Is Overselling Bad?

A question that goes around web hosting forums many times is the one of overselling and if the practice of it is ethical. In web hosting, the term overselling describes a situation where the web hosting company sell more resources then they actually have available and if all clients were to use the full amount allocated to them, the web host would not be able to sustain the services. Overselling in the hosting industry is usually related to the disk usage and data transfer limits set on each account.

Overselling Example

A web host has 80Gb of storage space on a server that clients are free to use and plans to put 100 shared hosting account on that server offering each client 1Gb of allocated storage space. If all users were to use their full allocated amount then 100Gb of storage would be needed and yet, only 80Gb of storage is available. This would mean that the server has been oversold and the clients do not get what they signed up for.

Why do Web Hosts Oversell?

Web hosts oversell to make more money. By offering more but having to buy less, their profit margins increase. Not only do they make more money that way, a lot of customers are tempted in to buying as they see very high amounts of disk space and transfer and think they are getting more for less. The example above shows a dilemma that is put on the web host. Is it actually a problem though? Overselling, when done correctly, assumes that not everybody will need to fill up 1Gb of storage. Most people will use less then 100Mb of their allocated storage space and if this is the case, then there will be no problem.

How to Oversell Correctly

If you want to go down the path of overselling then make sure you are realistic with what you offer. On a numbers basis, it is very unlikely that all clients will use up what they have. What you need to do is work out the perfect spot where you can oversell, but not by dangerous amounts. Monitor your server(s) regularly and if you see resources moving up too quickly, then make sure you have extra resources on tap that can be quickly moved in to place with out effecting the client. Should disk space start getting too low then look at seamlessly moving some clients to another server.

Is overselling wrong?

I personally think overselling in moderate amounts is neither wrong or right and is a business decision that needs to be made from the beginning. When done right and not stupidly, it is possible to offer clients slightly more. However, be prepared for extra work with monitoring and making sure that the whole process is transparent to the clients and act quickly if disk usage levels start to increase. Also have some good policy’s in place for clients using more then the allocated storage space.