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Guide to Web Hosting: Part 1 – The Oversell

April 20th, 2008

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Hi, I’m Jules and I’ve been in the web hosting industry for around 13 years now. I’ve personally worked for quite a few ISP’s that have sold web hosting, so I know all the little tricks, scams and marketing ploys they use to try and entice you into purchasing hosting with them.

Given how there are literally hundreds of thousands of web hosts on the Internet today, how the heck do you find the right one for you? How do you spot the genuine and reliable ones from those new startups who have no idea what they’re doing? I’m going to (hopefully) give you some idea and information on what to look for and how to decrease your chances of being ripped off with poorer hosts.

These guides can be quite long, so I’m going to post them in parts for ease of reading.

Part 1. Overselling.

The basics
Overselling is essentially the act of selling more than you are able or capable of providing to the end user, simply because a web host knows that they won’t use it. It plays on the mindset that most clients want as much as possible for as little as possible, despite never using it. It’s a bit like buying a high performance sports car and using it for domestic purposes. You’re sold on the image that you have all this power, but you can never use it. Attempt to use it and you’ll either get into a nasty accident and crash (like a server), or you’ll have your license taken away (be suspended for “excessive resource usage on a shared host”).

To really understand what overselling is, how it works, and why it’s a problem, we need to look at the hard facts and mathematics.

Disk Space
Ever seen an advert for a host offering perhaps 50GB, 100GB or even 200GB disk space? Ever wondered how they can offer that at sub-10$ prices? Quite simply they can’t. They can offer it to you, but you’ll never be able to use it. If you even come close to using it, they will (generally) terminate your account and claim that your site has grown far too busy, and that you’ll need to upgrade to a VPS, or dedicated server.

Disk Space Facts:
Disk space is a limited commodity. Disks only come in certain capacities, and you can only house so many of them in a server. Once you’ve filled up your disks, and you can’t add any more to the system, there is NOTHING you can do to obtain more space except delete existing files. There is NO SUCH THING as “UNLIMITED DISK SPACE”. It’s simply a physical improbability, and nothing more than a marketing term. “Unlimited” roughly translated means “We don’t want to advertise a fixed figure, but use too much and we’ll terminate your account”.

For examples sake, let us suppose that the host we are dealing with has 2TB (2000GB) of disk space in the server we are on, and that we’ve purchased a 200GB space account. Mathematically, this means that the host could only store 10 user accounts on that server without overselling.

2000(GB or 2TB) / 200(GB) = 10

This is on the assumption that every account on that server will be allowed to, and can use up to their maximum disk space allowance of 200GB. This is logical because after all, they’ve paid for that space right? But wait…10 clients per server? This can’t be very profitable for the hosting company, can it? It’s not at all, and this is where overselling comes into play.

Of that 200GB space package, most accounts will barely reach even 1% usage (2GB). If we re-do the calculations based upon a 2GB disk space usage instead of the maximum theoretical of 200GB, we see far different results:

2000(GB or 2TB) / 2(GB) = 1000

Wow! That’s an additional 990 accounts we could store on that server, and that’s 990 times more revenue we can earn in the process! Let’s oversell! It’s a very easy trap to get into, and a trap that almost all web hosts fall foul of.

Can you see the problem with this yet? Should any individual or multiple user(s) use more than the estimated 1% of their disk space, the calculations simply don’t add up any more, and the server may experience issues. In some cases it might even run out of disk space. To prevent this from happening, a lot of hosts will suspend or terminate the accounts that use more than this calculated percentage, giving them a variety of excuses. Not all hosts do this, and some will simply move those top user accounts to a different server.

Bandwidth
Bandwidth is similar to disk space, but actually has to be looked at in terms of physical network performance. Because networks don’t have a hard set data transfer limit, we have to look at what they’re actually capable of transferring from a speed perspective.

Most servers are connected via a 100Mbit port. For those of you who aren’t networking-savvy, don’t worry too much about this because the figures will be shown below. Because all bandwidth quotas are displayed in bytes and not bits, we need to convert this accordingly. Fortunately, that’s pretty easy for us as it’s roughly a division of ten. A 100Mbit port has a theoretical maximum transfer rate of approximately 10 megabytes a second, excluding overheads. There are always overheads, so let’s drop this figure down to a “safe” 9 megabytes a second.

Let’s assume that this port is constantly in use, and at its maximum capacity 24 hours a day.

9 (megabytes a second) * 60 seconds * 60 minutes * 24 hours = 777600 megabytes

This works out to an approximate maximum transfer capacity of 776GB a day. In a one month period, this works out:

776(GB) * 30 days = 23280(GB) or 23.280TB

Now we’ve crunched the numbers, let’s assume that our hosting company that gave us 200GB disk space also gave us 15TB bandwidth per month. We can see quite clearly from the numbers that it’s possible to provide 15TB, but ONLY if we are the only customer using that connection or port. Unfortunately, we’re not. With a potential for thousands of other clients to be using that connection at the same time, our chances of actually reaching that figure diminish drastically every second. It is, yet again, another marketing ploy. It’s just another way to say “We have no set hard limit on how much bandwidth you can use, but if you use too much, we’ll cut you off”. 15TB looks better on paper than 60GB, after all.

“UNLIMITED BANDWIDTH” is also a complete myth. Using our figures we’ve quite clearly shown that there is a limit on the speed of the transfer through a network, so resultingly there is also a theoretical limit on how much data you CAN potentially transfer. This is something that conveniently most hosts neglect to mention.

Generally speaking again, hosting companies do not expect a single client to use anything more than up to 3-5% of their potential bandwidth allowance. Using more than this will potentially result in more account terminations and the attempt to sell you a dedicated service.

Why is overselling a problem ?
For some it’s a question of ethics. Do you really want to be the customer of a host who lies about the packages they offer? Can your business really survive under the observation of a company who may cut you off at any moment for using “too much” of a package that you clearly paid for? It’s a huge potential risk for anyone that makes money from their website.

For others it’s a question of performance. Sharing a server with many hundreds, or thousands of other people can seriously impact the performance of your website. All it would take is a handful of rogue users to run some badly coded scripts, and they could bring the entire server down. Do you really want to host somewhere that’s so heavily oversold? Statistically, the more accounts on a server, the higher the potential for downtime and server failures.

How do I spot overselling?
It can be very difficult to spot overselling, depending on how severe it is. Generally if you see a host offering high packages for next to nothing, they’re overselling. If you see fairly good packages at insanely low prices (around $1/month) – they’re overselling.

The fact is that hosting costs money. Servers, staff, bandwidth, disks, replacement and backup hardware…it all costs money, and we’re not talking about pocket change here. If you pay $1/month for hosting then you should expect the same as if you paid $100 for a car. If it works fine without any problems for a period of time, then that’s great, you’re lucky. When it experiences problems, don’t be surprised if you receive little or no support at all.

Not every host oversells, and not every host charging $1/month for hosting packages is going to provide you with little or no support. The intent of this part of my guide was to inspire you to think carefully about what goes on “behind the scenes”. Remember, if it looks too good to be true, it probably is…

Twelve Comments

  1. Jason Rakowski

    April 20, 2008

    Good Layout and design. I like your blog. I just added your RSS feed to my Google News Reader. .

    Jason Rakowski

  2. Tom Ross

    April 21, 2008

    Great post Jules, some very useful information. This is actually why I’m transferring my sites to This WebHost. I’m fairly sure that my current host is overselling, and it’s caused me endless problems. I’m actually surprised that it’s allowed legally. I can’t think of another industry where clients are being ripped off so badly.

  3. Erik

    April 22, 2008

    Great post. I’m glad I found this host. 🙂
    Everything has been awesome so far.

  4. Jules

    April 23, 2008

    Erik and Tom – thanks for your comments, we’re glad to have you guys on board. Please help spread the word about this*, and don’t forget you can earn 25% commission at the same time as an affiliate!

  5. Chaster

    April 26, 2008

    Yeah,
    One interesting note: some hosts will advertise that they support PHPadmin and Mysql. Though its great that they took the time to upload this software, note that both are free and because of such they should be standard for web hosts

  6. Jason

    April 26, 2008

    You probably should have stated that this is limited to shared hosting.

    Dedicated hosting isn’t anything like this. Granted, the entrypoint for this type of hosting starts at around $119/month on the low end so it requires a different type of buyer.

  7. Jules

    April 26, 2008

    Jason, thanks for your comment. I believe I refer to sharing a server a few times in my article, so I hope that’s clear for most people. If not, then you’re absolutely right, this was intended to be for shared environments only.

    Speaking of dedicated hosting though, they are also oversold from a bandwidth perspective. 100Mbit ports are rarely provided to individual servers and are often shared amongst either entire racks or large portions of the rack. Though they advertise 100Mbit, or perhaps Terrabytes of data transfer, theoretically you’re never going to be able to utilise that.

  8. Jack

    May 12, 2008

    You all seem very good at defending your corner at This*! It’s great to actually see there are people behind the website.

    I’m looking for a host for a new project and I’m keeping This* at the top of my list so far.

    Might be with you soon!

  9. Benjamine

    March 5, 2009

    Great, thank for sharing your post, I learned alot from it.

  10. Stephen Losier

    April 17, 2010

    I definitely love your own posting style, very interesting. don’t give up and also keep posting as it just simply that is worth to read it,excited to looked over far more of your articles, have a good one 🙂

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