Web Hosting Overselling.

The Power of Statistics

Statistics are used especially when you don't know something for sure, but you're willing to accept a prediction for that thing with a percent of confidence. The higher the percent (e.g. 95%, 99%, etc.), the better the prediction is. Business applied statistics help the producers better understand consumer behaviour, so they can predict the quantity of products to sell, the price for the product and so on. So, what does this have to do with web hosting? In the last two years we have noticed a trend of web hosting overselling, especially in the hosting plans offered by the big web hosts in the market. And this overselling is related to business applied statistics.

The idea of overselling is simple. Let's say a company has a shared hosting plan that offers 250GB disk space. They have a server that has a 500GB hard drive, so they should be able to host two accounts on it. But instead of advertising and selling two accounts, they decide to advertise and sell five. "Fraud!" some of you might shout. Well, not necessarily. If the company has statistical data that points to the fact that only 25% of their customers are using the whole disk space available and the rest of 75% are only using up to 10 GB of disk space, a simple mathematical equation shows us that the prediction for the disk space used by the five customers equals 290GB (1*250 + 4*10), which is less than the 500GB limit. In our example, the sample of five customers is a very low number, and the error of the prediction can be quite big in case two or three of the customers are big disk space "spenders", but with samples of hundreds of thousands of customers, the variation of the error will be very small.

The web hosting overselling trend was somehow expected, because most of the players in the hosting services market have now at least 5-6 years of experience, meaning 5-6 years of valuable statistical data, enough to make a prediction with a high level of confidence. The hosting companies noticed that most of the accounts do not use more than about 0.1GB of disk space or more than 1GB of monthly bandwidth, so why do they offer 6,000GB of disk space? Or 15,000GB of monthly bandwidth? The answer is quite simple: because it makes their offer stand out as a good deal, exceptional value for money. It's all about marketing the product!

Overselling - bad or good?

Overselling web hosts are counting on the big numbers to "lure in" customers as we all know that the goal of any consumer is to maximize satisfaction (in our case, to get the best possible web hosting offer for the same ammount of money). The advantage of overselling for the host is that they don't need servers and bandwidth to cover all the "advertised" disk space and bandwidth. They make more money off each server than they would normally do. As long as part of the extra profit "translates" into cheaper hosting plans, more features and better customer support, their clients have also advantages.

While the goal of the client is to maximize satisfaction, the goal of the web hosting firm is to maximize profit, so don't be fooled by the "big numbers". You need to pay attention to the web host's Acceptable User Policy or Terms of Service (ToS), because if you plan to use the whole advertised bandwidth or diskspace, you will most likely be kicked out for violating some regulations from the ToS or for overloading the server's resources (CPU, RAM memory). But if you indeed need that kind of traffic and disk space it's not fair to hog a shared server, consider VPS hosting or dedicated hosting

So, is hosting overselling bad? Is it good? Well, it's pretty hard to give a straight answer; overselling could be a good thing for both the web host and the customer but for this win-win situation to actually work both the webhost and the customer should not be greedy. If the web host gets too greedy and crowds too many websites on a server, that will affect the quality of their service (resources overload, downtime) and in the end their credibility. If the customer gets too greedy and tries to maximize usage of the shared resources, it will be unfair to the other webmasters hosted on that server. As long as the hosting company monitors its servers' usage and manages its resources and infrastructure so that the quality of the service is not affected, overselling is not a bad thing.

The Unlimited Myth

Some web host oversell disk space and/or bandwidth to unlimited quantities! As we discussed in Hosting Explained, bandwidth and disk space cost money, so it's not possible or at least not economically feasible to offer one of them or both in unlimited amounts. Usually the ToS and AUP agreements hold the "key" to unlimited disk space or unlimited bandwidth:

A few examples:

• A web host offering unlimited bandwidth might not allow video streaming which is know to be a heavy bandwidth "consumer";
• A web host offering unlimited disk space might not allow files on the server that are not related to the website content;
• A web host offering unlimited bandwidth might not allow an account to use more than 25% of the CPU for more than 90 seconds. And if you're planning to do heavy trafficking, you will require CPU power.

So, there is no way of getting real unlimited bandwidth and/or unlimited diskspace? Of course there is! It's just that you will need an unlimited budget to pay for that …