Whilst web hosting can prove to be a very lucrative market for some, it is also an extremely competitive one. As a result, the number of web hosts who oversell their available resources is very much on the increase.
Overselling works on the principle that not all users of the service will fully utilise all of their allocated resources each month. This allows the host to effectively sell more resources than they actually have at their disposal. In turn, this may lead to lower prices for potential and current customers and/or higher profits for the hosting company.
If you have ever searched the internet looking for a hosting package then you will know that advertisements for hosting packages typically start at around $10 per month or less and offer large amounts of disk space in addition to hundreds of Gigabytes of bandwidth.
What, though, will happen if the customer comes close to using all of their allocated space and bandwidth in any given month? Also, and perhaps more importantly, can the customer actually use all the advertised amount of space, bandwidth and other resources?
If a web host manages any overselling well, and the majority of customers do not use all their allocated amounts of space and bandwidth then it needn’t have an adverse effect on any other users on the shared hosting plan. This is because newcomers looking for hosting are quite likely to sign up for a plan that offers far more disk space and bandwidth than they actually require. Also, they may well deliberately purchase a larger package than needed just to be on the safe side.
In such instances I do not think that the more well known web hosts are scamming anyone. Ultimately, they have a pretty good idea that they will not exhaust their resources in any given month and are merely trying to maximise their revenue.
On the other hand, some shady web hosts quite deliberately oversell their packages, knowing full well that they haven’t got a hope of meeting demand. In this case it is clearly a scam as they cannot fulfill the service requirements that the customer has paid for. They will most likely lose the customer at the end of the month but with people switching hosts on a regular basis, they can probably hope to replace them with another victim with minimal delay.
Overselling can help keep costs down for the customer when the host manages it well, but can lead to downtime and suspended accounts when operated by some of the less than ethical alternatives.
With so many web hosts on the internet today it can often be hard to find a good one. In such a lucrative market there are plenty of companies engaged in spamming the net with false testimonials and praise, even for the worst of the overselling hosts, as well as rubbishing the competition.
Often, the only way to gauge a web host is to actually sign up and test their service which, ironically, is how the worst overselling hosts manage to keep finding new short-term business.
What are your experiences with hosting and have you ever had problems with a host overselling too much?