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  1. #1
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    What will be the scenarion here?

    I don't know if there's an on-going contest in web hosting in terms of storage and bandwidth. But I was wondering...what will you do in this scenario.

    Example:
    Your dedicated server cost you $200/month and you have 500GB HDD
    You are offering a reseller plan for $5/month with 50GB storage.

    Client A - J (10 resellers) signed-up and they have 10 websites/clients that consume 5GB of storage each. Which means that is equivalent to 50GB per reseller x 10 = 500GB.

    10 resellers x $5/month = $50 gross revenue per month.

    ------------------

    What will you do?

    A. Tell them (or make up a story) that they are consuming too much resources even there is no DB connection and they are only utilizing the allowed storage capacity?

    B. Hope and Pray that they will not use this much resources?
    Ask for Server IP & Nameservers IP to check if your reseller provider truly provides 100% white-label.

  2. #2
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    C. Shoot myself for thinking it was a viable business model to charge less than expenses.

  3. #3
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    Quote Originally Posted by tchen View Post
    C. Shoot myself for thinking it was a viable business model to charge less than expenses.
    hahaha nice reply pal i agree.
    Ask for Server IP & Nameservers IP to check if your reseller provider truly provides 100% white-label.

  4. #4
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    Quote Originally Posted by Yujin View Post
    I don't know if there's an on-going contest in web hosting in terms of storage and bandwidth. But I was wondering...what will you do in this scenario.

    Example:
    Your dedicated server cost you $200/month and you have 500GB HDD
    You are offering a reseller plan for $5/month with 50GB storage.

    Client A - J (10 resellers) signed-up and they have 10 websites/clients that consume 5GB of storage each. Which means that is equivalent to 50GB per reseller x 10 = 500GB.

    10 resellers x $5/month = $50 gross revenue per month.

    ------------------

    What will you do?

    A. Tell them (or make up a story) that they are consuming too much resources even there is no DB connection and they are only utilizing the allowed storage capacity?

    B. Hope and Pray that they will not use this much resources?
    I think the overselling model uses different assumptions, knowing that most websites are well under 1GB in disk space (a default installation of Wordpress is under 100MB). And they probably manage their servers themselves, and pay much less for a server with a 500GB drive in it.

    The overselling model obviously works, as the largest and most profitable hosts use it. I don't like it because the quality suffers, and it requires kicking off the most successful sites, but that's the model most of the industry is using. I doubt that these industry giants are using non-oversold and more expensive accounts to subsidize the oversold portion of their business; even thought the margins are probably smaller, I suspect the total income is larger from the overselling part of their business.

  5. #5
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    The obvious answer is your are underselling your reseller plans. Also, a dedicated server comes at a premium for customization and performance. Shared/reseller hosting is a different animal altogether.

  6. #6
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    Although we would never oversell (we charge more to compensate) - overselling your space could be an option here in the short-run? Because here you'll be making a $150 deficit every month - thats $1800 deficit a year....

    So you have 3 options,
    1. You update your terms and conditions to state some new limitations and start overselling your hard drive space in the hope that your reseller do not all suddenly start using the 50Gb they have available - as well as dont all suddenly start using more and more resources to bring the server to a halt.

    2. Move to a cheaper server which will cost you a lot less, and bring up the cost of the reseller, eg. inflation of server costs, you charge them $10 and find a server around $80-$100 per month all inclusive. This way you manage to at least break even on that server.

    3. Contact your clients stating that the company is currently having financial difficulties and that you are looking for a partner host to take the accounts over - reassuring your customers that the change will be seamless and that they will be kept informed of everything before it happens. Then find a partner host to take over the 10 accounts and essentially cut your losses!


    Hope this helps!

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  7. #7
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    Quote Originally Posted by Yujin View Post
    I don't know if there's an on-going contest in web hosting in terms of storage and bandwidth. But I was wondering...what will you do in this scenario.

    Example:
    Your dedicated server cost you $200/month and you have 500GB HDD
    You are offering a reseller plan for $5/month with 50GB storage.

    Client A - J (10 resellers) signed-up and they have 10 websites/clients that consume 5GB of storage each. Which means that is equivalent to 50GB per reseller x 10 = 500GB.

    10 resellers x $5/month = $50 gross revenue per month.

    ------------------

    What will you do?

    A. Tell them (or make up a story) that they are consuming too much resources even there is no DB connection and they are only utilizing the allowed storage capacity?

    B. Hope and Pray that they will not use this much resources?
    This is somewhat of a strange question, the logical answer would be not to oversell in the first place. Its really not a hard logic to follow, base your prices off your cost of operation + room for profit and you should never have to ask you-self those questions.
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  8. #8
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    It's called overselling - there are those who do it because they know that 1% or less of their customers will come close to using what they are offered and the 99% that don't will cover the 1% that does.

    It really does depend on the market though, target the wrong audience and you could end up with a majority of your customers using their allocations - which could be a huge issue if you're not ready for it.
    Michael Denney - MDDHosting LLC
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  9. #9
    It's not so bad overselling with Shared hosting, just not so good to oversell too much with Reseller accounts, due to Reseller customers being able to resell unused space.

  10. #10
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    Quote Originally Posted by HostXNow View Post
    It's not so bad overselling with Shared hosting, just not so good to oversell too much with Reseller accounts, due to Reseller customers being able to resell unused space.
    If you have overselling on for your resellers, then it can be quite a bit easier to happen.
    Michael Denney - MDDHosting LLC
    New shared plans for 2016! Check them out!
    Highly Available Shared, Premium, Reseller, and VPS
    http://www.mddhosting.com/

  11. #11
    Quote Originally Posted by MikeDVB View Post
    If you have overselling on for your resellers, then it can be quite a bit easier to happen.
    Correct. I have it disabled.

  12. #12
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    Hey thanks for all the replies I will assume that most of the provider opt the letter "B" answer (Hope and Pray...).

    Follow-up question to Chris and Mike...

    Quote Originally Posted by HostXNow View Post
    It's not so bad overselling with Shared hosting, just not so good to oversell too much with Reseller accounts, due to Reseller customers being able to resell unused space.
    Quote Originally Posted by MikeDVB View Post
    If you have overselling on for your resellers, then it can be quite a bit easier to happen.
    But what will you guys do if for "example" your monthly package cost will not compensate your monthly expenses? I'm sure you noticed this to some of the providers here. I mean the customer is in the assumption that he can utilize the entire storage without even bothering the server for multiple DB connections.

    ----------------------------

    Others are welcome to answer. Not explaining the scenario but WHAT WILL YOU DO in the scenario that your client is already utilizing what you promised and again not causing trouble on the server. Also, let's exclude making a lengthy TOS as you can only restrict so much. Ciao
    Ask for Server IP & Nameservers IP to check if your reseller provider truly provides 100% white-label.

  13. #13
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    Quote Originally Posted by Yujin View Post
    But what will you guys do if for "example" your monthly package cost will not compensate your monthly expenses? I'm sure you noticed this to some of the providers here. I mean the customer is in the assumption that he can utilize the entire storage without even bothering the server for multiple DB connections.
    If I sell somebody something and they try to use all of it, that's my problem and not theirs. It doesn't make sense to cut a customer loose if they're using what you sold them and not causing any issues for others beyond using what you provided to them.
    Michael Denney - MDDHosting LLC
    New shared plans for 2016! Check them out!
    Highly Available Shared, Premium, Reseller, and VPS
    http://www.mddhosting.com/

  14. #14
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    Quote Originally Posted by Yujin View Post
    But what will you guys do if for "example" your monthly package cost will not compensate your monthly expenses? I'm sure you noticed this to some of the providers here. I mean the customer is in the assumption that he can utilize the entire storage without even bothering the server for multiple DB connections.
    You set your prices. Why on earth would you set your prices below your costs? Do yourself and ultimately your clients a favor and charge them a fair price for their hosting. A fair price includes you making a profit! If you don't make a profit your business model is unsustainable. If your business model is unsustainable it is not just you who are out, but your clients as well. When you become more established you can "oversell" more than when you are getting started out because you will have more clients to spread the resources over and commissioning an extra server as needed won't be as difficult.

  15. #15
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    I completely and entirely agree with Mike. I wouldn't ever sell something I don't have, and I most certainly will not back down from what I have sold to anyone.

    You can't sell something to someone and then say "Hang on a minute... You're actually using what i've sold you! Sorry mate, off you go!" How could you do that and keep any sort of half decent reputation?? Its not a really good business model is it?

    On the other hand - with regards to your calculation of costs, no-one in their right minds, if they want to make any sort of profit will sell all their space on their server for less than it costs them! Simple maths! (unless they are planning on overselling...)

    The only reason one would interviene would be if it started to cause others using the server any problems!


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    XelionOne
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  16. #16
    Quote Originally Posted by Yujin View Post
    But what will you guys do if for "example" your monthly package cost will not compensate your monthly expenses? I'm sure you noticed this to some of the providers here. I mean the customer is in the assumption that he can utilize the entire storage without even bothering the server for multiple DB connections.
    Luckily mine does. But If it did not, I would probably just sell the company and start back up again, only with more realistic plans. And yes I have noticed it with other providers. A lot of them will not be round much longer. The more they oversell the more support is needed = more money to hire extra support. A lot of them think they can offer thousands of accounts for pennies and still offer excellent support using just 1 or 2 staff. It just doesn't work. That is where most of them go wrong.

  17. #17
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    Quote Originally Posted by MikeDVB View Post
    If I sell somebody something and they try to use all of it, that's my problem and not theirs. It doesn't make sense to cut a customer loose if they're using what you sold them and not causing any issues for others beyond using what you provided to them.
    That's nice to hear I just hate thinking that some will choose to make alibis with their customers when unexpected happens. Sometimes they will ask you to change provider even you're not doing anything but to cut their loses they will do it anyway. I don't know if I should call it a scam but its like some appliance manufacturers that offers lifetime warranty. When they realize that the appliance is beyond repair they will give you much problem and you will just end up piss and buy a brand new one.
    Ask for Server IP & Nameservers IP to check if your reseller provider truly provides 100% white-label.

  18. #18
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    Overselling at this level requires proper scale. Let's say you have 10 dual quad core servers with a 2TB primary HDD each, you are now able to spread out your heaviest users.
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