What is Overselling?

Overselling is a marketing gimmick that many hosting companies use where they promise more (often far more) resources than they have available to try and lure clients onto their servers. Extreme amounts of disk space and bandwidth for very low prices to try and convey value are the hallmark of these providers.

If you’ve recently gone searching for a hosting plan, you’ve undoubtedly seen an ad or two (or a thousand) promising “$2 a Month! 500 GB of Storage! 2 TB of Bandwidth! Host Unlimited Domains!”or some equally outrageous offer. This is overselling at its finest.

Anatomy of the Oversell

A new hosting provider leases a dedicated server with 2 GB of RAM, a 120 GB hard drive and 500 GB of monthly bandwidth and costs $150 per month.

Now let’s suppose that this host was planning to sell hosting packages for $3 with 100 GB of disk space, and 500 GB of bandwidth (which, by the way, is nowhere near the extremes that some hosting plans go to).

Anyone who understands basic math instantly recognizes that if the host actually allowed just a single user to use the resources he or she has purchased, he would have nearly used up his entire hard drive and would have accounted for all of his monthly bandwidth on the server he is leasing. All with one $3 a month client.

In order for this hosting provider to arrive at any reasonable amount of success in the business, they now have to pack as many clients onto this server as possible (quite often up to 500 or more are put on a single server) in the hopes that the clients never actually use the resources they have purchased.

What Can Overselling Tell You About the Host?

Overselling can (and should) raise several warning flags to those searching for a hosting plan including:

• That they are involved in hosting only for the short term (or possibly even as a hobby during summer break). The barrier to entry is very low in hosting. Anyone with an allowance a reseller account and a website can portray themselves as a legitimate company. These types of hosts, not knowing anything about providing hosting services, think that by setting up shop and offering the moon for $3, they’ll be on the road to riches. A more likely scenario is they’ll disappear at the end of the summer leaving you without an account (and more importantly, your data).

• Quality of service is not a priority. Many hosts that oversell need to pack as many clients onto a single server or reseller account as possible in order to realize any profit from their operations. With this many people fighting for the same RAM and processing power of the server, poor service quality is inevitable. Clients often have to endure this low level of service for months (if they haven’t bailed by already) until the host can save enough funds to get an additional server. Even then they will likely start overcrowding that one as well.

• Customer support is not a priority. By offering cheap plans, a host that can attract new clients in large numbers now has a new dilemma on his hands: how to support a large user base with any kind of quality. Long response times to help tickets and responses that do not solve the problem but only buy time for the host should be watched out for. “We’re taking a look at this issue” is a popular response hosts use to keep you waiting another few hours.

How Can Overselling Impact Your Hosting Experience?

Account Suspension/Termination: A host who oversells is counting on you to never use the resources you’ve paid for. Their business depends on it. If your blog, forum or online store becomes popular and your traffic increases significantly, you run the risk of your hosting provider suspending or terminating your account so that they don’t have to live up to their advertised offers.

Frequent Migrations: If your site gains any degree of popularity or your ecommerce site sees an increase in transaction you may be asked to pay more or leave. In other words, if you actually use the resources you were promised you will likely not be welcome anymore.

Slow Site Performance: As mentioned above, with often hundreds of sites competing with yours for valuable resources, servers can easily bog down and become unresponsive. If a solid support and monitoring system is not in place, you can be stuck in this situation for days.

Exposure to Malicious Users: Cheap hosting (especially those with 30 Day Money Back Guarantees) is very appealing to spammers and other users with less than admirable intentions. Being able to get in on the cheap, run their scripts and leave without much accountability (if any) is the perfect vehicle for this crowd. Many hosts will try and protect against this kind of behavior but if you’re not on the ball 24/7 monitoring activity, you may not see them until they’ve done their damage.

Things You Can Do to Avoid an Overseller Nightmare

Ignore the Sales Pitch: Forget how big the resource allocations are. In reality, you are not really getting all of these resources anyways. Look for other signs of value such as: software and tools offered with your account, tutorials (if you’re new to hosting), reputation of the host on forums and message boards, account transfer services, a comprehensive knowledgebase, a busy company forum, multiple avenues to contact the company, etc.

Pay Attention to Response Times: Send a sales inquiry or technical question via the company helpdesk and note the response time and the quality of the response itself. You often tell if a host takes their business seriously by how quickly they get back to you and how well they answer your questions.

Ask About The Company’s Operations: If a host owns their own equipment and has significant investment in their operations, they are likely (though not always) to go the extra mile and provide a higher level of service quality.

Is the Company Organized as a Formal Business Entity?: Using a formal business entity (corporation, LLC, partnership, etc) can be an indication of how serious the owners of a hosting company are likely to be. This process takes time and investment to do properly and most "fly by night" hosts do not bother with this formality.

Are there hosts that don’t oversell who provide poor quality of service? Sure. Can you wind up with some of the same experiences noted above with a large company? Of course. Overselling is an unfortunate part of today’s hosting industry and is unlikely to go anywhere anytime soon. One thing you can and should do to avoid a hosting nightmare is to do your own due diligence when looking for a host and remember, with hosting (like with so many other things in life), you ultimately get what you pay for. The next time you see an outrageous hosting offer that seems too good to be true, it probably is.