Web Hosting Talk : Web Hosting Main Forums : Web Hosting : Calculation for overselling

[disciple1]

Hi,

How does one go about calculating what can be safely oversold in regards to bandwidth.

Thanks,

Rick

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[JTY]

There isn't really a formula for it. To many factors effect what you can do.

[4Hosted]

Please Note i dont condone Overselling

When overselling, I would presume you are making more profit than you should expect, thus i would expect the Webhost to work a little harder on the Account management side.

Keep an eye on all accounts, Yes, All accounts, and see what the customer is currently using per month, Research what they used the month before, is the customers site growing??

Usually keeping the account at about 500MB/Month above what they are using at the moment should be sufficient, of course, it depends on how the site is growing each month.

The last thing you want is a customer getting a great Advertising campain going, they get LOADS of hits which makes their bandwidth limit go over their Oversold limit and the site gets automatically suspended, Customers want to make sure they get what was advertised and paid for, MOST dont use even half of it but if YOU are making a profit out of their unused space and bandwidth, it should be up to YOU to make sure they dont go over the OVERSOLD limit

Hope this help

P.S think this should be in the Running a Web hosting business section, Mods?

[elementip]

If you have 20 clients, each using 20gb/mo, and your monthly bandwidth is 400gb, than you can safely oversell nothing. It really depends on what people are TEND to actually use, VS the maximum they could use.. The difference COULD be used to buffer overselling, but it's always a gamble.

Overselling is for webhosts that are A)very good at math, or B)very bad at math.

There's really no inbetween.

[disciple1]

Hi,

I'm not sure whether I condone it or not. I have done quite a bit of research and found that most sites don't use much of their alotted transfer amount.

I assume this is why people oversell. I have seen so many posts concerning this topic I just began to wonder how the people who do oversell insure that each customer actually gets what they are paying for.

If this is in the wrong forum I apologize and please feel free to move it.

Thanks,

Rick
Christian Family Host

[4Hosted]

Your are right.

Overselling can be judged in 2 ways but if you Oversell responsibly, Knowing your customers, their sites and their monthly growth, you should be fine.

The only thing i dont like is people who oversell until they cant sell anymore and then cancel any customers account that uses more bandwidth than they are supposed to and not the bandwidth that they paid for.

For example, overselling until you fill your server, but if a customer uses more than their resold limit of 1GB bandwidth, although they paid for 2GB bandwidth, instead of changing their limit to the right lotted amount of 2GB, the customer has their account suspended for OVERUSE!!!

It just matters on how you PLAN to oversell and how responsible you are at doing it

[JHServers]

Just monitor your server use for a month and if you have lots of room, pop another account in there and see how it goes. If you still have more then fill a few more. I'll admit to overselling a little bit, but even if all my clients wanted to use their amount of bandwidth i offered, then power to them, they can do it. I won't suspend their account because i'll be making enough to cover the bandwidth overages. If I have a server with 500 GB bandwidth and customers are using 250 but I offered a combined total of over 600. Sure i'll sell a couple more and stop when it gets close. Some servers can oversell more than others, it just depends on your servers. I would just reccomend you monitor everything and make sure there's enough to go around Hope this helped...

[TR Seeks]

A lot of hosts oversell. They work on the stratagy that not many people will use it all and for the people who do use it there are enough people not using it to cope for that

[disciple1]

Thanks for those who have responded. I am new to this business and am trying to nail down information concerning things I am not so sure about.

So, from the responses I have received so far there is no one using a calculation of any kind. You simply monitor your accounts and get a feel for what they use on a regular basis and then you could oversell accordingly.

I guess this (for me) begs another question. How many accounts can you safely place on a server before you would feel over saturated?

Thanks again.

Rick

[SROHost]

Number of accounts is just as subjective. Asking how many accounts to put on a server is a bit like asking how many people to put in a car. What type of car? What sized people? How far must they travel packed in so tight? It's also a bit harder when the people in the car may grow and shrink at any time.

Try searching the Running a Web Hosting Business forum here for existing answers to more questions like this.

[ArtieFishill]

4Hosted, while I probably understand why you don't condone it, in reality, it's probaby bad ROI NOT to oversell.

But to get the the heart of the matter, overselling is NOT bad if you manage that overselling correctly and efficiently. You need to be constantly aware of the loads, watch the bandwidth and disk usage, move sites that are growing too rapidly to new, less used servers, etc. NOT overselling it actually losing money and wasting resources.


For arguements sake, say you have a 600gb transfer and 80gb space available on a server. Now, you know some of that webspace is going to used for the OS and backups..so let's say 60gb is available for hosting. Say this server costs you for arguements sake $180 a month to lease. (not a dual xeon naturally..lol).

To make things simple, you only offer 1 plan of 10gb transfer and 1gb webspace.

So by sticking to the "plan" in allocating sites to a server, you can only put 60 clients on it. To break even at just server cost you need to charge only $3 per plan. Nice price, very compatitive. But wait. Add in overhead, profit (YES, most of us are in the business to MAKE money..lol), advertising, support, etc. Hmm..that costs..so we now need to bump that plan cost up...to say $6. Still not a bad price in reality for 1gb space and 10gb transfer. That gives you a 100% gross profit over cost of server. Well, that's provided all clients pay and you keep the server full. While this probably isn't a major issue with larger hosts, can be for smaller ones. Now, we all know that hardly anyone offers a SINGLE plan, so in the end these numbers will fluctuate vastly.

But let's now look at the server. 60 clients. how many are actually using 1gb space adn 10gb transfer a month? 1? 2? NONE?

Average load on low end budget hosts is probably around the 200-300gb a month range for transfer and probably less then 50% utilization on disk capacity.

So, in reality, while your clients are getting what they paid for, you are actually wasting a ton of available resources. By moderately overselling (say 20% to be conservative) you can increase your revenue, possibly offer better prices, stay competative with larger hosts, and still keep the clients ever so happy. But it takes a little more work. You need to watch your servers on a daily basis, maybe have a high load server that you don't oversell with less clients for those that DO tend to hit the limits or close to them, etc.

You need to remember, you are in the business to MAKE a profit. If you can increase your bottom line without impacting your customers (meaning that even though you've oversold a server, they still get the resources they need), then there is no harm in overselling and it makes very practical business sense. It's when it starts to impact the server and clients that it's NOT a good ROI.

I like to think of it like a bank. You use Customer A's money (resources) to give to Customer B (loans), but while insuring that if Customer A comes in needing his money, you have enough on reserve to give him. Of course if a run on the bank happens, then your screwed.lol..but when's the last time you saw a run on a server where EVERYONE need EVERY last drop of resources available?

HOpe that all made sense.

[TR Seeks]

Well said Sean.

On the other question howwever it all depends. As your package varies etc then you cant

You do not want to be a host who trys to cram as many people on a server as possible and then ends up shutting down.

Keep watching the server loads and bandwidth. Otherwise you may find yourself having to shut down the server

[ArtieFishill]

Naturally there are hosts that abuse the idea of overselling, greed being the major cause. But I've seen 900-1000 sites on a server an it runs fairly ok because 3/4 of the sites have little if no activity..lol. But that's a rare and extreme case.

(mind you that's NOT me...I only wish I had that many clients..lol)

[dbbrock1]

IMO, any normal shared/reseller host that doesn't oversell is pretty much throwing money away. All the ones that claim they don't oversell are pretty much fools and should really rethink the way they are running his/her company.
Of course that shouldn't be abused.

[disciple1]

I don't think it's necessarily foolish.

I think it's more foolish to advertise something that you can't deliver and I believe that MANY people/companies are doing this.

As it has been stated, if you are constantly abreast of your clients and their requirements then you can oversell a reasonable amount without much harm. But how much time do you want to spend analyzing ALL your clients needs, especially as you begin to grow?

I guess it's a question each one of us has to answer.