I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of harddisk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of harddisk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

That's where you are wrong. There are many host out there who are extremely successful without overselling. You are just after the wrong customer. If you want to complete with the mainstream big guys (hostmonster, hostgator etc.) you will literally "get eaten" unless you have really deep pockets...

We had only 2-3 people, during the last 5 years, asking why we don't offer huge disk space plans. After we explain them what overselling is they decided to buy hosting from us. Mostly we offer our services to Greece (small country) and most local webhosts don't oversell either.

my customer are mostly SME's, small local businesses. Usually some beginner computer user, internet literate but not very tech savvy. They can search the web and see these companies selling at price I can't compete with. But can't understand why I can't provide the same price even after the overselling lecture I gave.

I know bigger companies that know their stuff usually willing to pay more. But usually the bigger guys won't deal with a small outfit like myself.

What's your target market segment?

I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of harddisk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

Overselling is and always has been a major part of the hosting industry.

Hosts who do not oversell seem to be more successful if they make that fact obvious from a marketing point of view, as an increasingly number of customers are looking for hosts who specifically do not oversell.

"You're not just paying for diskspace and bandwidth at our company. With us, you know that we charge enough to ensure that we hire top notch support staff and replace equipment as often as needed. You can go for bargain basement hosting, if you wish. They do serve a purpose in this industry too. It all comes down to what type of hosting you're looking for."

That generally makes the sale for us.

--Tina

overselling is a great marketing scheme that targets those who know nothing about the industry. There are plenty of people (especially on wht) who know better

But people still want the cheapest a lot of times. Comes down to, "you get what ya pay for". If thay want to go cheap, they will figure out the mistake in down time and etc

As the other Industry experts might have pointed it out in this thread its all about the market.

If you main source of getting clients is through online means then u might be disappointed since its all about overselling however offline corporate customers is another deal.

It's really upto the service you offer.

Recently I was looking around for top dedicated servers in the UK. Seems the true reputable providers sell 300-400 pounds a month for a basic server with 100GB bandwidth.

Even look at hostgator, look at the completely different range in the figures between shared and resellers. Doesn't make sense logically does it?

Go figure.

. . . Even look at hostgator, look at the completely different range in the figures between shared and resellers. Doesn't make sense logically does it?
Yeah it makes sense. You can get away with overselling more on the shared single domain type accounts, than you can with reseller accounts, with unlimited domain hosting.

Recently I was looking around for top dedicated servers in the UK. Seems the true reputable providers sell 300-400 pounds a month for a basic server with 100GB bandwidth.

Not sure who you've been looking at, but unless those services were 100% managed/bespoke solutions then there are plenty of alternative options that are perfectly good, for a lot less money.

Hosts who do not oversell seem to be more successful if they make that fact obvious from a marketing point of view, as an increasingly number of customers are looking for hosts who specifically do not oversell.

LOL, can you list a host that has more than 100k clients that doesn't oversell. I can name maybe 10 host with over 200k clients that are oversellers, some with even 500k clients. The real facts are non-oversellers wont' ever get as large as oversellers PERIOD!

That's where you are wrong. There are many host out there who are extremely successful without overselling. You are just after the wrong customer. If you want to complete with the mainstream big guys (hostmonster, hostgator etc.) you will literally "get eaten" unless you have really deep pockets...

Agreed...We're doing fine...clients who have higher cpu usage for that matter will come to you since they know you wont try to cut them off for high usage of anything. If customers want "lots of storage", well let them go there. Most companies that offer lots of storage also mention you cant store files over the size of a few kbs.

Regards

LOL, can you list a host that has more than 100k clients that doesn't oversell. I can name maybe 10 host with over 200k clients that are oversellers, some with even 500k clients. The real facts are non-oversellers wont' ever get as large as oversellers PERIOD!

A company that markets itself properly and doesn't oversell wouldn't need 500k customers. I wouldn't measure the success of a business based on client count.

A company that markets itself properly and doesn't oversell wouldn't need 500k customers. I wouldn't measure the success of a business based on client count.

The number of clients is definitely an important number... but it is not the only measure for success, not by a long shot, and can also be deceptive without the rest of the story. A company may have 500,000 clients and negative earnings, or 500,000 clients and a healthy profit.

Regarding the thread topic:

The web hosting market is diverse and there is demand for all different types of web hosting. If you find yourself competing on terms you don't like then stop and start to compete on terms you do like... You don't have to market yourself as a 'cheap' provider, which is what mass market hosts typically do, instead why not find a niche (or a couple niches) and focus on it (them) specifically? You may have a smaller client count but you'll also probably have a lot less gray hair :)

-dan

"You're not just paying for diskspace and bandwidth at our company. With us, you know that we charge enough to ensure that we hire top notch support staff and replace equipment as often as needed. You can go for bargain basement hosting, if you wish. They do serve a purpose in this industry too. It all comes down to what type of hosting you're looking for."

That generally makes the sale for us.


I agree 100%. I will explain to the client the higher costs and even offer to upload their content for them (I am a designer as well), if they prefer a "discount" hosting plan. So far all these clients have declined, and decided to host with me instead.

My belief is that once the client knows you are not trying to rip them off, and are willing to provide what they think is best for them...then you build a trust relationship.

And if they are determined to find the cheapest service possible, then I dont really want them as clients as they will likely be far more troublesome.

-Brian-

would someone define "overselling?"

would someone define "overselling?"

You "oversell" whenever the amount of resources (disk space, bandwidth) sold surpasses the total amount of resources available on your server (or reseller plan if you are a reseller).

So for instance if you have a 20GB disk space reseller account, and you have 1GB hosting plans, if you were to avoid overselling the largest number of accounts you could offer or sell would be 20 (even if all of your clients don't use more than 100MB each). By doing this, you will be leaving 18GB+ of unused space under the table. Your call.

My opinion is there is "healthy" overselling, that I think most hosts do even if they don't label themselves as oversellers, and the "outrageous" one when you have those insane offers that just don't pass the math (what about a 3TB disk space, unmetered bandwidth at 3.99$/month?)

would someone define "overselling?"

http://www.webhostingtalk.com/wiki/Overselling

:)

overselling is a bad habbit.

Thanks guys.

A practice the airlines have apparently adopted.

Thanks guys.

A practice the airlines have apparently adopted.

AcmeAir Special! $4.99/mo UNLIMITED FLIGHTS!

"Sorry sir, your flights are using up all of our planes. We are going to have to terminate your account and ask that you seek air travel elsewhere".

:emlaugh:

overselling is a bad habbit.

Agreed. I especially despise those webhosts who oversell like crazy with their "unmetered" or "unlimited" plans and they end up closing up overnight taking their client's money with them.

What I have noticed is overselling was never really an issue two-three years ago, however now it is...

A company that markets itself properly and doesn't oversell wouldn't need 500k customers. I wouldn't measure the success of a business based on client count.

Agreed. Many businesses nowadays still maintain a strong customer base without overselling. Generally speaking, users who have more knowledge would be willing to pay more knowing that they will get higher quality service (in most cases).

Agreed. I especially despise those webhosts who oversell like crazy with their "unmetered" or "unlimited" plans and they end up closing up overnight taking their client's money with them.


Rageki-John,

Wow, what a sweeping generalization. I know this goes without saying but I'm posting it anyway:

1. Not all overselling hosts are scammers.
- AND -
2. Some hosts that do not oversell are scammers.

Yes, some hosting companies oversell. Yes, some don't. Yes, some of the hosts in *both* groups are fly-by-night operations, but most of the hosting companies in both groups are perfectly legitimate businesses. Assuming that a business is fly-by-night simply because they oversell is the result of a very flawed thought process. That's like saying... well, I'll spare you a really bad Dan-analogy, you get the point :)

-Dan

the problem is that it is perceived value.
The customers will rather pay 10 bucks for 1 TB that he will actually use 200MB of, rather thatn pay 10 bucks for 1GB of hosting.

I could follow suit and give him $10 for 1TB but then some guy will come order that plan and actually use a TB of space (ok maybe not a TB but a lot) and end up taking my server down.

the problem is that it is perceived value.
The customers will rather pay 10 bucks for 1 TB that he will actually use 200MB of, rather thatn pay 10 bucks for 1GB of hosting.

I could follow suit and give him $10 for 1TB but then some guy will come order that plan and actually use a TB of space (ok maybe not a TB but a lot) and end up taking my server down.

Which is where the general line in the TOS that is either: "we can terminate you at will for any reason" or "if you use an excessive amount of resources your account will be terminated" is usually quoted by the provider. Some providers have got to the level where they simply has so much storage and bandwidth available that they are able to swallow the customers that are costing them money.

I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of harddisk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

-----

THE FIRST RULE AS a business ..never accept that you're running out of business.... This is going to adversely affect you if you plan to post ads here or seek out potential clients...once they realise you dont have a stomach for competition and hosting..they're going to check-off you from the list.

Don't explain whats wrong with overselling..theres nothing wrong with...Its how the company works and functions...I would have suggested an indirect course of action...

If the company the client mentions has any negative feedback on forums or sites or blogs...you might want to refer the client there (hoping that there are no bad reviews about you, otherwise you're asking for trouble). That is the best way to show the customer complaining about your pricing ...that hey the other guys doing bad with his tactics...

Second rule of thumb...never give up...keep going..else you dont deserve to be here....

Third rule follow the first two and keep working for ultimate customer satisfaction. Happy customers refer other clients :)

What I have noticed is overselling was never really an issue two-three years ago, however now it is...Overselling has always been a big subject, and has always happened in this industry. Ironically, it seems that the more it gets talked about, the more we see of it. :)

Yes, overselling is for the well prepared. Small operations are unlikely to play this game to the extreme and win.

-----

THE FIRST RULE AS a business ..never accept that you're running out of business.... This is going to adversely affect you if you plan to post ads here or seek out potential clients...once they realise you dont have a stomach for competition and hosting..they're going to check-off you from the list.

Don't explain whats wrong with overselling..theres nothing wrong with...Its how the company works and functions...I would have suggested an indirect course of action...

If the company the client mentions has any negative feedback on forums or sites or blogs...you might want to refer the client there (hoping that there are no bad reviews about you, otherwise you're asking for trouble). That is the best way to show the customer complaining about your pricing ...that hey the other guys doing bad with his tactics...

Second rule of thumb...never give up...keep going..else you dont deserve to be here....

Third rule follow the first two and keep working for ultimate customer satisfaction. Happy customers refer other clients :)


I agree with everything you're saying except the part about slinging mud at the competition. I think it reflects poorly on any host that would point out the shortcomings of a specific to a potential customer.

--Tina

If you don't compete on resources and price, then you don't have to worry about other hosts overselling. That is their model and if it works for them and can earn a living from it, then good for them.

I think some of those "hating" them are really just "hating" them due to jealousy rather than concern of the customer. The likes of DreamHost and HG must be doing something right to be continually getting business and maintaining a decent customer base.

Web hosting goes much deeper than just webspace and bandwidth. If you are finding it difficult to compete, then you should have already planned out how you will be competing and considered all these factors before starting your company.

You are going to have competitors, you will need put considerable focus on marketing and you will have to get used to the fact other businesses are going to take a chunk of the marketshare. This is business and web hosting is no exception to it.

/rant

If you can't take the heat, Get out of the kitchen.

Same thing happened in the access business. I started one of the earlier internet access providers back in the early 90s and after a few of years big players came in with enormous amounts of cash offering services for significantly less than cost price.

They pretty much all collapsed, owing millions, some folk even went to jail. Which would be all nice and just except they drove many smaller legitimate players out of business along the way. I fear the same thing is happening in hosting. Most of these megacheap megahosts are probably not profitable, but they've got people with deep pockets backing them who probably don't understand the industry. It's the .com hype all over again.

If only someone would prove that you can't possible use what their advertising because they would be cut off much earlier for using too many resources, then they could be taken down a peg for false advertising and then hiding behind the fine print (tos).

In America, you can't say "buy one get one free" if in the fine print you make that impossible. False Advertising. But it's going to take actual proof and a class-action lawsuit to put a stop to this practice of unlimited everything, 1TB everything, etc. Until someone calls them on it, they'll continue to do it. And in the meantime, we will have to compete on a different level than price/space/bandwidth.

We don't oversell, but at the same time there are strategic calculations that can be run for any size provider to determine how much they can oversell without impacting their performance. The Airlines aren't the only ones out there who do it, many other business operate by overselling their performance based upon a solid understanding of usage trends.

For example, we have data centers here in Atlanta and in Europe. If I were serving both markets out of the same center I could probably oversell 80% based upon just the time zone differences.

We do a lot of multi-media streaming, so I can't get away with it. But to say 'I can't compete' means you can't. You need to get creative to be competitive, and this doesn't mean short selling your customers.

By the way, if you provide the best service, you don't need to be the cheapest.

I try to explain to them the why overselling is bad. But they're just not listening..

I would suggest focusing on what you offer that the oversellers do not. Examples: Personalized service, no form-letter replies, quick ticket system assistance, personal customer relationships, etc.

It's typically a lot easier to emphasize your service advantages than to attack an industry practice (however bad that industry practice may be).

-mike

I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of hard disk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

Hmmm.. maybe you've already tried this, but I'd say your coming from it at completely the wrong angle - with all due respect.
I'm an ICTPS Account Manager so I work in sales.. currently trying to start my own webhost slowly on the side too, well getting the basics done at the moment.

But perhaps you should try a few different techniques...

First off, Generally when customers put up barriers like this.. the worst thing you can do is go head to head with them and try and prove your point and talk about what you want to talk about without acknowledging what the customer is talking about (this can be more lengthy sometimes but sometimes very necessary if you want to get the sale).

Now, if you haven't tried it yet, 2 methods I'd suggest trying are...

1. Acknowledge what the customer is saying and then direct their attention toward what you want to point out.

Eg.
Customer - "But so and so can give me double the resources for the same price as you."

You could try something more like "Yes and that does sound like a fantastic deal it's definitely more then we can offer at that price, however this is due to them overselling which will also generally decrease the performance of your hosting as the server will be be overloaded with websites"
If you manage to spark a conversation you can even go onto explain how overselling can affect the performance of their site and why it's a bad thing..

Or you could just as easily completely throw away that point and point out something else that was at fault with the competitor.. don't fully attack them however, this would easily end up reflecting poorly of you.

The reason this method is effective is because instead of jumping the gun and going straight to what you want to talk about and straight to the "hard sell" your building a bit of a relationship with the customer... it sounds more like you care about them getting a good service and your acknowledging what they have said first and then smoothly interlacing a flaw in the competitors product - you haven't even tried to sell or mention your own product here but you've pointed out a fatal flaw in the competitors product which will make yours seem superior.
*further more most customers upon pointing out a negative in your product will get their backs up and be ready for a fight to haggle you down perhaps, most customers are quite surprised and it takes down their defensiveness when you up front admit that your competitor is offering a good deal. It also says something about your company too by acknowledging that.

This intertwines with the fact that people HATE to be sold to.. people like to buy, if you want people to buy your product, you shouldn't be trying to sell it to them, you should be trying to be the Friend helping them buy something, if you can get to that angle with someone, it is much much easier to swing someone to your view and direct them where you want them to go.

2. Define yourself.

You can use this as a follow up on the first point or you can use it straight up, there are a lot of posts already on this and it applies to nearly EVERY business out there - Working in IT sales which is a saturated market, I am reminded of that every day.

What makes you better then the other company offering double the space and bandwidth for the same price?

This is really up to you, it's something you need to think about and ask yourself then use as a selling point... but perhaps customer service can be a point, (just be sure you don't promise what you can't offer)
But obviously one simple thing is you can always point out that larger companies, etc may have less personal or generally worse customer service as opposed to your own company whose staff are all very friendly and whom treat each customers case uniquely and do not give bulk standard answers, etc etc.

In other words, be in charge, control the conversation.

If they put up barriers about something it doesn't always mean you have to disprove it, sometimes if you use your wording well you can steer their attention away from the initial negative they have picked out in your service opposed to a competitor(s), to one of the positives that you hold over your competitor(s)

I hope this is of some help to you and perhaps other people if you haven't tried these methods already :)

Cheers,
Dan

my customer are mostly SME's, small local businesses. Usually some beginner computer user, internet literate but not very tech savvy. They can search the web and see these companies selling at price I can't compete with. But can't understand why I can't provide the same price even after the overselling lecture I gave.

I know bigger companies that know their stuff usually willing to pay more. But usually the bigger guys won't deal with a small outfit like myself.

What's your target market segment?

Ahmad,

If you are into LOCAL market then why do you have to oversell?

Stop competing with bigger fishes and start concentrating on your own business funda!

I can't compete unless I oversell too..
Everytime I push my plan to a customer they just say "But this other guy is giving me 10 million gigabyte of harddisk for the same price."

I try to explain to them the why overselling is bad. But they're just not listening..

:mad: :mad: :mad:

<I don't know what I want either.. Just ranting>

Then either niche your business, or oversell yourself?

Hmmm.. maybe you've already tried this, but I'd say your coming from it at completely the wrong angle - with all due respect.
I'm an ICTPS Account Manager so I work in sales.. currently trying to start my own webhost slowly on the side too, well getting the basics done at the moment.

But perhaps you should try a few different techniques...

First off, Generally when customers put up barriers like this.. the worst thing you can do is go head to head with them and try and prove your point and talk about what you want to talk about without acknowledging what the customer is talking about (this can be more lengthy sometimes but sometimes very necessary if you want to get the sale).

Now, if you haven't tried it yet, 2 methods I'd suggest trying are...



Thanks Dan for your detailed message. There are some great points. I have learned essentially what you are talking about, but its great you took the time to write it all down for everyone!

My pleasure, I'm very glad you enjoyed the read and got a few things out of it :)

thanks a lot.. I'll definitely take all comments and consider them all.
Xendrx: thanks for the detail post

as i read the whole thread, it seems its better off withough overselling.

i too am afraid of overselling, it will surely decrease the server performances and it will soon degrade your hosting services too.

Although I am only targeting "Friends and Family" and select referrals (4 clients right now will be writing a business plan and doing a proper site), I don't oversell my 100GB space and 700GB bandwidth on my VPS. I also am going to start off with giving the amount of space 90% of people need. 50MB and then as they need more give it to them up to 500MB for the same price. This would allow me to have 100 sites and if people use up the space, just add another VPS, since revenue will be enough to cover the cost of 2 VPS's. The dedicated server I want which would be on par with the server running the VPS I am on, would be $600/month+.

as i read the whole thread, it seems its better off withough overselling.

i too am afraid of overselling, it will surely decrease the server performances and it will soon degrade your hosting services too.

This is somewhat true, however we all know it certainly isn't going to disappear.

Whilst I'm certainly no expert on this side of things, so perhaps a webhost who has more proven experience might like to comment if I'm right or correct me if I am wrong, but I'd say overselling (As long as it's not too much) isn't all that bad or dangerous, as long as your no trying to push your server too far I'd say it's pretty safe.. for the simple fact that I'd estimate that most customers overestimate their needs especially if you work the pricing right (I saw a few articles on pricing on the forums that give great advice).

For instance... I'm sure we've all done it at some point, seem the package with 10gb of hdd space and 100gb of bandwidth, but for only 5 dollars more we could get 25gb hdd space and 500gb of bandwidth.
So when people do this overestimation and don't use it all, that's why I would say overselling to a certain extent isn't too dangerous as only some people will actually accurately calculate what they need and use it all.

But obviously as I pointed out earlier, there's always other avenues if you don't wish to oversell then you can of course use strategies to direct the customers attention to the more positive points of your business.

As some have mentioned in this thread, to an extent it's about finding your target market.
Some customers will have a greater value on excellent customer service.
Some customers will have a greater value on having more bandwidth and hard drive space.

This is somewhat true, however we all know it certainly isn't going to disappear.

Whilst I'm certainly no expert on this side of things, so perhaps a webhost who has more proven experience might like to comment if I'm right or correct me if I am wrong, but I'd say overselling (As long as it's not too much) isn't all that bad or dangerous, as long as your no trying to push your server too far I'd say it's pretty safe.. for the simple fact that I'd estimate that most customers overestimate their needs especially if you work the pricing right (I saw a few articles on pricing on the forums that give great advice).

For instance... I'm sure we've all done it at some point, seem the package with 10gb of hdd space and 100gb of bandwidth, but for only 5 dollars more we could get 25gb hdd space and 500gb of bandwidth.
So when people do this overestimation and don't use it all, that's why I would say overselling to a certain extent isn't too dangerous as only some people will actually accurately calculate what they need and use it all.

But obviously as I pointed out earlier, there's always other avenues if you don't wish to oversell then you can of course use strategies to direct the customers attention to the more positive points of your business.

As some have mentioned in this thread, to an extent it's about finding your target market.
Some customers will have a greater value on excellent customer service.
Some customers will have a greater value on having more bandwidth and hard drive space.


Yup i agree with you, it matter's on client's interest.
I'd be happy with few customers and not oversell than have lots of customers with pressure of overselling my space and bw.
;)

And actually, for the small to medium host, and even for the large ones, overselling can cause higher support expenses as you have more clients per server you'll need more support personnel to support them especially if things go wrong.

I also am going to start off with giving the amount of space 90% of people need. 50MB and then as they need more give it to them up to 500MB for the same price.

That is difficult to explain to customers. Just visualize things a little differently.

You have all that unallocated space on your server, what if you give each person who needs 50MB a 500MB account. It's just a number on their control panel and the space is not actually used until they use it. Even though there might not be enough space on the server for every person to have 500MB, there is still plenty of free space and everybody is happy because they all see 500MB available even if they're using 2MB for their site.

That's how to look at overselling. It's only numbers on a screen. You said you'd bump them up to 500MB as needed anyway, so it's not like you can't handle some of the people using the full limit. It's also easier for you to not have to micromanage every account and just monitor the overall server usage.

And it's also very hard to use up these massive amounts of resources even if you try. I had a cheap oversold account when the wiredCD came out a number of years ago (a CD of royalty free music), so I uploaded the CD to my site and posted links everywhere. I generated a ton of traffic (more in a month than my main site has used in 5 years), yet it wasn't even a blip to that overselling host.

(And just to be clear, profquotes is hosted with a very reputable company that I didn't do that to -- it was a different site hosted with Tomsyer that I did it to.)

JaguarPC is doing something like this. They have a one plan for one fee and once you hit 80% of your disk space, you can click a button to get more. They call it ENDLESS DISK SPACE.

It's kind of a new twist on and old topic!