Seeing as oversellers do not incorporate the law of supply and demand into their business model, I am curious as to how they profit and what sacrifices have to be made in order to profit? Do oversellers have to operate with a staff in order to cover the costs of expenses and generate revenue? Would you have to devote more time than a usually overtime shift to maintain the prices that you advertise?

I know it's not easy to be an overseller, and I'm curious to know what accommodations you have to make in order to be successful.

How is overselling really more difficult? The fact is most people don't use their alloted resources. So overselling really isn't an issue until actualy usage capacity is reached as opposed to sold capacity. As for profit, an overselling operation should in practice be easily more profitable than one that does not. (assuming company x and y charged similar prices and one oversold and one didn't) If I didn't answer your question perhaps you could elaborate on it.

Because you are making a substantially less profit by overselling (large data and bandwidth allotment at a very inexpensive rate) what sacrifices do you have to make to maintain the daily operations of your business?

Do you not hire an outsourced support company, do you place 500 customers on a Celeron server? I'm not talking down the oversellers, just wanting to know how you maintain your online presence.

Well, overselling is based on the fact that people won't actually use the resources that are sold to them. So yes, you are dealing with more people, however just because you sold them x ammount of space/transfer doesn't mean that they will utilize it.

I think you're missing my question. It's not a matter of why you oversell, but what do you have to do to make it successful. And successful is defined by the ability to continue to oversell.

You're associating overselling with a negative connotation. I'm just interested in how it works beyond the price and package setting. I'll wait to hear from others. Thanks though. :D

Profit is made like any business. Charge a, expenses are b, number of customers are c..you've got to make 'a' big enough so a * c > b
Within the expenses variable it sounds like you are making assumptions that it would vary from a host who doesn't oversell. Regardless of what the maximum resource usage could possibly be, resources are an actual amount - a non-overselling host may have a lower maximum resource amount, but even they only have to deliver to the actual usage..just like oversellers.
If you're assuming that the actual resource usage is different, I think that's an invalid assumption. I'd say a non-overselling host doesn't really exist - even if they have a 10MB pipe and sell 10 accounts with 10GB transfer per account - the 10MB pipe isn't sufficient to take the full 100GB blast in .01 secs...so they basically don't have the resources to deliver and are oversold for that brief .01 sec time.

I think you're missing my question. It's not a matter of why you oversell, but what do you have to do to make it successful. And successful is defined by the ability to continue to oversell.

If done responsibly, based on a proper statistical analysis of average usage, "overselling" can be done without having any negative impact on customers. Hosting companies that do this achieve a much better utilization of their resources, and therefore a greater profit. With a greater profit, they're able to afford more support and better servers. There are no sacrifices that need to be made, as you seem to suggest in your question, since the companies that are overselling properly are making more profit than those that don't.

Kyle,

Overselling provides you less sacrifices. You are making the assumption that you are charging smaller prices for more resources. Which is not the case. If you have a solid limit of 2,000 GB of bandwidth and you sell 3,000 GB of bandwidth worth you have a lower price per bandwidth.

The same applies for space. When it comes to support staffing a single support person can handle 500 + accounts. Typically if you have some nice video tutorials, FAQ's section, Knowledgebase, and good servers you will not see many support request.

The laws of supply and demand are just for modeling purposes. It's not guaranteed that products will be bought and sold at the equilibrium point. A generic S & D plot reflects a common market ie multiple firms. Let's look at a single car dealership. Depending the skill of the sales employees they could sell cars above the equilibrium price. Maybe that particular firm has cheaper volume costs and is willing to sell more cars at a lower price than the common market.

It's possible to perform at the same level and save costs through technological improvements. I believe somebody mentioned tutorials. That's one example of labor saving technology, there are others such as co-locating powerful servers that can house many users while saving on the lease costs of similar hardware.

Just because a firm oversells does not mean that they sell at a lower rate. I believe someone else mentioned this. In that case I suppose the firm artificially increases their producer surplus.

Likewise they could oversell at a lower rate and cause a virtual rightward/downward shift in their supply curve by misrepresenting their available resources. That would push their equilibrium point to a lower price with more quantity demanded/supplied. Theoretically they could increase revenue or keep it at the same level.

One thing we all need to remember is that a service is not a tangible good. In addition we offer a transferable service. For instance you probably couldn't oversell lawn care services because it would be hard to juggle supply among multiple yards that will use all of their resources no matter what. Furthermore, the lawn care example uses multiple raw materials that might not work on another yard such as pesticides and fertilizers. With web hosting the same resource works with all clients. Well sort of, business/enterprise customers demand something on a different level but I am assuming this is for the budget market. In hosting many people use less than others.

We see a similar overselling concept with cellphones. Watch commercials, and you can see the major players trying to offer as many minutes as they can at the lowest price, often this is offered at unrealistic levels.

Long story short, you might be able to increase profits or at the very least make what you bring to the table more attractive to prospective customers with overselling and still maintain a healthy profit.

When does everything fall into chaos?

Overselling has one very bad side effect. After 9/11 Hopefully we still remember what happened. Cellphone service providers were jammed with excess traffic and buckled under the load. The same threat exists for an oversold customer that has customers start using all their resources.

Typically this doesn't happen and the overselling system works.

If you really want to keep a great service, with overselling, then it's easy. Just get better or more support staff, and make sure you server isn't slow. That's about the only costs that could be factored in with overselling.

Kyle, our strategy when we first started up was to oversell like crazy. By some crazy flawed logic, we thought we could bring in lots of clients by giving them huge allotments. Did it work? Of course not!

Serious clients know that you're overselling and that your servers will run like cr*p, and the only clients you will get are the cheapos who will abuse your services and cause the servers to run slow.

I do not think a truly sustainable business can be built on overselling, and we certainly do not do it anymore. I think that ultimately, companies such as GoDaddy are going to run inot pretty large financial troubles becauase of their eagerness to oversell - instead of building quality client relationships.

As for success, ultimately, I don't think it will come. Overselling just does not work.

I think the overselling concept is based on the fact that most clients do not use all of their resources and thereon overseller's marketing strategy is based on making profit on sales volume.

I think the overselling concept is based on the fact that most clients do not use all of their resources and thereon overseller's marketing strategy is based on making profit on sales volume.Exactly - it's just a marketing gimmick that I believe borders slightly on being unethical. That's why I'm sorry we ever even participated in this practice at one time. The host that is overselling is just not truly prepared to meet the capacities it advertises were clients ever to fully utilize them.

From past experience...

Overselling can be fine, and profitable, if you are willing to provide the endless support fixing issues that continue to arise day after day due to server abuse, load issues, etc.

I truly believe that any reasonably good host wouldn't fill a server based on disk or bandwith usage. It should be based on load and performance. For example, one server may perform well with 200 accounts on it, with min. support and issues. However, the same server may have problems running with 150 accounts.. based on the uses of each account. You can overhold a server without overselling.
I used to oversell. I don't anymore. I stop putting accounts on a server the moment it starts requiring more support time fixing issues due to overloading. The more time that's required, the less profits I see, ultimately.

Just my two cents :peace:

I honestly do not believe that the law of supply and demand applys to virtual services and products.

A good example is software. Upon completion of a development project of say Tax software, they only have 1 completed source of the compiled software. The software is downloaded off their website, therefor the only cost is bandwidth for providing the software download. If 1,000 users are going to purchase this software, all they have to do is put the software on the server and give 1,000 links to this, in this case supply and demand does not take place, because the demand of 1,000 seperate copies of the tax software comes from the originial on the server at no cost of production for a copy.

If you fallow what im saying, overselling is actually the main principal of most virtual businesses. Aswell as overestimating. Datacenters build huge buildings with 1,000 racks say, but do they have any guarantee they will fill those racks? No.

But a good example of how you can profit from overselling is say if they advertise they have over 2,000 available racks, and thats helps them bring in customers, and really they just plan on after 800 racks being sold to build another building with another 5,000 racks.

Basically i think a "new" law takes place on the internet, and who ever understands this law and principal of profit will see the biggest success.

I didn't expect to get so many great replies, I appreciate the explanations. :)

Overselling is fine, as long as you don't do it to an extreme. Its not unethical, because you can always add more space/bandwidth if, in the highly unlikely situation, all the users suddenly decided to use everything they paid for.

In the meantime, you're making a better profit and (hopefully) investing that profit into making your business succeed. Overselling CAN work...its been working for us for 9 years. Our reputation speaks volumes on the fact that it doesn't hurt server performance or customer opinion if done responsibly.

--Tina

I think is not possible do not oversell in shared hosting business ( thinking about CPU, process and memory and not just in terms of disk space & transfer)

I think this all about semantics. "Overselling" is a negative term that refers to selling more services than you know you can deliver. That's different than selling services based on statistical averages for disk and bandwidth usage.

Overselling is unethical and bad. Statistically balancing resources is what every host does (or should do).

I do believe that overselling attracts lower-quality clients that will use more resources than an otherwise average cross section. those ads for "unlimited bandwidth" and even some that claim "unlimited disk space" attract a proportionally higher number of clients that really want to use a lot of space and bandwidth.

I know that many years ago when we briefly sold hosting through eBay, (and not oversold, but just generous disk space/bandwidth for low prices), we got the worst clients imaginable. They expected tech support to help them reconfigure their PC's, debug scripts, and basically do everything completely beyond the scope of normal hosting while they paid almost nothing per month and jumped ship frequently to the next low-ball hoster.


Overselling is fine, as long as you don't do it to an extreme. Its not unethical, because you can always add more space/bandwidth if, in the highly unlikely situation, all the users suddenly decided to use everything they paid for.

In the meantime, you're making a better profit and (hopefully) investing that profit into making your business succeed. Overselling CAN work...its been working for us for 9 years. Our reputation speaks volumes on the fact that it doesn't hurt server performance or customer opinion if done responsibly.

--Tina

I think is not possible do not oversell in shared hosting business ( thinking about CPU, process and memory and not just in terms of disk space & transfer)

All resources are finite. However, some resources are heavily dependant on others. If the number of cheeseburgers being consumed increases, then it is not unreasonable to assume that the amount of bread, meat, and cheese being consumed has also increased. Then some resources are only slightly dependant on others. It is also not unreasonable to assume that the amount of lettuce, tomatoes, and french fries by consumed increased as well, but we really cannot say that their consumption increased at the same rate as the bread, meat, and cheese because some people, such as myself, order a plain burger or two and that's it. In hosting, transfer is the cheeseburger; disk space is the bread, meat, and cheese; and cpu, processes, and memory are the lettuce, tomatos, and fries. Plainly, if we want to get a good idea of how much cheeseburger we are getting we should look at the actual cheeseburger and its essential components. We wouldn't want to order a cheeseburger and get a salad.

Seeing as oversellers do not incorporate the law of supply and demand into their business model, I am curious as to how they profit and what sacrifices have to be made in order to profit? Do oversellers have to operate with a staff in order to cover the costs of expenses and generate revenue? Would you have to devote more time than a usually overtime shift to maintain the prices that you advertise?

Overselling is the very rough equivalent of a hamburger joint selling burgers the size of a small car and hoping, realistically, that no one will be able to eat the whole thing then salvaging the remainder to provide to other customers. By the by, there is a major difference between taking into account the actual use of consumers and overselling. By taking into account the average actual use of a consumer and setting reasonable limits, everyone benfits. The company profits more, the consumers have the assurance that they can use everything that they paid for without suffering from a loss of service quantity. Overselling is either removing the limits on consumers or setting them astronomically high, thus effectively ignoring the question of actual use entirely.

Let me clarify. A company that is incorporating actual use is managing its resources while keeping the knowledge of these resources limitations in the front of their thinking process. A company that does this will always have the luxury of being able to simply pay overage charges, buy more bandwidth, etc in order to alleviate server resource limitation problems and this is what they do. A company that oversells on the other hand is not too concerned about the average use of its customers. What they are concerned with is keeping a low average and a low standard deviation of resource usage. (For the record, standard deviation can be defined as the average distance of the numbers in a set from the average, a low standard deviation means that most people use roughly the same amounts as the other people.) Which is to say that their primary thoughts and concerns are not with optimizing their resources around average actual use to ensure continued service quality in the event of high usage but with optimizing their customers use of resources to ensure continued availability in a high usage enviroment. Get the difference? Actual use provides a better value to the customer at a more reasonable price. Overselling (as used in this forum atleast) is offering the world to customers while at the same time working hard to ensure that the majority of your customers merely require a small town. If the word overselling was banned on these forums I would call it "customer shaping" because it is only by targetting low use customers specifically and minimizing high usage customers that an overseller continues to exist profitably.

A profitable overseller is also one that increases the maximum availability of their services (thus decreasing the effects of customers who may actually approach full usage of their allotment). Clustering, a good faqs/tutorials section, load balancing - anything that alleviates their constantly pressured resources and decreases their risk exposure is a good thing to put into practice. Using colocation or operating a minor datacenter would also, in the long run, make things lower priced for them while decreasing their exposure to risk. The risk being that the standard deviation of their customers resource usage would progress beyond the point that they would be able to afford and force them to go out of business.

I know it's not easy to be an overseller, and I'm curious to know what accommodations you have to make in order to be successful.

Overselling successfully is quite hard. The constant need to keep an eye on your servers, the exceedingly low revenue per customer, the negative connotation, and the above industry average customer churn rate are all things that most people, I'm sure, would not want to deal with. There is also the problem that one of your primary expenses will be advertising, its sort of like a shouting contest between customers that have been burned and your banner ads, and it is crucial to not lose this battle because the moment you do you will begin to lose customers more rapidly than you will be gaining them. As your customer base decreases, so does your risk of suddenly developing a "terminal standard deviation". You don't want that.

Overselling is an interesting phenomena because it is actually a more pleasant experience to do things normally. There is a reason why the "successful" oversellers tend to be large. More volume decreases risk if you also use clustering and efficient support techniques. A small hosting company that wanted to be a sucessful overseller should start out not overselling and then start later down the road. That way they have a jumpstart on the volume that is needed to succeed as well as a solid reputation.

By the by, you don't really make more money by overselling. Overselling is just taking advantage of the lack of consumer knowledge in the hosting industry and the fact that hosting is a generic product that requires generic inputs to provide. Overselling is a nice approach to take if you lack imagination or can't afford to hire a properly informed business consultant.

Now, just in case the company that I am connected to is ever revealed to a potential client somehow and this post comes back to haunt me while I'm trying to make a sale - We Do Not Oversell (we do have intelligent average actual use policies but no, no overselling). Hmm, maybe I need to reiterate. We Have Never Oversold. What? You don't believe me!?!?! But I just said..... Ah, nevermind....

In conclusion, using average actual use IS NOT the same as "overselling" (a word that begs for a proper dictionary definition).

Someone must be hunger... man now my stomach is talkin.
Good comparison...

All resources are finite. However, some resources are heavily dependant on others. If the number of cheeseburgers being consumed increases, then it is not unreasonable to assume that the amount of bread, meat, and cheese being consumed has also increased. Then some resources are only slightly dependant on others. It is also not unreasonable to assume that the amount of lettuce, tomatoes, and french fries by consumed increased as well, but we really cannot say that their consumption increased at the same rate as the bread, meat, and cheese because some people, such as myself, order a plain burger or two and that's it. In hosting, transfer is the cheeseburger; disk space is the bread, meat, and cheese; and cpu, processes, and memory are the lettuce, tomatos, and fries. Plainly, if we want to get a good idea of how much cheeseburger we are getting we should look at the actual cheeseburger and its essential components. We wouldn't want to order a cheeseburger and get a salad.

There is absolutely nothing wrong with overselling. A company with a strong business model can pull off overselling without a hitch. The problem comes when a company starts to offer absolutely rediculous hosting plans such as 10GB for under $10/mo (disk space). The cost of disk space is by no means a lot, yes, however...if they are a responsible host they would be using a RAID array and in addition they would be doing daily backups. This just adds on to the cost per gig of disk space and let's not also forget that some hosts use higher quality hard disks such as WD Raptors or even Seagate SCSIs (some hosts use 15K RPM). So while many hosts say they have such generous offerings in terms of disk space because the cost per gig is getting cheaper, all that tells me is that they are cheaping out on the hard drives they are using, as they have obviously not implemented RAID nor a good backup system.

Overselling is quite simply the selling of resources which you don't have. There's no other way to define it. Overselling is by no means unethical, or unfair. Companies outside of the hosting market do it all the time (e.g. Cell Phone companies). If you build a strong business model which does not depend on overselling to make a profit, but merely uses it to boost profits, then you will have no problems. A company should not rely on overselling to make a profit, but there is no reason why they cannot use it to increase profits. Unfortunately, many hosts in today's market either don't realize this or simply forget this. They enter the price war, which in the end, is quite simply the race to the bottom. These companies, do, however, make a good profit. They simply rely on mass volume to keep their company going. While the quality of their service may decline (in some cases very rapidly - [e.g. Site5]), their profits will not.

So, you can oversell as much as you want, and still make a profit (and in some cases an even larger profit if you oversell, depending on your business model)..

Anyway, enough rambling for me...

The problem is people that don't understand the process aren't going to understand what anyone is saying.

NO host on the planet could make money if they sold exactly as much resources as the server has as a total. It's ludicrous to even suggest it.

Overselling is fine and can be profidable.

Trought that peoples will make more help requests because of server load.
And it sometimes might make bigger problems with servers.

All resources are finite. However, some resources are heavily dependant on others. If the number of cheeseburgers being consumed increases, then it is not unreasonable to assume that the amount of bread, meat, and cheese being consumed has also increased. Then some resources are only slightly dependant on others. It is also not unreasonable to assume that the amount of lettuce, tomatoes, and french fries by consumed increased as well, but we really cannot say that their consumption increased at the same rate as the bread, meat, and cheese because some people, such as myself, order a plain burger or two and that's it. In hosting, transfer is the cheeseburger; disk space is the bread, meat, and cheese; and cpu, processes, and memory are the lettuce, tomatos, and fries. Plainly, if we want to get a good idea of how much cheeseburger we are getting we should look at the actual cheeseburger and its essential components. We wouldn't want to order a cheeseburger and get a salad.



Overselling is the very rough equivalent of a hamburger joint selling burgers the size of a small car and hoping, realistically, that no one will be able to eat the whole thing then salvaging the remainder to provide to other customers. By the by, there is a major difference between taking into account the actual use of consumers and overselling. By taking into account the average actual use of a consumer and setting reasonable limits, everyone benfits. The company profits more, the consumers have the assurance that they can use everything that they paid for without suffering from a loss of service quantity. Overselling is either removing the limits on consumers or setting them astronomically high, thus effectively ignoring the question of actual use entirely.

Let me clarify. A company that is incorporating actual use is managing its resources while keeping the knowledge of these resources limitations in the front of their thinking process. A company that does this will always have the luxury of being able to simply pay overage charges, buy more bandwidth, etc in order to alleviate server resource limitation problems and this is what they do. A company that oversells on the other hand is not too concerned about the average use of its customers. What they are concerned with is keeping a low average and a low standard deviation of resource usage. (For the record, standard deviation can be defined as the average distance of the numbers in a set from the average, a low standard deviation means that most people use roughly the same amounts as the other people.) Which is to say that their primary thoughts and concerns are not with optimizing their resources around average actual use to ensure continued service quality in the event of high usage but with optimizing their customers use of resources to ensure continued availability in a high usage enviroment. Get the difference? Actual use provides a better value to the customer at a more reasonable price. Overselling (as used in this forum atleast) is offering the world to customers while at the same time working hard to ensure that the majority of your customers merely require a small town. If the word overselling was banned on these forums I would call it "customer shaping" because it is only by targetting low use customers specifically and minimizing high usage customers that an overseller continues to exist profitably.

A profitable overseller is also one that increases the maximum availability of their services (thus decreasing the effects of customers who may actually approach full usage of their allotment). Clustering, a good faqs/tutorials section, load balancing - anything that alleviates their constantly pressured resources and decreases their risk exposure is a good thing to put into practice. Using colocation or operating a minor datacenter would also, in the long run, make things lower priced for them while decreasing their exposure to risk. The risk being that the standard deviation of their customers resource usage would progress beyond the point that they would be able to afford and force them to go out of business.



Overselling successfully is quite hard. The constant need to keep an eye on your servers, the exceedingly low revenue per customer, the negative connotation, and the above industry average customer churn rate are all things that most people, I'm sure, would not want to deal with. There is also the problem that one of your primary expenses will be advertising, its sort of like a shouting contest between customers that have been burned and your banner ads, and it is crucial to not lose this battle because the moment you do you will begin to lose customers more rapidly than you will be gaining them. As your customer base decreases, so does your risk of suddenly developing a "terminal standard deviation". You don't want that.

Overselling is an interesting phenomena because it is actually a more pleasant experience to do things normally. There is a reason why the "successful" oversellers tend to be large. More volume decreases risk if you also use clustering and efficient support techniques. A small hosting company that wanted to be a sucessful overseller should start out not overselling and then start later down the road. That way they have a jumpstart on the volume that is needed to succeed as well as a solid reputation.

By the by, you don't really make more money by overselling. Overselling is just taking advantage of the lack of consumer knowledge in the hosting industry and the fact that hosting is a generic product that requires generic inputs to provide. Overselling is a nice approach to take if you lack imagination or can't afford to hire a properly informed business consultant.

Now, just in case the company that I am connected to is ever revealed to a potential client somehow and this post comes back to haunt me while I'm trying to make a sale - We Do Not Oversell (we do have intelligent average actual use policies but no, no overselling). Hmm, maybe I need to reiterate. We Have Never Oversold. What? You don't believe me!?!?! But I just said..... Ah, nevermind....

In conclusion, using average actual use IS NOT the same as "overselling" (a word that begs for a proper dictionary definition).


There are so many incorrect/uneducated statements in here I wouldn't know where to begin correction.

The analogy is so far off base it's ridiculous.

There are so many incorrect/uneducated statements in here I wouldn't know where to begin correction.

The analogy is so far off base it's ridiculous.

I guarantee you that the time that you spent going through my drivel and replying would be greatly appreciated. As a matter of fact for anyone that actually read that, thank you for bothering to do so. For those that didn't, don't worry I understand, I didn't read it myself.

There are so many incorrect/uneducated statements in here I wouldn't know where to begin correction.

The analogy is so far off base it's ridiculous. No it's really rather spot on. You don't seem to have a grasp on the bigger picture from a real web hosts perspective. I'm still laughing at how long this banal debate has continued on web hobby talk. Overselling, how funny. Overselling is marketing the unused portion of sold service layers that go (hopefully) unused. Resource management is the un-marketed flavor. No more no less, overselling is not a business model in the real world. Real webhosts with data centers and measurable customer bases have known for years how to use unused yet allocated resources to more efficiently manage their service architectures and provisioning. Only recently have the little nobody hosting companies begun to use unused resources as a marketing vehicle through absurd pricing and allocation modes- it's all they have to compete with... what's really funny is now the large companies are employing similar pricing tactics which are really only designed in the long run to drive the small companies out of business..

It's impressive that you seem to know the status of my company. is that tele kinetic?

By the way, maybe it's YOU that just recently learned how use unused resources. ignorance in the industry on your part doesn't equate to everyone. You also don't seem to understand what a business model is.

enjoy your cheeseburger analogy

It's impressive that you seem to know the status of my company. is that tele kinetic?
enjoy your cheeseburger analogy Nope, the template looking website, co-opted DC descriptions and a web hobby talk hyperlink sig are all small time dead give aways.

I happened to read some of your replies to other threads.

You really need to find something that will keep you less pissed at the world.

By the way, what do I do for a living? where do I work and what's my position? Oh right, you don't know. What do I do for kicks in the evening? how many customers do i have? Do I rent or rack my servers? What's my background?

the problem is you ramble on like you're some sort of pro (i happened to read a few of your other whiny posts) so it seems as though you think you're an idiot yourself. Why else would someone who thinks everyone here is stupid keep coming?

You have no clue what a business model consists of and you made it plain as day in your response.

I happened to read some of your replies to other threads.
You really need to find something that will keep you less pissed at the world.
By the way, what do I do for a living? where do I work and what's my position? Oh right, you don't know. What do I do for kicks in the evening? how many customers do i have? Do I rent or rack my servers? What's my background?
Your activities and proclivities like your company are irrelevant. Webster made some good points, which displayed a much higher degree sector knowledge than yours. Period.

the problem is you ramble on like you're some sort of pro (i happened to read a few of your other whiny posts) so it seems as though you think you're an idiot yourself. Why else would someone who thinks everyone here is stupid keep coming? For the pure entertainment value why else?

You have no clue what a business model consists of and you made it plain as day in your response.
Once again you prove the amateur humor content here is nonpareil

Your activities and proclivities like your company are irrelevant. Webster made some good points, which displayed a much higher degree sector knowledge than yours. Period.

For the pure entertainment value why else?


Once again you prove the amateur humor content here is nonpareil

Now you know my knowledge level too?

Ohjhhhhhh. it's entertainment. ahhhh got it. Looks more like you have an enormous inferiority complex and try to overcompensate by using 2 dollar words and belittling everyone on the forum while bragging about things you claim to have and do..

Clear as day. Go ahead and continue, I just hope you get some help. nobody should have to be as miserable as you are.

It’s not so much how you write at issue, it’s what the words actually mean; in this case, nothing. Couching whinny blather in pedantic, obtuse lamentations is worth about as much as your web...

Spoken like a true industry outsider... "segmented" servers... this board gets funnier every day.

While the misinformation on this board is generally a great source of personal amusement I take offence to a couple of common myths perpetuated here; one of which is the furtherance of resellers and...

you seem to have little grasp of this industry beyond the coolaide posted here, a reseller perhaps? What an absurd comment. Real hosting providers integrate connectivity, provision storage, manage...


No you're mistaken You are merely the smallest of the small sounds emanating from the 99.95% of the web hobby posters and political miscreants which play a tired, predictable tune upon the instrument...


Welcome to the world of real business. Yes Virginia, it exists outside of web hobby talk. Products and services are "soft launched" after long R&D periods, proven, market and consumer tested and...

How will signing up with a dinky struggling host make customers happier? If they have to resort to these tactics they are hardly viable.

How pathetic that you even have to ask this. A TOS and AUP are centric to oversight and management. Unless you can engage legal counsel, discuss your OWN business model and ascribe it to a legal

I do not think this is worth arguing over. :) It seems to me to be rather clear that overselling has worked for some and not worked so well for others.

You're right. I was out of line with my response to websters post. The point doesn't change but I didn't need to be condescending like that.

I am in a small but highly competitive market. But I can proudly say that I do not oversell. And recently, I do see a decline in new users' sign-ups.

So, if you are a host, do other hosts (which do overselling, large or small) hurt your business? Am I being stubborn not to oversell?

I am in a small but highly competitive market. But I can proudly say that I do not oversell. And recently, I do see a decline in new users' sign-ups.

So, if you are a host, do other hosts (which do overselling, large or small) hurt your business? Am I being stubborn not to oversell?
At the risk of thread hijacking, most people who are attracted to overseller pricing are probably not your ideal clientele anyway. As a small web host one of your better marketing strategies would be to focus on your local market. Not everyone has a city as large as Houston in which to pick up clients, but if there are small businesses nearby you can spend some time getting to know them and then construct an individualized sales pitch. Partner with or become a web designer and then there is an even greater potential for revenue. The old threads in this particular sub-forum and WHT in general are goldmines for all kinds of business related information - the search bar is your friend, get to know it.

. . . You have no clue what a business model consists of and you made it plain as day in your response.
Just about lost a mouthful of green tea, reading that. :eek2:

You're soooooo far off the mark with that statement, it's not funny. Sure, cowabunga can come accross like a pain in the bum, at times, but he knows this business inside out (I think I understand half of what he posts :D), upside down, top to bottom. Claiming he doesn't "have no clue what a business model consists of", is dead wrong.

That being said, he could ease up on the "web hobby talk" thing. Although most hosts who participate on WHT are not in his league, we're still professionals, and hosting is how we feed our families. :)

At the risk of thread hijacking, most people who are attracted to overseller pricing are probably not your ideal clientele anyway. As a small web host one of your better marketing strategies would be to focus on your local market. Not everyone has a city as large as Houston in which to pick up clients, but if there are small businesses nearby you can spend some time getting to know them and then construct an individualized sales pitch. Partner with or become a web designer and then there is an even greater potential for revenue. The old threads in this particular sub-forum and WHT in general are goldmines for all kinds of business related information - the search bar is your friend, get to know it.

What exactly are you referring to when you say 'overselling'? I think the biggest problem is semantics and the fact that you are misusing the term.

Your analogy makes no sense because it has no similarity in any way to hosting. If you're going to do that you should use something that's at least doing the same thing. Such as another business that sells non-tangible products. Airlines OVERBOOK their planes by 20% because they know that 20% of the people that buy tickets aren't going to show up. That's exactly the same type of idea. You need to already understand these things, or close to it, and ALL of your figures are based off these numbers. That's the whole point.

IT's also NOT overselling in the sense you're thinking. a decent business isn't managed by "well we think this will happen" it's based off real numbers, viable percentages and accuracy. You should know the ratio you average by what bandwidth and disc space a user will use and how much space. It has NOTHING to do with what your packages offer compared to what your server has in resources. According to your analogy if I have 51 people that bought a 1gb hosting package I'm overselling if I have a 50gb hard drive and that is not true. There are many more things taken into consideration and broken down correctly to come to a final figure. What percentage of CPU power does the average use? what percentage of RAM does the average website use?

That's the problem. ANY company that sells services actually sells more than they could ever support and if they didn't they wouldn't be in business. That's not resource saturation. That's not overselling in the sense that you're saying. If they sell 20% more than their network can sustain and the average customer usage goes up to 90% that's 10% when it's a negative thing.

The problem here is that people are confusing two completely different things with one word. They mean different things to different people.

The Web and the Web Hosting Industry itself, both abound with incorrect terms and people using correct terms incorrectly. Maybe, instead of using 'overselling', we should start a new term: Server Jamming or just "Jamming" for short?

Most Hosters provide Hosting packages using the 'Allocated Method' or the 'Actual Use Method' (see a basic definition (http://www.webhostingtalk.com/showthread.php?s=&postid=2085239#post2085239)). After that it's a free-for-all when it comes to what is being oversold.


Can unlimited anything, really be provided on a Server with limited resources?

Some say 'yes' some say 'no'.

Best to pick a Hoster that can provide for your Web Hosting needs and budget. Good Service, Pricing, and Support, are all important issues. Each has an order of priority depending upon the needs of the individual Client. Most are happy with 2 out of 3 and if you can get all 3, the World is your oyster! :D


Personally, I have found this to be good model to use -- for business or otherwise.

The greatest good, for the greatest number, for the longest time.

NO host on the planet could make money if they sold exactly as much resources as the server has as a total. It's ludicrous to even suggest it.Well, that's a fairly silly statement. What you just said was "NO host on the planet could make money if they don't engage in overselling".

I can assure you there are many, many hosts out there making plenty of money with reasonably priced plans with reasonable resource allocations, plans that don't come anywhere close to the typical definition of 'overselling'.

There are hosting companies out there beyond those you see on WHT, you know ;)

Brandon

WHT Is a tiny fraction of a single percentage of the market. but what does that have to do with the market? you're missing my point. The way he's defining this 'overselling' is not correct. Read the reply two up from this one and that's what I'm talking about.

What exactly are you referring to when you say 'overselling'? I think the biggest problem is semantics and the fact that you are misusing the term.
It can be very hard in an industry of this size to find a single bit of jargon and assign to it a commonly accepted meaning. Semantics are relative to their user. Overselling is a nice, descriptive word. Perhaps we should just accept that it often refers to both incorporating actual use and wildly overextending one's reources and judge the definition based on context

Your analogy makes no sense because it has no similarity in any way to hosting. If you're going to do that you should use something that's at least doing the same thing. Such as another business that sells non-tangible products. Airlines OVERBOOK their planes by 20% because they know that 20% of the people that buy tickets aren't going to show up. That's exactly the same type of idea. You need to already understand these things, or close to it, and ALL of your figures are based off these numbers. That's the whole point.
Oversellers (the negative connotation holding definition) "overbook" their servers by figures that are triple figure percentages. A bit difficult to compare directly to the actual airline industry practices. The cheeseburger analogy was not the greatest possible, but I don't think that it was misleading and, besides, I was terribly hungry at the time. (Also, the actual percentages that airlines overbook their planes are based on an analysis of previous and current data about the popularity of that particular route. So, that is more in line with incorporating "actual usage".)

IT's also NOT overselling in the sense you're thinking. a decent business isn't managed by "well we think this will happen" it's based off real numbers, viable percentages and accuracy.
Real numbers, viable percentages, and "accuracy" sound like statistics to me. Unfortunately, statistics are what someone thinks will happen. These thoughts are backed up by numbers, behaviour studies, and evidence. The thing is though, they are still someone's thoughts and there is always a degree of error.

You should know the exact ratio you average by what bandwidth a user will use and how much space. It has NOTHING to do with what your packages offer compared to what your server has in resources.
I am not exactly sure what you mean by this.

That's the problem. ANY company that sells services actually sells more than they could ever support.
Go to google and type in houston hosting OR "web design" and then look at the some of the ratios of hosting prices to bandwidth & disk space. I seriously doubt that they are "overselling" (your definition). Just one example in a services industry.

The problem here is that people are confusing two completely different things with one word. They mean different things to different people.
There is no correct definition of a word if there are multiple definitions even if a one of more definitions are not in a dictionary. That is why it is important to define in what way you are using an ambiguous word using context. I apologize if I have failed to do that in this thread.

In my defence, I believe that the "oversimplified" nature of the hosting industry due to low barriers of entry have created an enviroment where industry specific jargon with non-specific definitions can flourish.

Real numbers, viable percentages, and "accuracy" sound like statistics to me. Unfortunately, statistics are what someone thinks will happen. These thoughts are backed up by numbers, behaviour studies, and evidence. The thing is though, they are still someone's thoughts and there is always a degree of error.

.


You're joking, right?

Once again you prove the amateur humor content here is nonpareil
I'll second that. And I am glad to contribute.

Just about lost a mouthful of green tea, reading that. :eek2:

You're soooooo far off the mark with that statement, it's not funny. Sure, cowabunga can come accross like a pain in the bum, at times, but he knows this business inside out (I think I understand half of what he posts :D), upside down, top to bottom. Claiming he doesn't "have no clue what a business model consists of", is dead wrong.

That being said, he could ease up on the "web hobby talk" thing. Although most hosts who participate on WHT are not in his league, we're still professionals, and hosting is how we feed our families. :) Bob, please accept my apology for my blanket statements- They don't apply to yourself, the likes of John Crowley and many of the other longtime professional hosts on this board- regardless of size, and for whom I have great respect. That being said, it is my firm belief that the lowered barriers of entry along with this board contribute to the pollution, degradation and devalued customer experience in an industry that at one time had great potential for professionalism. Unfortunately there are handful of small professional companies, several medium sized companies, a few large companies and tier 1 DC’s - the remainder being just amateur garbage, with their templates, reseller accounts, stolen, plagiarized content, outsourced service and pursuant to this thread, oversold marketing. So yes, my ire is often focused at the amateurs and losers that increasingy populate the industry and to an extent the facilitation of their presence by this board - Just take a gander at the "offers" section- what a joke. Believe me, every day I do everything in my power and marketing budget to make certain the garbage hosts won't be here in a few years; if that means continually increasing downward pricing pressure with term increases in customer acquisition costs, so be it. In the scheme of things this board is irrelevant to my ends aside from corralling and casting a lens upon those that degrade the business; and of course providing a good laugh. But as always, I do enjoy your comments. :)

Overselling is its current form for many hosts these days is more in line with the "negative connotation" being batted around in this thread. However, I see it more along the lines of "unlimited" rather than overselling for those companies that offer Terabytes of transfers and a full hard drive worth of space for the price of an extra value meal at McDonalds. I might go as far to say that this is false advertising, but I'll refrain (due to the fact that your average website with a mix of static and dynamic content cannot push 1500 GB in a month on a shared server with 500 other clients [cpu usage limits, etc...], therefore they cannot use that which they purchased).

Now, if we're talking about the more responsible term "overselling", where a host, based on usage statistics they have gathered over the years, knows that xxx number of clients will use, on average, xx GB of space, and xxx GB of transfers per month, adds enough clients to each server to most effectively utilize the resources of the server without causing overcrowding, severe load issues, etc... t(this is separate from what is actually offered per plan, but looks at the server as a whole) then this type of overselling is one that should be practiced to avoid wasting resources. And, if done correctly, actually benefits both host and clientele.

Now combine responsible "overselling" with plans that allow any one "average" customer to fully use the resources in their account, and you get a win-win combination for both the host and the customer. Striking this balance (I won't even get into the pricing and financial issues) is hard to do, and requires constant vigilance and adjustments. But the end result is one where you have a stable hosting company that is poised for positive profits and growth for a long period of time.

Trying to compete with the low priced, oversold, virtually umlimited hosting plan companies is a sure way to insure low to no profits, constant problems, low quality support, and a nice spiral to the bottom... Which is what these larger companies want to happen.

- John C.

Bob, please accept my apology for my blanket statements- They don't apply to yourself, the likes of John Crowley and many of the other longtime professional hosts on this board- regardless of size, and for whom I have great respect.
Ok, I'll call off the hit. :D
That being said, it is my firm belief that the lowered barriers of entry along with this board contribute to the pollution, degradation and devalued customer experience in an industry that at one time had great potential for professionalism.
Yeah, I'd agree with that statement. The entry barrier is practically non-existant, and yeah, that creates more problems than good.
Believe me, every day I do everything in my power and marketing budget to make certain the garbage hosts won't be here in a few years; if that means continually increasing downward pricing pressure with term increases in customer acquisition costs, so be it.
So you're the one driving up adwords pricing! :eek3: :D
But as always, I do enjoy your comments. :)
As I enjoy your posts. :)

It's a great industry, and there's room for anyone who wants to provide a solid service, to find their place in the sun. My perfect place in the sun would be around 25 server mark. As my father would say, "small fish are sweet". :)

Sweeeeeeeeeet. :homer:

Overselling can be used in two ways:

1) To increase profits, by reselling unused resources based on calculated projections
2) To increase customer volume by selling alot more resources/services cheaper, hence attracting more clients.

#1 Results in the total revenue collected per 100 clients to be much more than projected without overselling.
#2 results in the revenue collected per 100 clients to be lower with overselling.
Higher return per client = better service & support

I wrote a smallish article a while back with my thoughts on plan creation. Some might find it useful: http://webhostingtalk.com/showthread.php?t=526088

I think that many webhosts here at wht are oversellers but the dont want to mention ;)

Nope, the template looking website, co-opted DC descriptions and a web hobby talk hyperlink sig are all small time dead give aways.

I would have thought pages one link off the homepage like this would have given it away better...

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Really? What URL is that? I doubt you'll be able to link to it.

What does any of my website have to do with some schmuck spending his employers money and bragging about it while trying to make everyone see how smart he is by speaking in condescending wanna be tough guy tones?

Guys, let's not fight. :) Does not make you look very good - remember, anyone can see what you're posting.

I had a long reply, but decided to sum it up a tad.

When's the last time you heard a phone company get accused of overselling?

The power company?

It happens. All the time. Every day, all day. It's called resource management.

What makes you think the space and bandwidth you provide from your server(s) is any less of a utility than telephony or electricity?

Now, we're all in this because we love the game, but at the end of the day, business is business, and if you can put one more client on that server without it affecting anyone, without degrading service, without causing others to not be able to use their resources *on average*, then I don't see why you wouldn't.

Now, everyone's free to do whatever they like. And the 'bonus' with this low entry cost market is, everyone does.

I would venture a guess that most of the people on here who run bits saying 'We don't oversell' are hosting purely because they love it? That's cool, that's how I am to. If I had it my way, we'd raise our prices a bit, lower our packages a bit, and then I'd go get a day job and keep hosting as my hobby for another X years until we grow, maybe to the point where it wouldn't be a hobby.

But that doesn't work when you want to do this stuff for a living. It's noble, sure, it's just, sure. But growing slowly over a period of years and years isn't how you grow a business. This is why I have my business partner. He's the business manager, he controls sales, it's his area. Why? Because I love what I do. We're constantly at odds about some things, and that's because I love what I do every day... but the fact is, without him, I'd still have a day job.

Now, will I say we oversell? No. Do we ensure servers are properly utilized? Heck yes! BUT! Look at our track record. Have we ever had one complaint? Anywhere? Not that I've seen. If you can find one, I'll be happy to work it out. Even the one client we had to terminate for resource usages has recommended us since. Not trying to advertize or thump our drum, just trying to point out that weather or not a company underutilizes their servers or not, gives no indication of how their services will run.

You're right, overselling is a dirty word, but then, I didn't make it that way, others did. It's the same as 'mother-inlaw'. How does a simple word have so many negative meanings to it? Because there have been some that it fit to that deserve it. Maybe even a majority, but not EVERY mother-inlaw is a wicked woman, much as not every host who does 'overselling' will have horrible service.

Ok... uh... that went on a bit longer than I planned it to... here's your soap box back. :blush:

It has a bad undertone because it's completely misunderstood. There are two terms people are trying to use to mean the same thing.

overselling is NOT resource saturation