what they paid their affiliate for that sale. These web hosts have to squeeze in as many clients on to one server as possible to minimise costs. With technology progressing at an exponential rate, it allows hosts to cram in more and more clients on to one server. The problem with this is that the service degrades as more and more requests are made to the server. With the increased demand the chances are more likely the server will fail, be it software or hardware related. How do you avoid these hosts?

How do I avoid these hosts?

Fortunately not all hosts practise overselling at these extremes and provide levels of service on par with some dedicated offerings. You need to do your homework, as I've mentioned elsewhere you can't rely on one review. The likely hood of reviews being real these days is very slim so you need to find out what people are saying, what their experiences have been. The hosts on our website are there based on real user reviews. Use them to help you determine the web hosts real reputation so you can make an informed choice.

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