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06-03-2004, 01:28 AM #1Junior Guru Wannabe
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50 Gb bandwitdth for 7.45 $ policy - How they manage
Hi,
I see many companies ipowerweb,******,micfo .....are providing 40 to 50 Gb band width for 6 to 10 $ per month...
These are big companies so they can manage .....
But... these days we can purchase a reseller hosting like this....for 50 $ u get 100 GB space and 100 Gb bw........i mean these guys buy dedicated server and i think they just are trying to resell to 10 customers needin resellein hosting....
I just wanna know whats the profit margin one should keep in mind.....are they just making 3 times or 4 times more than the rent they pay per month for the server...
Thanks n just wanna know u r input....
Have a great time n good luck in u r business
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06-03-2004, 01:31 AM #2Predatory Poster
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Standard overselling strategy. When it's done right it works great but more often than not it's done poorly and fails miserably. I prefer not to mess with it as it takes a lot of skill and discipline to balance an overselling strategy. If you can make it work than more power to you.
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06-03-2004, 02:07 AM #3Web Hosting Master
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Originally posted by pixel_fenix
Standard overselling strategy.
if everyone who has money deposited in your bank went to withdraw it tomorrow morning, your bank would fail.
half the businesses in the world "oversell" in one way or another. i see the word "overselling" thrown around on here a lot as if it is a dirty word, but that is small-fry thinking.
if it doesn't make sense to run a bank with enough cash on hand to satisfy the absolute maximum demand, why would you presume that it makes sense for your hosting business?
if you offer 250mb of space, but see that the average used is consistently 100mb, you're throwing money away making that extra 150mb available to everyone. that doesn't mean you leave too small an overhead - the point is not to have unnecessarily large overhead.datapimp - You only get one soul, ya dig?
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06-03-2004, 08:12 AM #4Build It Better!
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Originally posted by datapimp.com
it's standard because it works.
if everyone who has money deposited in your bank went to withdraw it tomorrow morning, your bank would fail.
half the businesses in the world "oversell" in one way or another. i see the word "overselling" thrown around on here a lot as if it is a dirty word, but that is small-fry thinking.
if it doesn't make sense to run a bank with enough cash on hand to satisfy the absolute maximum demand, why would you presume that it makes sense for your hosting business?
if you offer 250mb of space, but see that the average used is consistently 100mb, you're throwing money away making that extra 150mb available to everyone. that doesn't mean you leave too small an overhead - the point is not to have unnecessarily large overhead.
Until that time arrives, overselling is nothing more than taking money from someone for a service you already sold to someone else generally resulting in people crammed onto overcrowded, overtaxed servers. This ultimately leads to account suspensions for folks using the same amount of resources they would have otherwise been fine using if the server was not oversold.
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06-03-2004, 02:05 PM #5Web Hosting Guru
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In my experience, 98% of the clients use less than a 1 GB transfer per month and less than 100MB of space.
Even if you offer 100 GB, these customers won't use more than 1 GB. Of course if you start to oversell huge, you might attract different type of customers using much more resources.
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06-03-2004, 02:53 PM #6Web Hosting Master
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Pretty soon this will be all irrelevant and those who started this massive overselling trend will be competing against the bigger boys offering unlimited space (restricted by linked files - no file backup dumps) and unlimited bandwidth (limited by resource abuse - which these 50 GBs/mo guys do anyway). After this is done, space and bandwidth will be flat fee and the battle will be with ad dollars and name brand won by great service and support. Not some pissing match to see who can oversell the most space and bandwidth to differentiate.
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06-03-2004, 03:01 PM #7Web Hosting Master
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Offering most people more than 1 gb is just asking for trouble.
Unless it's a reseller plan they more than likely want to put non legal content in their webspace. Now I don't believe in snooping on customers content (I am not the website police) but why offer an account that will be used for non legal purposes 90% of the time.
I'm happy with the customer that wants 500MB. They get to host a large site and they don't store non web related files on my servers.
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06-04-2004, 01:26 AM #8Junior Guru Wannabe
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Thanks a lot guys for the discussion....It seems its much safer and better to sell what actually the user needs......
I was just wondering how the rest of the hosting companies still manage to get custmers when they have these Big companeis offering more for less...May be the users dint liked it too....
As one said...what matters is the support
Have a great time & Business.....
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06-04-2004, 07:07 AM #9Web Hosting Master
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Originally posted by Watcher_TVI
As soon as the FDIC begins insuring hosting clients for $100,000 per account I'll buy in to your bank analogy logic.
Until that time arrives, overselling is nothing more than taking money from someone for a service you already sold to someone else generally resulting in people crammed onto overcrowded, overtaxed servers. This ultimately leads to account suspensions for folks using the same amount of resources they would have otherwise been fine using if the server was not oversold.
as for account suspensions, either you have a resource abuse policy in place or you don't. if you do, and a user exceeds those limits, they are shut down. that is an issue completely removed from how "taxed" or "crowded" your servers may be.
but maybe we're talking about different things here. i'm assuming a system where the web servers and file storage are separated. if you're talking about some little cobalt somewhere running web, ftp, mysql and mail on the same box, that's a different bag of fish.datapimp - You only get one soul, ya dig?
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06-04-2004, 08:00 AM #10Build It Better!
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Originally Posted by datapimp.com
as for account suspensions, either you have a resource abuse policy in place or you don't
It also doesn't matter if the web servers and file storage systems are on separate boxes or not, the same systems can be oversold just as easily.
I think UmBillyCord is exactly right. Pretty soon the standards will be resource usage and not bandwidth. Software such as VPS will become standard for shared hosting platforms with specific RAM and Resource allocations. That at least would give the consumer something solid to hang there hat on instead of the all too infamous "Your site has been suspended for excessive resource usage" account terminations that are running rampid. This ludicrous level of overselling going on today only hurts the industry and takes advantage of the consumers.
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06-04-2004, 01:49 PM #11Web Hosting Master
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Originally posted by Watcher_TVI
This ludicrous level of overselling going on today only hurts the industry and takes advantage of the consumers.datapimp - You only get one soul, ya dig?
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06-04-2004, 02:10 PM #12Web Hosting Master
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Next thing we get is overselling of resource usage. There is no end to this apparently.
Originally posted by Watcher_TVI
I think UmBillyCord is exactly right. Pretty soon the standards will be resource usage and not bandwidth. Software such as VPS will become standard for shared hosting platforms with specific RAM and Resource allocations.What you can do with Cpanel ------------------> |||||
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06-04-2004, 02:25 PM #13WHT Addict
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I do not understand why you are so anti overselling.
Why don't you ring up your airline and shout at them next time they offer you free first-class due to overselling the flight.
The bank analogy is perfectly sound and takes place. The only place where your money is guaranteed is if a) it is ensured by an organisation that does not oversell or b) its protected by assets such as gold bullions. It is how the world operates.
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06-04-2004, 02:50 PM #14Build It Better!
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There have been more than enough overselling threads and they all say pretty much the same thing, my opinion of the practice hasn't changed, I think it's flat out wrong.
As of today both the Airlines and Banking Industries are regulated by the Government and backed by Federal Insurance, Web Hosting is not. Even Taxi Cabs are regulated as to how many people they can carry and how much they are permitted to charge.
Web hosting is completely unregulated with no set of guidelines or published standards in place to protect the consumer. Comparing the Hosting Industry to any other industry that is regulated by the Government and backed by Federal insurance is an extremely faulty comparison. Like comparing the lemonade stand on the neighborhood corner to the Coca Cola company...
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06-04-2004, 03:38 PM #15Retired Moderator
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Watcher_TVI, are your reseller customers allowed to oversell?
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06-04-2004, 04:43 PM #16Build It Better!
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No they are not...
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06-04-2004, 05:49 PM #17WHT Addict
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There is nothing wrong with comparing the neighbourhood lemonade stand to the coca-cola company. Both offer a similar product and both are requried to follow certain practices regarding the production and service of their product. This is the problem with these anologies - they can be viewed in two lights. Essentially, however, the two entities have to ensure that their business model works whilst following the legislation in place.
Web hosting is not regulated due to the nature of the internet. However there are guidelines in place to provide a 'code of practice'. These are provided by the Internet Society (ISOC) and the Internet Service Providers Association (ISPA). Certainly a UK bank will ask an internet business to at least look over these before providing financial facilities - I know HSBC suggests this.
Overselling is a basic economical concept which has been in use for decades and supports business. Maybe on a smaller level (with regards to resellers) overselling should be controlled/discouraged but certainly on a corporate level it should be permitted.
I also do not see how you can take such a strong stance over a process which, if used properly, can promote the growth of business and happy clients. Of course if abused or followed incorrectly it will cause problems - but so will loans & overdrafts. Overselling, like loans, can provide a larger cashflow into the business and if, managed properly, can be supported whilst keeping clients pleased. It is unfortunate that you have to rely on a regulatory body before supporting something.
Just for the record, currently we do not engage in overselling due to the nature of our cashflow forecasts etc.----
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06-04-2004, 06:41 PM #18Build It Better!
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I don't know what the procedure is where you live but in the US the kids start up lemonade stands with out the tiniest bit of "legislation" or in many cases even supervision. No rules, no Board of Health, it's buyer beware when you take a drink and hope the kids didn't use their mud bucket to mix the stuff in.
Just like web hosting, it's buyer beware and hope the people you purchase services from aren't selling you an account on their desktop connected to the Internet on a cable line in their basement, or on some $50.00 server at a substandard facility.
You may very well think overselling is a great concept for business, it's been my experience and observations that it does not provide such great results for consumers when it comes to web hosting.
What is curious to me is that if you think it's such a positive concept for business, why would you not observe the practice yourself? In fact, why would you make it a point to state that you do not observe the practice?
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06-04-2004, 06:54 PM #19Web Hosting Master
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I don't know what the procedure is where you live but in the US the kids start up lemonade stands with out the tiniest bit of "legislation" or in many cases even supervision. No rules, no Board of Health, it's buyer beware when you take a drink and hope the kids didn't use their mud bucket to mix the stuff in.
Note that this really *did* happen.
This is what makes the hosting industry so exciting... new companies all the time, inventing new ideas and introducing new special, "one-month" offers that typically last for a year if not longer, more well-known companies offering new services that just can't seem to catch their customer niche, and even older companies literally failing and shutting down operations.
That was my point with this example, and this is why I think the hosting industry is so exciting.
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06-04-2004, 06:59 PM #20Disabled
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Originally posted by Watcher_TVI
What is curious to me is that if you think it's such a positive concept for business, why would you not observe the practice yourself? In fact, why would you make it a point to state that you do not observe the practice?
Hmmm..... .....
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06-04-2004, 07:53 PM #21Junior Guru Wannabe
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Originally posted by keepr
Unless it's a reseller plan they more than likely want to put non legal content in their webspace.
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06-04-2004, 08:14 PM #22Web Hosting Master
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Well I am not totally against overselling though.
Banks oversell too! I mean for every $100 they have they are allowed to loan out $1000 .What you can do with Cpanel ------------------> |||||
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06-04-2004, 08:29 PM #23WHT Addict
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We made the statement because of the nature of this debate we wanted to ensure that no clients left with the wrong ideas.
We have no need to oversell due to our current financial situation. Some people do not need to loan money - but that doesn't mean that they discourage the process.
Unfortunately re: the child you are wrong. If the child decides to try and kill you with the lemonade, they are liable. Plus there's the fact of trading on a street, which in many places is illegal without a licence.
Within the UK anybody who sells food and drink must sell it in the same package they receive it. If they do not, they are required to produce it under legal conditions regarding hygiene. I would bet a lot of money that the law is setup the same in the US.
Just because it seems like a nice idea and that they are kids and that nobody you've heard of has been done doesn't mean it is not the case. Technically, they should not be producing their own lemonade and should not be selling it in the conditions that they are. Sure, no court is going to prosecute a child for doing it - but the legislation does not make exceptions. If a child decides to mix it in a mud bucket, and gives you tetanus whilst doing it, off they go to get fined - and if its not them then its their parents who, as those with legal responsibility, should've ensured it didnt happen. To be fair I think that view is a rather mis-guided, old-fashioned view on the way legislation is setup.
It is, of course nowhere near 'buyer beware'. If you choose to pick a small company that does not advertise a telephone number and that takes 48 hours to name their operating system then that is your problem. Just as if you choose to have an abortion done in a back alley rather than in a hospital. If you're choosing a hosting company, a few simple checks like calling their telephone number, some support requests and a talk with other clients will provide you a good idea of their size and structure - I'm quite sure that providers such as dinix.com are not running off a desktop ISP connection and I didn't need to do much to confirm.----
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06-04-2004, 08:42 PM #24Build It Better!
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Originally Posted by DroveNet
You've made my point for me...
As for the child and the lemonade analogy, well the kids in the US do it all the time with no licenses, permits, Board of Health inspections or anything else but that isn't the point here. Your Legislation may not make exceptions but in the US there most certainly are exceptions. However that's a topic for the Lounge...
It is, of course nowhere near 'buyer beware'.
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06-04-2004, 08:46 PM #25WHT Addict
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Unfortunately, there have been lots of people ripped off buying cars, paying gardeners and attempting to use an airline - it is not something unique to the hosting industry. According to your definition of the phrase, you should be buyer aware everywhere. I would call it common sense.
I made the comment to ensure that potential clients such as yourselves did not decide we were a poor company. I agree it is a good concept, just don't take part in it because I do not need to and I don't want those that are against it specifically not making use of my company on that belief.
With regards to the child selling analogy: it was in fact the US that started the "lets sue everybody" culture and I'm sure if you study your legislation it will cause similar problems. Rememeber I am not concerned with the implementation of the legislation - just whether or not the legislation covers them.Last edited by DroveNet; 06-04-2004 at 08:52 PM.
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