Oversell or die

[sellwhm]

Do you think that overselling is the standard? Have you noticed that bigger companies oversell quite a lot? Do you think getting more space and bandwidth is the reason why most people get high sales? Some people like to offer 50 gb of space for $20 for a reseller account? Is that even reasonable?

[[JSH]John]

It's a question I've been asked a lot by customers. Why should they join us if they can get 50 - 200GB of space for a lot less from other companies that I'm sure we all know.

50GB for $20 is way too much space, but not everyone uses that whole 50GB, this is the way oversellers think of it. If someone was to use all that space then I'm sure they would end up suspended for some smallprint in the ToS.

[Galaxy-Hosts.com]

For small companies it is really Oversell AND Die. Some of the big multimillion dollar companies get away with it, but very few small companies do on a long term basis.

[Decker]

Point is how many survive and how many die?

Most of the 'newer to the field' that come along go on the principal that all clients will not use it.
Unfortunately disk space kills that scenario as they can fill it easy even if no-one wants to download it, backups, files of all sorts.....

Usually you find server load is never considered, budget celeron and cramming 500 clients on it is a sure way to see you off quickly.

The 'kiddy host' sector gets hammered for this and it is the irresponsible ones that hide behind that, that cause this dislike for the previously mentioned. Not all but many do just spend birthday money on a cheap server and think they can host, and make a fortune. Wake up call - few of us make a fortune, and only after hard work and a lot of cash input.

Then some suffer and they're running very close and unable to cope so have to actually 'spend' some money' to keep it going and disappear. Sometimes having a years worth (or worse those one time payment hosts) of the clients cash in their pocket.

Responsibly done it can be managed if you have the finance to back it up but it does require carefull calculation. Not 100Gb disk space and 2000Gb transfer for $2.99 that's just stupidity kicking in without reason for appeal.

The big guys have cash to throw around and have various 'benifits' if they have to invest more - so they won't suffer.

[Matt8]

I think the only way to survive is to oversell enough to get customers but not enough to bankrupt you.

[AvailNetworks]

personally I think it depends on your target market.

I sell primarily to local business's for their websites. I average about $30/mo each and they use about 20mb space and about 1gb bandwidth each month. Knowing that data I have gathered I could easily offer 200gb space and 2000gb transfer each month for business accounts and it would make no difference at all. Generally these are "fully managed" sites and the end user relies on myself or another one of my associates to do whatever it is that needs to be done.

if you are advertising to the "hosting mass" you can more than likely safely oversell to whatever you feel like. globat.com is a fantastic example. they have thousands upon thousands of clients and they offer a minumum of 1TB storage and 5tb for their upgraded plan to each and every customer that buys there! but if you head on over to their network description page you will find out their ENTIRE storage array only contains 2TB capacity.

With a touch higher price point and massive storage/transfer offerings instead of averaging $2/mo per account, you average $7/mo per account for the EXACT same usage. Just make sure your TOS supports what you will and will not tolerate on your servers and don't hide anything and you are good to go.

if you plan to sell to the warez/mp3/anime/videop, etc. community it probably would be very silly to offer 1tb of space for $6.95/mo

plan and plan and plan some more where you want your business to head and you will discover you own pricing/business/overselling model and have a confident grasp of the whole process and be ready to take on the world

[mukeshtrivedi]

Don't you feel, overselling without application of mind can lead you to bankrupcy?

[AvailNetworks]

who is that question directed to?

[Volt.Networks]

I think the only way to survive is to oversell enough to get customers but not enough to bankrupt you.

I think that's probably right for the hosts who try to advertise solely to the online masses.

If hosts target local markets, I think they stand a much better chance.

[[ih]Demetris]

We target both local markets and online as well, i think that mild overselling is completely managable if done properly. However new hosts that think that they can oversell and hang with the majors are the ones that usually turn belly up..

[RavenServers]

Hi,

I am totally against overselling and buy servers even if the old server is at 20% usage. This may sound strange but if you've done your calculations and maxed a server, you should move on - you never know when one of those sites may become popular.

I just think that someone should get what they pay for, even if they don't use it all and it should be there all the time. It's based in your company's pricing structure and shouldn't affect you anyway.

Best wishes

RavenServers

[tmgavin]

Well, I think that oveselling is usually the case when you see those impossible 2+GB offers, that are less than 10 bucks. To sell stuff like this, (http://www.hostgator.com/shared.shtml) you would definitely have to oversell.. Or you fill up a server (assuming 200GB svr), for just a paltry 25 bucks.

[.Andy]

I belive oversell and you will die. on some of these companys that totaly oversell ( I saw one 500 gigs space 5tb bw for 5$ a month) I'm tempted to upload all that and watch there server crash.

[AvailNetworks]

sounds like you guys don't have a full understanding of the business and what happens when you actually get a server near capacity. Overselling is not bad if you know what you are doing and your client base. There is a line between paranoia and proper planning.

There is 2 ways to do business:

1. research research research, then launch

2. launch and wing it

[[ih]Demetris]

I belive oversell and you will die. on some of these companys that totaly oversell ( I saw one 500 gigs space 5tb bw for 5$ a month) I'm tempted to upload all that and watch there server crash.

Their server wont crash, but your account will more than likely be suspended, if a client wants to know what the space can be used for, read the TOS. Avail is correct proper business planning is the absolute key.

[Xcentric Media]

Overselling on some level, is a core part of any web host that becomes successful. The only way to compete and be successful in this business without overselling, is to host local based clients, or clients in some sort of niche. Now with that said, I'm not implying that you oversell like a madman. It's a rather calculated risk, if done properly.

[disedirata]

A question for Availnetworks... Are your answers coming from a competitor's perspective? Although you have a point that many companies actually oversell, would it be a good to take your advice considering that you host as well?

[tumble]

The main issue with the agressive overselling is:

It tends to bring many accounts. Granted this accounts do not use up all the space you offer. The problem lays with your poor server ressponse that will happen after you load a "ton" of sites on your server or in your reseller account. the majority of these accounts are running some sort of PHP/MYSQL appllication Always taxing the resources of the parent machine.

Just look at the reasons the bigger companies are losing accounts. alot of the reasons is poor server response.

Overselling is fine up to a point. But i tell you what if your server owner allows overselling via WHM. I for one would not host a site with them. I actully like to see my site when i click on the link.

If you need to oversell to a point were you are lying about what you are able to support. Then that within in itself shows a bad bussiness "ethic".

A bussiness build on lies not only hurts the "buyer" but it hurts those that really try hard to be "honest" because it shines a bad light on us as well.

So in the end if you cannot back up immeditly what you say and offer then your bussiness is built on "Lies"

tumble

[TSO]

Do you think that overselling is the standard? Have you noticed that bigger companies oversell quite a lot? Do you think getting more space and bandwidth is the reason why most people get high sales? Some people like to offer 50 gb of space for $20 for a reseller account? Is that even reasonable?

Yes, I do believe overselling is the standard way to business now, and there's no escaping it. There is definitely a psychological reaction that takes place when folks see large amounts of space and bandwidth being offered for sale - even if they inherently know they'll never use it all. And finally, I do think that considering current market trends, the offer you mention is indeed reasonable.

[JodoHost]

The main problem with very cheap, high resource packages is not the the excessive disk space/bandwidth allocations you are selling, it is the type of customers you are attacting.

Webhosting packages which are aimed towards people seeking very high resource allocations, will attract a higher number of clients that will abuse the servers, and use high amounts of CPU time. As a result, you have more server issues and lesser uptime.

The problem with overselling has never been running out of space. The problem is reliability.. and that boils down to the type of customers you are appealing to.

[Trexhost]

I have to agree with some of the responses in this thread about reliability, uptime, and the problems your server would continue to have.
However, in my personal opinion, with the years I've had in this business, I can say it boils down to one thing, that is, one thing after you have already established that you are truly going to offer a reliable platform for your customers, and that is credibility.
If you have a reputation for being a reliable provider, that will go along way. I do not believe in the overselling aspect, and I think thats the mistake many do when first getting into the business. There are two categories of web host

1- The ones bringing in reliable, real-life web hosting packages with no overselling. This will bring you the web host or customers, who know they want reliable service, who know the gimmicks from there years of experience in the web hosting industry, and know that the company there going with is offering a realistic package.

2- The ones bringing in "500GB for $10 amonth", which will bring in alot of customers who have not yet experienced what it is like to upload 50GB of that 500GB and get terminated the next day, or the companies website suddenly not loading and no where to be found.

I think alot of companies have ran away from the industry, and fell for the new-age of overselling. Theres no excuse for it. Overselling HD space is one thing, if you plan on slapping in another 250GB to your server when it reaches max capacity on your 4-HD slot woodcrest. Overselling with no intentions of meeting or exceeding the needs of the customer you just baited in is another. The industry has alot of reliable web host, I just think over the years, its become apparent, that overselling does not work, will never work, yet, will continue to be done, leaving many customers to sink or swim in an industry thats gotten over saturated by overselling web host. To all the new web host in the industry, dont go for the overselling route, keep your good image, start off good, run it great, and end it excellent. Dont expect $600 profits off of a resellers package. Start slow, and with time, work, and dedication, in the end of the road, you will see yourself swimming with the school. I've seen many new web host in the industry, this opinion of mine doesn't come from a book- It comes from whats been seen. How many web host have failed in the industry. How many are coming and going everyday. Then out of those that have came and gone, ask yourself how many were overselling. The facts are facts. These are real people, real lives, real data that people are putting in the hands of web host and trusting you with it. OVerselling, is not the route to go, unless you have intentions of meeting there needs when there reached.
Those are my two cents.
James V.P

[par1234]

I think it is mostly just a marketing gimmick. If you read the terms of service for most of the companies that provide large space you will find that there is practically no way you could use the amount of space they offer and stay within the terms of service. This also works to keep little companies from ever getting started, which is what they want. A lot of this probably has to do with legal issues as well, they don't want to continually be sued for allowing copyright infringement, or have law enforcement showing up all the time either.

[sharednick]

The line is very thin between overselling and not overselling. We personally manage to get whatever is needed to fulfill our customers desires and make the space and bandwidth they need available when they need it. Some people may think we do oversell because we do offer 3GB Storage and 50GB Bandwidth for $5.95 but it is not my version of overselling.

I think there are many reasons for overselling. The main one would be the fact that small hosts wants to compete with the big ones like globat, hostgator, 1and1, etc. And thats the major mistake they make. You do not want to compete with the big ones but use their weaknesses to sell yourself instead.

The 2nd reason I see is because people lack of creativity to get their customers. People are not only looking for storage space and bandwidth, in fact, most people looking for hosting dont even know what a GB is nor what the hosting word even mean. Thats the biggest leak in the market right now. Not enough people to target those poeple who don't know a thing about it. All they want is enough space to get their stuff stored and enough features to do what they want to do. No wonder why SAAS will become the next big thing in the hosting industry in the upcoming years.

We need to stop trying to mimmic the big ones and get our own niche market. There are still plenty out there that we do not even think about that does not even need to know how many storage or bandwidth they actually have.

What about giving everything they need in time ? As simple as that ? You need 10mb storage, you get it. You need 100mb you get it (at a fee per mb of course!) + We support and managed it !

Thats the way we want to go. Well I think so.

[hamster]

somehow, people nowadays prefer looking at unbelievably deceptive big numbers than reliable small but reasonable numbers. which is the cause of overselling...

[MonkeyMatt]

Indeed. However I find a lot of those hosts who do offer ridiculous space/bandwidth to customers post and are active here.

Overselling isn't bad if it is done correctly when it's overdone it's simply and totally wrong!

[Schmarvin]

Well, people do get bored and want customers quickly. Don't you believe that most people actually buy it?! Oh well, gets the companies a lot of money.

[RavenServers]

1- The ones bringing in reliable, real-life web hosting packages with no overselling. This will bring you the web host or customers, who know they want reliable service, who know the gimmicks from there years of experience in the web hosting industry, and know that the company there going with is offering a realistic package.

2- The ones bringing in "500GB for $10 amonth", which will bring in alot of customers who have not yet experienced what it is like to upload 50GB of that 500GB and get terminated the next day, or the companies website suddenly not loading and no where to be found.

I think alot of companies have ran away from the industry, and fell for the new-age of overselling. Theres no excuse for it. Overselling HD space is one thing, if you plan on slapping in another 250GB to your server when it reaches max capacity on your 4-HD slot woodcrest. Overselling with no intentions of meeting or exceeding the needs of the customer you just baited in is another. The industry has alot of reliable web host, I just think over the years, its become apparent, that overselling does not work, will never work, yet, will continue to be done, leaving many customers to sink or swim in an industry thats gotten over saturated by overselling web host. To all the new web host in the industry, dont go for the overselling route, keep your good image, start off good, run it great, and end it excellent. Dont expect $600 profits off of a resellers package. Start slow, and with time, work, and dedication, in the end of the road, you will see yourself swimming with the school. I've seen many new web host in the industry, this opinion of mine doesn't come from a book- It comes from whats been seen. How many web host have failed in the industry. How many are coming and going everyday. Then out of those that have came and gone, ask yourself how many were overselling. The facts are facts. These are real people, real lives, real data that people are putting in the hands of web host and trusting you with it. OVerselling, is not the route to go, unless you have intentions of meeting there needs when there reached.
Those are my two cents.
James V.P

Hi,

The best thing I have read this week. Thumbs up - I'll stand with you :)

Best wishes

RavenServers

[jcink]

It's just hard in my opinion these days to not oversell and get customers.

All of these companies overselling make the ones that don't look bad to newbies. I used to offer hosting 200MB of space per person for free (I got out of the hosting business now though, I gave up.). It was a stable number that I could support, and I could've even made a paid package out of that, but you know what people have told me? "I can't believe you only offered 200MB... that's like nothing. I can get 5GB from here... I can get 10GB here... I can get 20GB from this one... check this out!" My signup count was always pretty slow. Had I oversold my plan, I would have gotten more clients.

The general public doesn't seem to get it for some reason. I'm thinking they must believe that their website space should have around the same space their home computer has, or more, when reality for most that just isn't true. This one person I know is running around looking for 5GB web hosting for a board, until I just told him that he didn't need 5GB of space for just a small forum. And I see people running around looking for hosts with ridiculous amounts of space and bandwidth that I know they don't have, and for what? They wind up uploading an index file, and some web pages, less than 5MB! I ask myself why, what do you need 5GB for?

I think far and few sites ever use a lot of space. And the big guys and small guys who know they can get away with just suspending the customers using fine prints, and suck in others with enticing oversold offers will continue to do so.

It's just, with this kind of mindset, it's really difficult in the beginning not to oversell.

[krakjoe]

Its important to understand that it's not as clear cut as overselling and not overselling, for instance, if you have a server that has say 100 accounts on and have room for another 100 ( numbers are low, but nevermind ), you selling another 500 accounts isn't overselling if you plan to fund those extra 300 accounts with another server and a half so that your new clients get what they paid for ..... overselling is trying to squash all 500 accounts on the one server that you allocated 200 accounts too.

[Volt.Networks]

I'd consider that mildly overselling, which should be acceptable, so long as the clients get what they were promised.