Overselling is one of the dirty secrets of the shared hosting industry. It is a fact that almost no customer can escape and a reality at virtually every hosting company, including all of the major players.

Without it, the super-cheap prices shared hosting customers have come to expect would not be possible and the whole idea of “unlimited” hosting would be dead in the water.

Overselling is the process by which your hosting company is promising more space and bandwidth than it knows it can provide. Like how banks loan out deposited money, keeping only a small percentage in reserve, hosts promise far more resources than they could ever actually offer.

Odds are, if you are on a shared host, your provider is doing it and you need to be aware of it as it may have a direct impact on your site down the road. So here is a basic primer on overselling, what it means and why it could be a very bad thing.

What is Overselling?

For the sake of this article, let’s pretend we’re dealing with a host that has just one dedicated physical machine. The physical server might have 1 TB (1,000 GB) of hard drive space available for customers (we will not look at bandwidth right now).

The host offers one single account, with 20 GB of storage space. Therefore, the host can have 50 accounts before the whole of that TB is gone. However, most customers don’t use anywhere near the 20 GB promised. Some do, but most don’t and, on average, most use only about 25%, or 5 GB, of their available space.

This means that the host can, instead, have some 200 customers on the server before using up all the space. Even if some use the full 20 GB promised, enough will use just 1 or 2 to make up the difference. This allows the host to oversell the server, meaning that they have have actually “sold” 4 TB of storage (200 customers x 20 GB of space) and only have 1TB on hand.

This is how overselling works, a host promises far more resources, both bandwidth and storage space, than it has available knowing that most of its customers will not need anywhere near the amount offered. As a result, they can sell large amounts of storage and transfer very cheap, not because they have new technology to make it cheaper, but because they know most customers won’t use it.

In short, just like a buffet selling you “all you can eat”, most hosts offer excessive amounts of resources based not on the advertisement, but on what you will likely actually use.

Is Overselling Bad or Unethical?

To be fair, a lot of businesses oversell as part of their model. Cell phone companies, for example, sell monthly plans cheap because most customers won’t use anywhere near all of their minutes or data. Amusement parks offer summer passes knowing most customers will only come back 2 or 3 times.

Pretty much any business that works off a monthly plan oversells to some degree, especially any that offers “unlimited” usage. They know that customers are paying a monthly charge to avoid the hassle and worry of paying for exact usage and will almost never go over or even near their monthly limit. This is also why companies, like cell phone companies, charge such high overage fees, because those who do go over create problems. These prices are meant to be a deterrent to going over, not just a means to profit from the usage.

By in large, overselling is not viewed as unethical nor is it usually a problem. If hosts are smart about how they oversell and do so within principled limits, they should not run out of sources nor should they have any trouble meeting their promises for the few customers who do need the full amount. What it does mean is that the customers who use less are subsidizing those who use more but that is hardly an uncommon business model.

As long as hosts don’t go too far with overselling and can meet their obligations, few will complain. Customers who use less may object, understandably, but they might also wish to move to a host with a cheaper plan better tailored for their actual usage.

Exceptions to the Rule

To be clear, overselling is only common on shared hosting accounts; VPS and dedicated server accounts do not typically oversell. This is a big part of why these accounts cost so much more than shared hosting accounts for the space and bandwidth offered.

The reason is fairly simple: these accounts are structured around either carving up a physical server into a set number of equal pieces or simply having the entire server to yourself. This makes it much more difficult to oversell such a server, especially on hard drive space. While the most may oversell somewhat on bandwidth, even that is lessened as, usually, clients with dedicated servers or VPS accounts are more likely to use right up to their limits.

In short, if you don’t want a host that oversells, be prepared to pay extra and upgrade to an account where you have a dedicated server or a dedicated portion of one.

Bottom Line

For the most part, overselling is not a big deal. Though most hosts would be in big trouble if all of their customers started using their allotted amount all at once, the hosting equivalent of a run on the bank, the odds of that happening are slim to none.

As long as hosts don’t oversell to an extreme and make it so that their servers are in very real danger of being overloaded, overselling is not something to worry about.

However, if you do think of overselling as a problem, you do have options for escaping it, you will just have to be prepared to spend more money to get away from it.

(Thanks to FOTOCROMO for the image).

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