Right now I just started up my hosting company and would like to make a more attractive offer by overselling..

ie. offering 500megs of space and 20gig of bandwidth for $8 a month or so..

I know well enough that some of the people I will be hosting as of now won't use up 20% of those resources.. and hopefully that deal will attract a lot more online customers. However will this come and bite my ass later on? Or is selling by the mass and sacrficing more profit a good idea?

Overselling in web hosting is inevitable, especially for the smaller hosts looking to compete directly in price. (It would be much better if you could differentiate your offer in terms of quality and support, instead of raw resources).

The key to keep in mind is that you have to be careful about the actual usage and your alloted resources. If you are targeting small static sites, you can be more aggressive in overselling. However, if all your sites are heavy, you need to be real conservative.

Another factor that you have to consider is your upstream. If you upstream host (parent reseller, dedicated provider, etc...) is already overselling, you should be very careful about adding yourself to the equation.

Bottomline - You need to be careful, constantly monitor the actual usage, and plan accordingly. Overselling isn't a yes or no activity. It is a dynamic balance that you, as the host, need to maintain if you so choose to play the game.

Peter

It also depends what you're target audience is.
Adult hosts CAN'T oversell. Small business hosts usually have to, or they'd be wasting resources. Game network hosts, same deal as adult hosts. If you target high traffic sites, you have to be careful.

if i didnt delete all my mails, which content large attachment, it will take alot of space...... am i right?

Originally posted by trafficbuild
if i didnt delete all my mails, which content large attachment, it will take alot of space...... am i right?

Most definitely. That and log files and all the temp files which have not been deleted.

Originally posted by yoojeen
Right now I just started up my hosting company and would like to make a more attractive offer by overselling..

ie. offering 500megs of space and 20gig of bandwidth for $8 a month or so..

I know well enough that some of the people I will be hosting as of now won't use up 20% of those resources.. and hopefully that deal will attract a lot more online customers. However will this come and bite my ass later on? Or is selling by the mass and sacrficing more profit a good idea?

http://ziox.net

It is a very tricky business. It depends on what you think is most important, profits or customer satisfaction.

If profits is the motivating factor, then overselling would optimize your profits provided those on the server in total does not exceed the system capacity and data center bandwidth restriction. You would have to be prepared for tons of support tickets if things fails due to over utilization and so on and have spare funds to pay for the overage bandwidth utilization.

On the other hand, if customer satisfaction is concern, you could limit the number of clients on the server so as to provide optimum performance.

Of the it is true that not everyone would use all the bandwidth allocation, so you could probably stretch the server by 20% to 30% which should not be too much of an issue. But be sure to monitor the CPU utilization and the bandwidth consumption at the same time.

The business is a lot of customer service, balancing work and technical knowledge.

No

Originally posted by yoojeen
Right now I just started up my hosting company and would like to make a more attractive offer by overselling..

ie. offering 500megs of space and 20gig of bandwidth for $8 a month or so..
$8/mth for 20GB is a dangerous game to play. You'd need 125 of those accounts just to make descent revenue from your server. The you'll most probably have a unstable server with excessive loads and frequent restarts. Even if they only use 25% of what you promised them in resources, you're still in a corner.

I think most people oversell to some degree, as mentioned especially the small businesses.
However you have to know where to stop , what happens if you have a busy month and everyone uses their allowance??
Please don't try $8 for 20GB bandwidth it wont work, it never does and you will end up one of the many companies that collapses. Im not trying to be nasty, just realistic.

thanks for all your input. It was a choice I had to make with my partner, because he said overselling would just screw us over in the long run. But the way things look now. we can afford to oversell a bit. All your input is appreciated.