Overselling is Dangerous: What to Watch Out For

by Adam Knife - Date: 2006-12-02 - Word Count: 433 Share This!

Overselling is a flat out dangerous practice, yet, the over competitive market of the web hosting industry has forced companies to make scary and absurd changes to their marketing plans, including initializing an overselling system.

As the hosting market became more and more competitive, web hosting companies tried to be more competitive and take some of the customers from their competitors, to do so they tried to offer more, for less. As in any industry, this worked very well, unfortunately with the restrictions and limitations of computer hardware, eventually they hit a maximum price point: the absolute cheapest they could go, offering the absolute most. With a number of teenager-run fly-by-night operations popping up and scraping pennies in profit, the real legitimate companies realized that this model was unrealistic, and definitely not reliable long term...

Thus, the divide. The web hosting market split in to two markets, web hosting as a commodity, and web hosting as a service. The commodity market kept trying to compete on numerical price points: cost, bandwidth, space, etc. and in doing so, came to a realization: most customers buy more than they need. The majority of their customers will never use the space they purchase, and therefore, can be sold multiple times. And here emerges the concept of overselling, a web host calculates how much space users usually use, then sells the remainder of that space for a second time...

This sounds reasonable, as long as the host keeps up to date on its customers, and makes sure that the space you're actually using, is always available. Though there are other problems, this in itself is a problem: this is almost impossible to do. Moving customers to new servers is a tedious and very time consuming operation which could result in downtime for everyone involved, as such, some hosts which oversell dramatically have run in to problems where a customer will use all the space (s)he purchased, and fill up the hard drive to the point that other customers simply cannot use the service anymore. Processes start to fail, and usually that host ends up going under: taking your money, and data with them.

In essence, overselling isn't inherently bad, however, the inability to keep it stable and balanced could be considered the single reason you should stay away from hosts who heavily oversell. How do you identify such a host? Well, if it looks too good to be true, especially in this industry, it is. If a host is offering 200GB of space for less than $10 / month, you can be sure they're overselling, and not just by a little bit.

Related Tags: common, internet, hosting, web, web hosting, host, overselling, practices

Adam X. Knife is owner and writer for Pick Web Host and Pick Registrar

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