I see hosts selling client accounts with 60 GB & 30 GB etc....
Then I see others selling reseller accounts with 50-100 GB

I would like to know this from you.
Do most hosts keep the BW unmetered while creating Reseller//Client accounts ?
And allow flexibilty in usage ?

Cause if they capped it at say 40GB then on a RS server that would get them 10 resellers and by average rates 30-50$ per it goes to 300-500$
THat's not good profit.

Am I missing anything ?

if you pay a server for about $150 and you get $300-500 but only have 1 server and this the only money you get for live... then i dont think so is a good profit, maybe you can get more if work in mc donals :)

ceo, most hosts (dare I say all?) do oversell. overselling means you assume the risk that your clients and your resellers will NOT use the whole alloted chunk of disk space and bandwidth. So if your quota is 300Gigs on a server, you may sell 400-450. Some oversell more... of course the higher you go, the bigger the risk you assume. The important thing is that you have to be ready to deliver if a user uses their full quota.

serius hosts dont oversell ;)

Originally posted by phugo
serius hosts dont oversell ;)
everyone oversells.

This may be stupid, but I think I read somewhere...

What Control Panel does not allow the user to oversell?

Thanks there for enlightening me.
Ofcourse that's what I suspected.
But it's kinda funny.
It's like an improper promise, which means if you go above the risk we've taken we'll have to shift you to another server which means downtime ; )

Well, okay guys, I asked this cause I'll be opening 1 dedi for customers.
It's a niche segment & I do not expect them to use 1/10th of the space OR BW I will offer.
But I just wanted to know, so I'm not taking a big risk ; ) !

Originally posted by DarrenK
This may be stupid, but I think I read somewhere...

What Control Panel does not allow the user to oversell?

Maybe it's Plesk...not sure

Plesk I think, I had a Plesk reseller account and I couldn't allocate more then what I had allocated to me.

Originally posted by DarrenK
This may be stupid, but I think I read somewhere...

What Control Panel does not allow the user to oversell?
If you give your clients access to WHM/CPanel then when you are setting up their account on the server's master WHM, you can tick the little box that basically only lets them setup accounts to their disk space and data transfer usages. This would prevent overselling, but if hosts stopped overselling, prices for hosting plans would skyrocket.

People who say good hosts don't oversell are talking nonsense.

If we did not oversell then we would be charging $40 per month for a 4GB plan and nobody would buy it.

Our average user uses 110MB of bandwidth per month.
We have servers with 200 to 300 sites on that do not get near 100GB per month.

If we were not to oversall disk space the situation would get even worse.
We would have lots of empty hard drives with very few accounts on them.

I have never seen any hosting company who set aside 50MB of disk space for a 50Mb account and buy (and don't use) 4GB of bandwidth for a 4GB account.

If they did this you would all be on here bitching about high prices and why peopleforce you to pay for resources you are not using.

Gordon

"Our average user uses 110MB of bandwidth per month."

Thanks for the helpful reply.
Getting such nos. helps us understand the industry better !

im new in this.... but now i will oversell :D

If you look at it, there are two types of overselling:

1) You buy as much x-fer as you need, but you sell more, but if it was all used by each account then you'd not loose out financially.

2) You buy as much x-fer as you need, but you sell more, but if each customer used their full allocation you'd loose money.

Quite a lot of hosts sit in #2, some sit in #1, not sure what the ratio would be.

Personally I can say that disk space is the one thing we don't actually oversell on, it's something we've got plenty of per server.

KDAWebServices,

You got me thinking......
Reading & re-reading your post, I'm yet lost.

Can you pls. explain in a more simple manner ?

Well basically everyone oversells on bandwidth, you only by as much as you are using at one time else it's a waste - But the difference between #1 & #2 is that some financially over sell on bandwidth i.e. If all their customers used the full amount of data transfer then they would pay out more money to their suppliers for the transfer then the money their customers paid to them.

e.g. XYZ124 Hosts offers 100Gb per month for $10, they pay $0.50 per Gb for x-fer to their suppliers. If a single customer used all 100Gb they would have to pay $50 to their supplier, but the customer would only pay them $10 for it, hence the host is $40 in the red.

Very few hosts will be in #1
simply because a 4GB plan would cost us $12 per month in bandwidth provisioning alone.
If we charged $20 per month for that plan we would not sell any.

Selling the same plan at $10 might appear risky but having sold web hosting for 3 years I have never had a situation where all customers used all their bandwidth allowance every month.
It simply can't happen.

If anyone wants to feel really safe, I am happy to offer a 4GB per month 50MB disk space plan for $20 per month......


Gordon

Oh
The other part of the equation is that most small hosts are buying bandwidth in blocks of 100 or 50GB so they only get charged more if the exceed that on any particular server.

Gordon

Agreed, few will be in #1, but there are some.

If anyone wants to feel super safe then we have a special offer on: 500Mb disk space, 20Gb X-Fer, yours for £1,000,000 per year.

Originally posted by GordonH
Oh
The other part of the equation is that most small hosts are buying bandwidth in blocks of 100 or 50GB so they only get charged more if the exceed that on any particular server.

Gordon

i have 400 gb of bw ;) (but i still small host :( )

And the reason you have 400Gb is because of overselling ;) Perfect example.

i have 400 gb of bw... and im not overselling, i really have it

No, I didn't say you were overselling, but at a guess your bandwidth is from RS who are overselling.

Originally posted by Aussie Bob

everyone oversells.

Not true, Deb from Futurequest is one that comes to mind right away that would probably agree with me.

Originally posted by Aussie Bob

If you give your clients access to WHM/CPanel then when you are setting up their account on the server's master WHM, you can tick the little box that basically only lets them setup accounts to their disk space and data transfer usages. This would prevent overselling, but if hosts stopped overselling, prices for hosting plans would skyrocket.

Exactly what this darn industry needs if you ask me.

Originally posted by ceo
"Our average user uses 110MB of bandwidth per month."

Thanks for the helpful reply.
Getting such nos. helps us understand the industry better !

Consider yourself very lucky, our average is about 1g per user. But we have some pushing 50+ g and others moving just a few pages per month...but it averages out to 1g per user for us.

Originally posted by Jag


Not true, Deb from Futurequest is one that comes to mind right away that would probably agree with me.
I should have said 99.95% of hosts oversell in one form or another. :blush:

Jag
You are selling a 10GB plan for $14.95

How is that NOT overselling ?

Gordon

I would presume Jag is getting bandwidth at lower than $1.50 per GB, and as thus he is not overselling.

I thin the question is more: What kind of clients do you want? instead of are you overselling?

When you are overselling, you mostly get people who want everything for cheap, need to have extreme support etc. etc. While you get clients that pay $20,= for a 4 gb b/w plan don't need as much support.

Further more, you can better have 20 big clients (that pay good) on 1 server then 200 little clients, that need support for almost everything. It will cost you less time, while you make the same profit, accept with lesser clients, lesser time you have to waste giving your clients support. Lesser time you need to manage your server etc. etc. So I think you can better NOT oversell, it will take longer before you have got much clients. But the one you have pay you very well. And you don't have to give as much support, :)

So what do you want more?

We pay low prices for bandwidth but we still oversell
based on 2 years of real customer usage figures.

I personally have no problem with that.

Although it is true that you could make as much money with fewer
higher paying customers, but this is a risky business strategy.

If you have 10 customers and lose 1 you lose 10% of your income.
If you have 1000 customers and lose 1 you lose 0.1% of your income.
It leads to a more stable business.

Before I ran this business I was a charity trouble shooter.
Most of my clients had a very small number of donors which looked good froma cost/bvenefit analysis but made them very unstable.
I moved them towards having lots of smaller donors as well and in every case it made them more stable and there ase at least two who would have disappeared long ago without it.

This experience has coloured my judgement on these issues.


Back to the point: overselling is not a sin.
Provided you have the finances to cover your customers usage and make a profit thats all that counts really.

- don't fall in love with your business.
- ask yourself every day "how am I going to make money today"


Most of the hosts I have seen going bust have not been making a profit because they have got bogged down in technical infrastructure issues and taken their eye off the ball of making money.
We could spend a lot of money and make our network 5 or 10 % better.
Would that make things better for customers? - not really
Would it help us make money? - no

I suppose I have a totally profit orientated approach to this business but I have a wife, three kids and a leased line to support.

Gordon

If you have 10 customers and lose 1 you lose 10% of your income.
If you have 1000 customers and lose 1 you lose 0.1% of your income.
It leads to a more stable business.


And for that 1000 clients you can handle your support on your own? I don't think so. Do you also manage those servers on your own, do you bill them on your own etc etc.

It's all no, atleast if you wanna sleep so now and than.

You are only looking at the amount a client brings into the company but you don't see the amount 1 client cost you. Also what happen if you oversell and you need a lot more bandwidth in a month? Or bandwaidth ranges go up?? .

Originally posted by Starhost


And for that 1000 clients you can handle your support on your own? I don't think so. Do you also manage those servers on your own, do you bill them on your own etc etc.


No. Of course I don't.

Gordon

Good thread.. good info!!!

Now as a startup I am still amiss about settin up plans..
So say a person gets 1gb d/s and 10gb bw
what or how do you guys get that break down into seperate plans and not aggresivly oversell it??

Is there some kinda site that explains these formulas or methods??? Your input ont his would be much appreciated, I'm tryin not to start off doomed to fail.

I think a good place to start looking would be some hosts who've been around for 2 years, if not more. Chances are they have their pricing pretty well right if they've survived for that long :)

There's nothing wrong with overselling as long as you have your eye on the ball, have a plan you can put into motion if you've made a mistake, and are prepared to wear the costs of that mistake financially.

Truth be told there's an extremely low chance you'll suddenly be flooded as a start up unless you start promising unrealistic amount of space and transfer for the change someone may pull out from the back of their lounge.

It's not terribly exciting but slow steady growth is the surest way to stay in business.

Greg Moore

Originally posted by Jag


Not true, Deb from Futurequest is one that comes to mind right away that would probably agree with me. Ok Jag... you got me. I'll agree :D serius hosts dont oversell Some do, some don't... but all are quite prepared to cover the needs as they arise. A non-serious host that oversells is simply setting themselves, or their clients, up for a hard fall. If we did not oversell then we would be charging $40 per month for a 4GB plan and nobody would buy it. If hosts stopped overselling then clients would quickly become educated as to what they actually need and adjust accordingly. The ONLY reason overselling works is because the host is depending on client ignorance. Clients that only need 5MB of disk space and 1/2 GB of bandwidth demanding unlimited of both are what allow overselling to work. Once these clients become wise to their actual needs, overselling will be in a dangerous position.

If overselling were to stop today, site owners would look at what they are actually using and purchase accordingly. They would also be more inclined to clean the 'garbage' off of their sites e.g. old outdated files and copies of the old site that they don't need but leave it there taking up space "because they can". This only creates more backup and storage work for the host...hence not overselling can work out to be the wiser decision.

I want a house with many huge bedrooms, a pool and a spa, and about 60 acres of land. If I can get one for the same price as my current smaller house with less land I'll jump on it..but since I know I can't I adjust my home-owning needs to fit my family. I'd be irate if I paid for the 60-acre lot only to find out I have to remain with the 1/2 acre fence and yes...I would sue the broker that sold it to me. This lil lawsuit issue is something many hosts have been able to ignore for a while now. Be aware that as site owners get smarter the lawsuits will follow and those are far more expensive than the overselling is worth. everyone oversells on bandwidth, you only by as much as you are using at one time else it's a waste This is so far from the truth it is almost laughable. Maybe "everyone" who is small enough to have the privilege of buying bandwidth by the GB on demand but "Everyone Else" purchases the full pipes that can only successfully service the clients at about 70 or 80% capacity since peak hours affect the amount of bandwidth you can pump through them drastically. Those of us who have to do this pay for ALL OF THE BANDWIDTH whether it gets used or not..in addition to paying for multiple lines for redundancy sake..e.g. a second DS-3 "just in case the first goes down" but in the meantime it's just money spent for nothing... So for many hosts the bandwidth is being 'undersold'.