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  1. #26
    Join Date
    Apr 2002
    Location
    Chicago, Illinios
    Posts
    391
    Originally posted by Jedito
    No, you wont like to compete with $1 hosting, usually, you'll get as a customer people that will suck your time with support request.

    Nobody with at least a minimun knowledge of hosting can think in be hosted for $1 per month.

    There is a whole world outside WHT, we are doing pretty well, and we must be one of the 10 most expensives hosts in WHT
    Heh, I must be one of those 10 most expensive hosts too.

    cortices,
    Yes you can profit without overselling but you will have to charge a lot more. I know there is one host on this board that I know of that doesn't oversell and they make profit.

    - Mike

  2. #27
    Join Date
    Dec 2000
    Location
    The Woodlands, Tx
    Posts
    5,974
    Overselling strikes me as an interesting subject. Let me pass a thought on to you.

    With a prepaid phone card you get so many minutes.
    Hosting is prepay, you get so many gigs/bw.

    If you dont use all your minutes on the card one month, you can use the rest next month.
    With hosting, if you dont use all your gigs....your SOL.

    --------------------------------------
    That's the difference between a host that over sells and one that doesnt. One that doesnt oversell could pass on the unused bw to the next month because the customer's monthly charge covers the bw alloted to his account. With overselling, it doesnt.

    So is overselling honest or not? Of course, I know you all would never go out of business, and would never charge customers extra, nor do you feel you ever need to raise rates.....at least not until too many of your customers are using more than you expected. That's the advantage to not overselling. We dont have to worry about costs not being covered due to a client's growth. I'd really like to know what a host who is overselling would do if too many of his clients grew past his profit point on the overselling bit.
    Last edited by Webdude; 10-24-2002 at 02:59 AM.

  3. #28
    How about mobile phone/cellphone bills.
    If you don't use the inclusive minutes some phone companies will let you use them next month, some won't.

    My phone company lets me carry them over for one month only.
    In the second month I still don;t use them.

    Muy usage of the phone is an established pattern, therefore the fact they have let me carry them over is irrelevant.
    I am stillnot going to use them.

    I have seen some colo companies offering bandwidth over a 12 month period.
    Maybe thatwould work for virtual hosting.

    At the end of theday, nobody will break ranks on this because their prices will rocket.
    A while ago we were haemoraging customers faster than we could get them because we were charging more than our competitors.
    I am not prepared to take that risk again.

    Suppose we did increase prices and not oversell.
    If customers did not leave then our profits would rise.
    Last year our profit (pre tax) was 50% of turnover.
    Do you think that would be fair to customers?

    Gordon
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  4. #29
    Join Date
    Sep 2002
    Location
    Dallas, TX
    Posts
    205
    Webdude:

    Very interesting point. A perspective I had not yet considered. However, (and this shouldn't come across as desperate rationalization ) you can't compare two seperate industries as if they were the same. Thousands of factors culminate in determining the pricing structure in any given industry. What works for them will not necessarily work for us.

    One point you made that I must disagree with.

    That's the difference between a host that over sells and one that doesnt. One that doesnt oversell could pass on the unused bw to the next month because the customer's monthly charge covers the bw alloted to his account. With overselling, it doesnt.
    Actually, the *only* way to properly handle this situation is to vastly undersell your resources. What if all of your customers (and this is a very likely scenario, I think you'll agree) do not use all their resources one month? The next month they now have you probably overselling already. The month after that? Yeah well. Good luck.
    justin 'at' abrogo.com
    http://www.abrogo.com
    Shared Unix Hosting

  5. #30
    Join Date
    Jun 2001
    Location
    Kalamazoo
    Posts
    33,412
    Originally posted by Webdude
    . . . . . . . . I'd really like to know what a host who is overselling would do if too many of his clients grew past his profit point on the overselling bit.
    *Disclaimer*
    I don't oversell.

    To answer your question; I would think they would simply purchase more from their provider. I don't know a provider that automatically shuts you down for using more. They want you to use more so they can charge you overage (as opposed to the more reasonably priced pre-purchased charge). Not saying there is a conspiracy to. I'm just saying, I'd surely rather sell something for $4 each instead of the $2 each I sell it for if purchased in advance.
    There is no best host. There is only the host that's best for you.

  6. #31
    Join Date
    Jun 2002
    Posts
    196
    Note: for the example above about $1 hosting, its very very possible.

    say we have the "started page holder hosting plan" that comes with 5MB webspace and 5 emails for $1/month. I could put thousands of these accounts on a server and it would run fine. Which means thousands of dollars.... If this server cost 100 and I make 1000, 9x my profit is just fine for me.

    aswell as the overselling issue, You dont need to oversell unless your not charging enough, or paying too much.

  7. #32
    Join Date
    Jul 2002
    Posts
    441
    not quite. what about bandwidth costs. if u gave just 1 GB/mnth to those clients, ud need 1000GB/mnth. thats where the overselling comes in. no one cares about HD space; its all about bw.

    by the way, id be very interested in a $100/mnth server with 1000GB bw.

    Originally posted by ninji
    Note: for the example above about $1 hosting, its very very possible.

    say we have the "started page holder hosting plan" that comes with 5MB webspace and 5 emails for $1/month. I could put thousands of these accounts on a server and it would run fine. Which means thousands of dollars.... If this server cost 100 and I make 1000, 9x my profit is just fine for me.

    aswell as the overselling issue, You dont need to oversell unless your not charging enough, or paying too much.

  8. #33
    Reasonable overselling is, I would say, an acceptable practice. Reasonable, IMO, might be 10-15% oversold on space/bw.

    Hotels overbook. Airlines overbook. Why? Because there are almost ALWAYS reservations that go unused. In both industries, from time to time the overbooking becomes a problem when everyone shows up -- but they deal with it by making it right in one way or another. Web hosts should operate with that sort of model in mind.

    You could even make a case for the idea that even BANKS "oversell" if you consider the idea that if every single customer of a particular bank wanted to withdraw all of their savings on the same day, the bank would be totally unable to give everyone their money -- they simply don't have it.
    I thank my Lord for all His wonderful blessings.

  9. #34
    I believe banks only have 20% liquidity.

    Gordon
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  10. #35
    Gordon:

    Actually, it varies. There is a federally mandated liquidity, but banks CAN be more liquid if they like.
    I thank my Lord for all His wonderful blessings.

  11. #36
    What is the oversell factor/percentage for most hosts?
    Web Hosting Stuff - Over 10,000+ Hosting Companies Listed
    http://www.webhostingstuff.com

  12. #37
    Join Date
    Nov 2001
    Location
    The South
    Posts
    5,408
    I look at it more of a tuning process.

    If you've got a server that's simply not being utilized, load is nothing, drive's practically empty, and it's basically just sitting there, regardless of whether it has 10 or 400 sites on it it can still hold a few.

    On the flip side, if you've got a server with 3 clients on it who are all beating the hell out of it, who cares if you normally throw 300 sites on a server, that server is full.

    I guess this is the perspective of someone who buys bandwidth by 95% I don't "oversell" bandwidth per se, if my servers use 3.6 mbits, I pay for that, whether those customers were sold 10 gigs or 10 terabytes of total transfer, I pay for what's used, they use it, I pay for it.
    Gary Harris - the artist formerly known as Dixiesys
    resident grumpy redneck

  13. #38
    Join Date
    Sep 2002
    Location
    Mansfield
    Posts
    314
    Got to throw in my .02

    If you can't deliver what you sold when they need/ask for it you're ripping them off.
    I can't sell 10MB off a T-1 and not expect to get caught.

    If I sell 10MB off a DS-3 feed and pay for only what I use, that's good business.

    If you always deliver more than you sold thats great service.

    How you manage your resources is business management.

    So at what point are you overselling?
    GUI admin tools have no honor. It is a good day to vi.

  14. #39
    Originally posted by ninji
    Note: for the example above about $1 hosting, its very very possible.

    say we have the "started page holder hosting plan" that comes with 5MB webspace and 5 emails for $1/month. I could put thousands of these accounts on a server and it would run fine. Which means thousands of dollars.... If this server cost 100 and I make 1000, 9x my profit is just fine for me.
    Does everyone here work for free??? You're above example is waaay off. You might need 1 tech for every 1000 clients at least, so you're talking about $2000 per month for wages, twice what you're taking in! and that's even before the small costs of bandwidth/server/day to day expenses

  15. #40
    You are wrong.

    It depends on what services you are offering and what the SLA is.

    For example, we supply 10MB of web space free when someone registers a domain name.
    The service is restricted.
    No frontpage, no-cgi, no SLA.

    We have thousands of people on these plans and they don't use one tenth of one technicians time per day.

    Gordon
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  16. #41
    I'm a bit late on this thread so I have to apologize...

    Originally posted by GordonH
    Once the third party processors stop sponsoring merchants outside the US we will see a reduction in the number of one server businesses.
    Gradually the market will become more quality orientated.
    Huh? How are 3rd party processors sponsoring merchants outside the US? And I agree on your last sentence about quality, but how is this related to the type of your merchant account?

  17. #42
    Originally posted by Jedito
    There is a whole world outside WHT, we are doing pretty well, and we must be one of the 10 most expensives hosts in WHT
    Just a small note: If you are amoungst the 10 most expensive hosts in WHT, we are probably no 2 or 1
    Small but doing fine.

  18. #43
    How are 3rd party processors sponsoring merchants outside the US?
    2checkout, Ibill etc have many users who are not in the USA.
    One of the new rules coming in is that these companies will only be able to sponsor businesses based in the USA for third party processing.
    This has been discussed elsewhere in relation to this.
    Some processors are trying to get relationships with European banks to get round it, but as other international members of Visa will be applying the same rules eventually I don't see how it will help.

    Gordon
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  19. #44
    End of the day ... your service reliability must not be compromised ... as long as you can ensure optimum performance for customer websites, you're oK.
    Web Hosting Stuff - Over 10,000+ Hosting Companies Listed
    http://www.webhostingstuff.com

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