Is Overselling Bad?

Is Overselling Bad?

  • Yes

    Votes: 2 25.0%
  • No

    Votes: 6 75.0%

  • Total voters
    8
  • Poll closed .
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#1
In your opinion, is overselling bad? Do you do it? Why or why not?

When I learned the business, I was working for a small/local Dial-Up ISP. We had about 1 phone line for every 4 users. This was less than the industry standard of 5, and much less than the AOL standard of I think 10-20 (10 users per 1 phone line).

We technically over-sold, but we were very conscious of our users, when our peak times were, and whenever we hit a resource limit that started to impact them we upgraded our infrastructure to accommodate the growth.

I personally have no issue with "overselling" when it is used responsibly and ethicly, and as such, when I make my offerings to users I price things out accordingly and use it to the advantage of my users and my business.

Pro's for Users:
  • Reduced Costs
  • if VPS: Access to both Dedicated and Shared Resources


Pro's for me/business:
  1. reduced costs
  2. expanded availability of offerings

Note: When I setup my VPS accounts I set aside an amount of "shared" resources for memory and cpu. This is on top of the CPU and RAM that is dedicated to each client, so that they have first come/first serve best chance access to thees extra resources. While I am not overselling all the resources, some are not dedicated and oversold. I do not over-sell storage/space. Space/drives are CHEAP.
 

LJSHost

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#2
Overselling with shared/reseller is essential to get maximum value out of your hosting platform. Most customers do not use what they have bought in terms of storage or CPU/RAM.

If we are talking about KVM style VPS with dedicated resources then this cannot be oversold however you could fit 20 low usage openvz shared servers on a 4 core server and still have resources spare.

Overselling is only bad when you don't invest back into the platform and it needs to be monitored daily.
 
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#14
asiabudgetserver
Which is the main reason KVM is not really popular virtualisation choice as they dedicate fixed resource to the VM. For openvz/virtuozzo platform, the memory resources are shared.

Most of the provider oversell but they have good quality control and add resources to the cluster when hit low resource alarm like ram/high cpu load/low disk space.
 
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#3
I'll echo what @LJSHost said: overselling is only bad when you don't invest back into your platform and constantly monitor it to ensure that clients who need to migrate to another less utilized server -or- working with the client to upgrad to a VPS (if on shared hosting) when their resource usage has become too much to be hosted in a shared environment.
 

StartVM

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#4
Overselling in any industry is essential for a sustainable business model. Look at airlines for example. They book something over 100% on every flight but they know there will be cancellations, and in the case they are still oversold at departure time, they simply move the customer onto another aircraft as in hosting one would hopefully have more resources at their disposal (hard drives, servers, etc).
 

Gecko

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#5
I am not a web hosting provider so I am speaking from a very long time web hosting customer.

Personally I can care less if there are 10 or 10,000 accounts on the same server I have my sites on as long as there is no negative impact. As long as my sites are seeing any bad slow-downs in load time, uptime losses or anything else that is negative for my sites I don't really care.

I understand that selling web hosting can have some very small profit margins and I am fine with my hosting business doing what they need to survive and keep my costs reasonable.

Some people want everything for pennies and don't realize that they can have it all so acceptable business practices have to be met and accepted.

I understand that web hosting is a business like any other and needs to do certain things to stay profitable and to keep providing service and I have no problem with reasonable measures being taken by a web host to stay in the + side of the money factor!
 

austenite

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#6
Overselling is associated with being bad practice, but that's because so many web hosts (I'm looking at you EIG) have abused the ability to oversell.

As with everything it's all about moderation, overselling is fine in moderation providing you manage your infrastructure properly and add new servers to your pool as and when they're needed. Overselling 10,000 websites on one server is just absolute stupidity.
 

StartVM

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#7
StartVM
Unfortunately the problem is far more widespread than just the big names (I'm sure you knew that but just wanted to clarify for the novices). Many new hosts also fall into the trap of overselling on steroids because they often times are either trying to turn a profit too quickly or they didn't negotiate reasonable expenses for their servers, IP space, etc before opening doors.
 

austenite

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#8
austenite
Yeah, I see a lot of new companies coming and going in the space of a few months. Don't run before you can walk.

First they start reselling shared, then VPS and then dedicated servers rather than finding something they're good at then growing and capitalising on that. You're right about the growth to, growing too rapidly can bring in a lot of problems. Slow and steady wins the race (not that it is a race :hysterical:)
 

StartVM

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#9
StartVM
Yep. Perhaps what needs to happen (since obviously reselling won't just go away) is that people need to be more upfront about their business model. Often times, the reason someone would knowingly go with a reseller (in the slim chance they even know they are reselling), is when they are offered a better price. This is why in other industries specific reseller companies exist is for the purpose of creating a lower price. If someone wants to create a reseller hosting company, great I am fine with that, but make sure that message is made transparent to your customers.
 

VictorVictories

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#10
One thing to keep in mind is that no matter how interested the prospect is to purchase webhosting one must not accommodate more no: of users on the server beyond the safe limit of the server. It may prove profitable for a shorter term, but in the longer run, it is not desirable.
 
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#11
Absolutely !... Overselling is very bad both for YOUR company image and your clients, and soon they will drop your service if not IMMEDIATELY and search for other providers, if you were the only hosting provider in the world or the ISP of your own island then you can oversell forcing all fellow citizens to sign up for your services, but times has passed since this and major hosting companies and even new ones seek to build a good image for the client and earn his LOYALTY not short sighted solutions such as overselling your product :)

IMO if you cant bring down your prices any further then just post them AS IS or offer first month discount to encourage signing up for your service, then show the client what your service is really made of :) this way you will earn his loyalty nearly for LIFE !
 

Kieran2001

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#12
Yes, and No.

If you have small hard drives and restricted system resources, overselling could be catastrophic if someone uses all your resources. Otherwise, for business with huge resources they can afford to oversell as they can upgrade their servers as and when needed, and they can afford high end caching systems to reduce server loads and usage overall.
 
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#13
Yes. Why would it not be bad? If you're overselling then it means you're making profit.

If you make a profit, would it be reasonable for you to upgrade your servers or buy more ? I bet it sure does. A happy client would more than likely bring in more business down the road.
 

BuzzNoc

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#16
I wouldn't oversell. just because I wouldn't want to end up with a big problem later down the line :/ I mean hey some people don't use much space at all. yet u never know u might have that one guy that comes in an loads up the server like a mother lover lol
 

BlaZeX

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#17
For Shared Hosting Servers, it is acceptable to some extent of over-selling, or else you will have to sell every package @ more than $10/mo to break-even.

For Reseller & VPS, it is bad. The reason is that, you are degrading the performance. You can never fully predict when your client's will be having peak users/usage. At this time, there will be a hit on the performance, slower page loads, no connection, etc. which will eventually make your client mad & angry.

If you are taking someone's money make sure you give them for every value of money they put in with you. Atleast, this is what we believe.

Our profit margins are quite low, but its the number's game which helps us to survive. Raising the price will have a bad effect though.
 

WHGBTom

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#18
Overselling to a certain extent is OK however if its massively abused it will hinder you in terms of service. I agree with it being bad in terms of Reseller or VPS though, far more resource heavy and will catch you out much quicker.
 
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#19
Overselling has become an industrial standard and won't end any time soon. Pretty much every service that we now use is oversold. In terms of hosting industry we can see the ramification of bad practice and what it can to do a host reputation. But with so much competition and increase in cost this option provide the best solution to offset costs. With the advent of cloudlinux you will see more overselling but with less consequences to the end user. If you choose not to do so it your choice a bad one but your choice.:duel:
 

casualhost

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#20
Overselling while managing the server well is the ideal combination. Most end users will not be using their resources at 100% constantly especially disk space/bandwidth. However server load/RAM usage/IOPS should be monitored and kept at an acceptable value within the servers capabilities to ensure good service to end users
 

HostKoi

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#21
With shared and reseller hosting when done right you can oversell and make a nice profit off the server without it having an impact on the service. You or your system admin will need to watch the server everyday and when it's time to stop adding clients a server, you need to get another online.

Now with VPS hosting i wouldn't do it regardless. All it takes is one VPS to have a sudden spike in usage to being the node to it's knees.
 
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#22
As for the customers, overselling will lead to few customers because they will find some other seller that have less price than the present seller. From the seller also, it depends on the situation also but some seller have a competition on other seller that is why they pull down the price as well.
 

Marcus_SM

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#23
There's an overwhelming number of hosts who oversell, especially low-end ones, especially those with OpenVZ virtualization. Even though it can make hosting packages cheaper, it can (and will) degrade overall service stability and accessibility when a host server gets overloaded.

BTW, most hosts won't even allow you to use 100% of the resources you've purchased with a VPS all the time, guess why?
 
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#24
We avoid overselling altogether which is easier for us just due to the service that we offer. We could potentially configure our platform so it is technically oversold, but that just comes back to bite you at some point. It may cost us more money upfront, but getting a bad reputation because of it isn't worth it to us.

However, I've seen systems be oversold and monitored/managed appropriately.
 
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