Overselling in Web Hosting Industry

What's Overselling

Overselling is a term used in the web hosting industry to describe a situation in which a company provides hosting service that are unsustainable if every one of its customers uses the full extent of services advertised. The term is usually referred to the web space and bandwidth transfer allowance, but now has been extent to the service after the selling.

Below is an example will give you a better understanding about what's overselling:

If web hosting company has a server with disk space 100GB, and it will host 10 web sites for different customers and promise 20GB diskspace for each, then overselling will happen.

Why Overselling

Overselling is a marketing strategy. We can use the same case in above as an example. When web hosting companies provide 20GB disk space for each customer, and only host 5 web site in one server, he will find that not all the customers have used up all 20GB space, there will be a lot of space there without being used. So, the service providers decide to take some risk, and sell more accounts in one server. What he bets on is that not all the customers will use up all the signed resource.

Is Overselling Bad?

Overselling is very common in almost all the service industry. Let's take the telecom companies as an example. They have millions of customers, what if all the customers dial out at the same time? Can their infrastructure support so many customers? The answer is definitely NO. So, shall they upgrade their infrastruture to avoid it, the answer is NO as well since it won't happen in the real world. So, overselling is not really bad if you can monitor the service status closely, and make sure what you provide to your customer is still in line with the service level agreement, it should be ok. And overselling will bring more profits to the companies.

Overselling in Web Hosting Industry

I believe almost all the web hosting companies now are using overselling strategy in their business. They host thousands of web sites in one server, promise thousands of GB for each and only charge you less $10 per month. Some of companies can manage the overselling very well and are able to keep up with the serivce they have promised to their customers. But in most case, what we heard are:

Server becomes in-stable and more downtime happened on the web site:

Connection speed become slow
No one response for the support tickets, customer service turn out to be very bad.
How to Win by Using Overselling Strategy As a web hosting companies, in order to fall into the trouble brought by overselling, below are some methods which definitely should be referred to:
Closely monitor the bandwidth and disk space usage of the domains in each server, and figure out the best numbers of the accounts can be hosted in one server in overselling situation.
Extend the bandwidth of the datacenter monthly according to the growth of the customers. Renew the bandwidth contract monthly will help the web hosting companies balance the cost and the service in a good manner
Hire more people if too many cases coming in, this is necessary since when they oversell their product and get more customers in, they will need more people to maintain the customer service level. It would be very helpful if they can figure out one supporter can serve how many customers. In this case, they can plan the hiring according to the growth of their customers.

Summary

Overselling can help making more money without investing too much, but keeping up with the service level agreement is a key thing should not be forget in companies what to win in this marketing strategy.

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