Web Hosting Talk : Web Hosting Main Forums : Web Hosting : Web Hosting Tutorials : Overselling – and Rocking the Web Hosting Industry

[The Stealthy One]

I am publishing the following article in multiple places, and thought I'd share it with everyone here. I'd love feedback (and yes, I do realize I am going to get flamed ).

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Overselling – and Rocking the Web Hosting Industry

It’s true. We oversell. In fact, we oversell our services to such an extent that we receive ninety-five hundred customer complaints each minute!

Of course, I’m lying – about the second part of my statement anyway. We do oversell our Web hosting services, and we take it to the extreme. We’re constantly pushing the envelope, looking for ways to put more users on a server, thereby making more money. If you believed the propaganda put forth by most of the Web hosting companies in the industry, you’d also believe my statement about our customer complaints. In reality, our customers couldn’t be happier.

Overselling is not a crime, and I hope I can open your eyes to the facts through this article.

First, let me address the question, “Why do hosts oversell?” Only by answering that question will we be able to continue.

When Web hosting was born (think 1994 or 1995), the Internet was, of course, new. HTML ruled, Websites were boring and static, and scrolling marquee was all the rage. It wasn’t too difficult to setup a server, give folks 10 Megabytes of storage space for their Websites, and make a bundle of cash. After all, when dealing with straight HTML, storage needs are very small.

Fast-forward to 2000. Price per Megabyte has fallen dramatically. The cost of bandwidth has plummeted, especially factoring in the telecom’s overcapacity. IT was now possible to receive disk space amounting to 500 Megabytes! Boy, life sure was good!

Then, as many believe, the industry went crazy. Zip to 2007, and you might thank so too. It is completely ordinary to find hosts who offer a minimum of 10 Gigabytes of disk space. The nerve!

Again, the “ethical” players would have you believe this change is bad. But here’s the story behind the numbers: the Web is no longer a static, HTML-focused place. The Internet as a whole is a socially-driven medium, its very life based on the ability of its users to communicate with whomever they please. HTML cannot meet these needs. Scripting languages, such as PHP, Python, and Ruby (among others) have moved into the picture, handling the needs of forums, photo-sharing sites, and even the mundane guestbook.

The truth is that some hosts have adapted to meet the needs of Web hosting users, and some have not. Large amounts of disk space eventually become necessary for a Website operating in 2007. Photographs, databases, sound files, scripts, and more – all need space, a lot more space than a simple HTML page.

So to answer the question, “Why do hosts oversell?”, I say, “Because they are meeting the needs of their users.”

Which brings us to question two: “If a shared hosting server holds hundreds of clients, each client has 10 Gigabytes of allotted disk space, and the server only has a 200 Gigabyte hard drive, how is this NOT lying?”

This is a good question.

The stodgy hosts do deserve a mention for pointing out a problem with many of the hosts that oversell: while disk space matters, it is not everything. By its very nature, a shared hosting environment puts many different Websites on one server. Obviously, a single one of those Websites cannot fully utilize, at any given time, the total sum of the server’s resources – resources such as CPU processing time/power and RAM. The problem with many overselling hosts is that they do not talk about the CPU limits in their marketing – all they mention is the copious disk space included with each hosting plan. In fact, it is even hard to find a mention of CPU usage limits in many hosts’ Terms of Service agreements.

However, it is very possible to utilize the full space allotted to you in a shared hosting account. Problems with CPU usage (which is generally capped at a percentage, such as 4% or 5%, for a set period of time, such as 90 or 180 seconds) arise primarily due to faulty scripts. As I already mentioned, many Websites in 2007 are totally reliant on dynamic scripts for their back ends. However, if a script which does not properly manage the resources of the CPU and RAM is written and given out to users, disaster can strike. The worst part of this situation is that many (my estimate is about 60 – 70%) scripts in use today are NOT properly written.

Again, the unethical hosts in the industry try to turn this into the overselling hosts’ problem. But why is this a Web hosting problem? It’s not! This is a problem with the folks who are writing and developing scripts. I won’t name names (I don’t need a lawsuit right now!  ), but I will say that some of the most popular scripts on the Internet are junk, in terms of the way they are written. Multihoster (which I seem to, unfortunately, have full management duties of now) is just one example that I CAN name.

In terms of the physical possibility of each user on a shared hosting server using his or her maximum allotted amount of space, there is no possibility it could happen.  However, hosts that oversell know this, and when a server starts to fill up, some clients are moved to another, new server to make more room, so everyone can use the full space allotted to them.

(In case you’re wondering, server moves happen every day, and when conducted right, the clients do not even know it happened!)

So our third question would be: “Why all the uproar over overselling?”

Another good question!

The bottom line, as I’ve touched on in a previous article, is that some hosts are not in the position, because of bad decisions in the past, to oversell. Overselling is a risky strategy, in that a budget must be available for the constant addition of servers. Certain larger hosts that were around during the dotcom bust are in debt up to their eyeballs now, and are in no shape to put themselves in such a risky position.

Instead of admitting the problem lies with them, these hosts choose to throw the blame to oversellers, who have figured out how to run a profitable business, providing users with the low-cost, high-quality services they’re asking for.

The expensive shared hosting provider is a dying breed, and they all know that. In just a few more years, we will no longer have to put up with their overselling propaganda. However, in the interim, it is important to address the true issues involved with overselling, and I hope I have done that with this article.

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[foobic]

Amazing - I have no problem with overselling in general yet your post still manages to irritate me.

So "Large amounts of disk space eventually become necessary for a Website operating in 2007"? No, at least not to anywhere near the extent offered. This kind of massive overselling works only because most users use only a tiny fraction of their allowed space and bandwidth, even if they're hosting a big gallery of family photos, which usually still amounts to well under 1Gb.

And if by some chance that gallery becomes popular and starts to use 50 - 100 Gb of transfer per month, it gets shut down for excessive CPU usage... But you say that's the fault of the software writers I love it!

Simply, this kind of overselling is not for the benefit of users and is necessary only to compete against all the other massive oversellers. The disk space and bandwidth numbers are irrelevant and might just as well be unlimited. However some resources certainly are limited, eg. CPU, memory and database connections - and the limits applied to these are usually not known until you hit them and your site stops working or gets suspended.

But if you pay more do you actually get more of these resources?

I'd love to see hosts publishing their real limits and competing on them but sadly based on some users' reaction to Dreamhost's old "60 CPU minutes per day" policy, many people just aren't smart enough to see what a benefit this would be. Perhaps some of the higher-priced hosts should try this approach along with the "we don't oversell" mantra...

For users that understand the offers it's not a bad market - it's good not having to worry about how much space you're using - but I find it a bit disturbing that newbies are now coming in thinking they need 20Gb space because some host offers it. Still, they should be able to make a more informed choice for their second host...

As for the "expensive shared hosting provider is a dying breed" - Dream on, friend. There will always be a market for higher quality at a higher price, and your disk-space / transfer numbers are not part of the equation.

[The Stealthy One]

Chris, thanks for the feedback!

[TechCrafters]

As a web designer who offers hosting as a matter of convenience, I've faced the problem of hosts overselling far too many times to count. When I first started out, many of my clients took care of finding their own hosting and sometimes we lucked out, but mostly we didn't. The grossly-oversold hosts make such sweet offers to folks, especially the newbies, but I was always the one who got the heat when their sites crawled since I was the designer. Now, I handle things much differently - I don't design sites unless I'm also hosting them and I don't make extravagant offers of unlimted resources. Realistically, I know that my clients are not likely to need more than a couple hundred MB at the most and the majority are well below that, so why offer and charge them for huge amounts of space they'll never use? I charge by the site, not the byte.

But I suspect my perspective on this comes from being a designer first and a host second. I'm not offering an instant setup shop and I don't want to be in the position of competing against thousands of low-cost resellers. I'm just a small shop owner relying heavily of word of mouth referrals to build my business, so the quality of the servers I use is very important to me. My clients' sites are spread out between several different servers, none of which are anywhere near capacity in either space or resources utilized. Right now there are four different hosting companies providing my server space for clients and if any of them show signs of degraded service due to over-selling, I have enough flexibility to move sites around as needed.

One of the nice things about operating as I do is that none of my clients have ever actually asked how much space they're getting - they know I'll make sure their sites have room to grow as needed.

-Mary

[extras]

Fisrt, I think you may want to define the term "overselling" in the way you are using in your article.

I think there are mainly three definitions of "overselling".
There are people who think of it as "extreme overselling", "overselling of only bandwidth and/or diskspace, but nothing else", and "overselling of any resources to any degree".

Many of discussions over this topic are futile because pople are talking about different subjects depending on their own definition.


To make the situation worse, many people are not even aware of the definition when they use some words.
Literally, they don't know what they are talking about.
They may be simply using the word to "decorate" their emotions/feelings about the host.


Yet for some others, "overselling" seems to be the only reason they can think for any kind of problem related to hosting.
Thus they will gladly call "overselling!" whenever they hear/read about any hosting related problems.
It's a magic word for these people, and I guess it makes them happy for the fact that they could make the connection between certain situation and the term, just like small kids being happy to name things.


When we are clearly aware of the obstacles for constructive discussion/thinking,
we may obtain better understandings in the end, IMO.

[InfoH]

Very well thought out post here, coming from another overseller this post hits the nail on the head!

Overselling isnt always a bad thing, it depends weather the company cant meet the customers needs, if you can its smart overselling, if you cant.. you need a new job

[1oneHost]

@GlobalWebDan: Good post...

I never believe in idea of overselling and on personal note, I hate it.

But here is the reality check: You can not run a profitable web hosting business if you're not overselling. So far, I am able to avoid any kind of overselling but I'm certain that one way or the other I would be dragged into it. I've lost many customers just because some other host was willing to offer 5-times the disk space with half the price, what I am offering.... so I end up lossing another customer .

The problem with overselling is that you can put a restriction to it, there will also be a competitor who will be overselling resources more than what you could even have. To my surprise there are companies who are selling 50GB webspace for less than $10/month.... and on top of it they're claiming that they're not overselling .

For me, its more like an ethical question rather than anything that either one should oversell or not....

[extras]

Many (smaller) hosts are overselling their support resources, IMO.
If all clients asked lots of support all the time, they will not be able to keep it up, and follow the path site5 has gone.

Also, many hosts are overselling CPU resources.
If host allows 1% of CPU, they can have only100 users per server or less.

These are less visible types of overselling, as hosts don't often advertise any limits on them.



About those who consider themselves as "non-oversellers":

Basically, I don't believe in someone who calims to do no overselling what so ever,
unless that host can clearly defines the limit for all kinds of resources and also s/he has ability to enforce the limit.


To achive "no overselling" on given type of the resource, one must know the total quantities and calculate the limit for each user.
But it's not enough to ensure all users would enjoy her/his share of resource, all the time.

The host MUST have the ability to monitor and ENFORCE the limit.
Without the ability, the host IS making an empty promise, and it leave the possibility of bad performance, crashes/crisis, and frustrated users.

[DSD-Dan]

Like most hosts, we oversell, but if our servers resources become challenged, I order another one, as long as you can meet the customer demand, there's no reason why you can't succesfully oversell

[InfoH]

Originally Posted by danserv

Like most hosts, we oversell, but if our servers resources become challenged, I order another one, as long as you can meet the customer demand, there's no reason why you can't succesfully oversell

precisely, overselling isnt always the sign of a amateur company.. as many hosts do this, even some of the larger ones i dont doubt..

overselling should only been an issue and should only be flamed when the company starts getting bad reviews for outages, downtimes, unreliability, imo..

[DSD-Dan]

Exactly, you get these hosts filled with accounts run by 14 year olds, that have a unlimited reseller that costs them their pocket money every month, that fill servers up with rubbish and illegal content and put server loads up. As long as you can keep the server running like a dream there's no reason against it

[Stranger]

One of my customers is leaving because he got offered:

200GB storage and 2TB transfer $5 a mth

How thats possible....

[Mini]

Okay Dan, if you think oversell is 100% ethical, and that there's nothing wrong with it then why don't you put up something that clearly states "We oversell our servers"in your banners and your main website?

Mini

[Stranger]

I find it funny.

Its sort of like paying for movie tickets.

Say they have 10,000 seats, they could sell 13,000 in the thoughts that 3000 might not turn up.

Also to have enough popcorn for 8,000 people because not everyone buys it.

Now what if everyone turned up?
What if everyone wanted popcorn.

I know what Im saying is Lame, but at the same time it should make some sense.

What happens when because youve got too many clients on big plans that your server suffers, and all clients suffer?

I have a fair bit of bandwidth only 40% being utilised, but I refuse to oversell.

Fair enough a client asked me for a special deal, and I cut him one, giving him 300gb transfer and 2gb space with 2 ips for $102
It is half the price Id normally charge, but Id rather clients who know what they want.

There are clients out there, who may have tiny sites, and see the bandwidth etc. and go for it because it sounds good for $5-10 a month.

Id rather clients who pay more, get a better service, no overselling, and last of all, if someone is willing to pay the price, they can use it wisely.

Overselling can cause lots of hassle in the support department, with people wanting to host mp3's, Warez etc.
Lets face it. If they pay $5 to host 1000 Mp3's, and you find out and kick them off, they go to another one

[cywkevin]

The only problem I have with overselling is that companies don't disclose their usage limits and the terms of service are written like a maze so you can't find important information about your contract. The worst offenders throw out customers and rarely provide proof of any actual offense.

Is it really that difficult to spend a few minutes and add a couple rows to your plan tables outlining cpu and memory usage?