I was wondering how they do it, and if it works?

I recently found a host that offers hosting for

Beginner - $.50/Month
Beginner PLUS - $.75/Month

and this is not just your small time hosting they are offering. See the fifty cent plan below to see what i mean. Now I'm not here to judge, but i am wondering how this gets done in a reasonable manner that will not have them out of business by years end. They have been in business for 2 months and i am wondering how they do it, with cpanel? Feel free to post if you have any ideas.

Disk Space 150 MB
Bandwidth 3 GIG
Mail Boxes (POP) 20
Mailing Lists Unlimited
FTP Accounts Unlimited
Subdomains Unlimited
CGI-BIN Yes
PHP Yes
mySQL Databases Unlimited
Frontpage Extensions Yes
SSI Yes
E-Mail Auto Responders Yes
Custom Error Pages Yes
E-Mail Forwarding Unlimited
PreInstalled CGI Yes
SSH Yes
Monthly Price N/A
Yearly Price $6.00

Overselling resellers. Their not uncommon. And personally, I don't think they're any better than people that offer unlimited space/bandwidth.

Originally posted by HstCreations
Overselling resellers. Their not uncommon. And personally, I don't think they're any better than people that offer unlimited space/bandwidth.

You took the words right out of my mouth.

stay clear! thats all I can say

But i mean would their host not slam them down for over selling if that is what they are doing? I mean if they are resellers over selling, would they not just get slammed down by their host eventually?

I'm wondering if it does not reflect a larger trend? Just becase i have not had a chance to look around for awhile and now i see this, it makes me wonder.

Overselling is entirely up to the reseller - if they oversell and their clients use it all up, the host will simply add the cost to the reseller's bill for the month. So there really isn't a need for the host to step in unless the reseller isn't paying up or is consuming a lot of system resources.

A lot of resellers oversell - a lot of customers don't go anyway near what they bought. I myself own an account with 5gb of space and 60gb of transfer, but I only use 300mb/2gb a month. It will change eventually ;) But in the meantime, you can see how resellers with customers like me will find it more profitable to sell the resources that I'm no using while hoping that I won't ever need to use it. It's common business sense, really.

Well their hosts don't care if a package is oversold.
If the company doing the over-selling attempt to use more than their allotted bandwidth or disk space then the cost is passed down.

Example:

Top Host 1 - Offers a reseller account with 1GB Space, 5GB bandwidth

Reseller 1 - Offers accounts to people, 200MB each, 1GB of bandwidth.

Reseller 1 sells a lot more accounts than the 1GB of storage space & 5GB of monthly bandwidth.
He is relying on the fact that "most" people wont use 200MB and a lot wont use 1GB of bandwidth.
As long as for ever 1 person who does use their full allowance there are a few that don't come anywhere near he is laughing.

The problem is when all of his accounts use the 200MB of space and 1GB of transfer each month.
Suddenly he is over-using his reseller account.
He will then git a bill from "Top Host 1" for the excess or quite simply his reseller account is closed down until the end of the month.
It's usually after that when the reseller packs up his bags and leaves all of his "clients" in the lurch with no home for their domain.

after bank charges.. left with about $5 per year ... well I guess they all be millionaires soon...

seriously, I wonder why people do consider signing up for these.