Overselling bandwidth: some hate it some love it

[ldcdc]

Overselling is often a heated topic, with devoted people on both sides of the barricade.

What's your opinion about it? Do you think that overselling bandwidth is OK? Do you think it's bad? Why?

Would you use a host that oversells? Have you ever used a host that oversells? How was the service?

Do you oversell? (A hard question to ask a host, I know! )

[thomasrau]

I'm not a host (at least not yet   ) so I'm not overselling.  As to overselling in general, I don't have an issue with it, provided it's managed properly.  Heck, even if your host isn't overselling chances are his/her upstream provider is.  The telcom industry is well known for overselling, I don't hear people claiming the phone company is cheating you for selling you a service that is "over-sold".
Don't get me wrong, I'm not condoning those that sell huge amounts of space and bandwidth for $3.99, that's not overselling, it's borderline fraud.

[ldcdc]

Hello Thomas! Nice to "see" you again.

Yes, the telecom industry is known to practice overselling, as are other industries. Some say it's OK for them to oversell because there are regulations that keep them in check and limit their ability to oversell.

In the hosting industry there are no imposed limits to overselling. This in fact leads to another subject. Should the hosting industry be regulated? What do you think? Should some overselling limits be imposed by the governments or some other authority/ies?

[thomasrau]

That's a tough one to answer.  I would like to see the consumer better protected from bad hosts, but on the other hand I hate to see more government regulation.  In general (at least in the US) government regulation causes costs to go up at a far faster pace than any resulting increase in quality (if any).  Also with the internet it would be difficult at best to regulate.  If the USA adopted strict regulations for web hosts/resellers whats to stop them from moving off-shore continuing their business unregulated?  
What's really needed is some sort of "Better Business Bureau" for hosts.  Some sort of internet ombudsman that could help settle disputes, and list "official" complaints.

[ldcdc]

Personally I agree that  government regulation in addition to the normal laws that apply to all busibesses and individuals, can hurt as much as it can help. Bottom line, I would prefer all business men and women to find the right ballance and not be greedy.

Sometimes I wonder if unreasonable overselling is about greed or about lack of knowledge. I mean, even a greedy person can easily see that it's better to have an ever growing, solid, sustainable business, rather than a business destined to fail.

[thomasrau]

I don't think that there is any one answer to that.  I'm sure that there are some well meaning hosts that don't fully understand the inevitable end result from massive overselling.  I'm equally sure that there are some "fly-by-night" operators out there that just don't care.  With servers so cheap its easy to set up a quicky business, oversell like mad for a couple of months, then take the money and run, only to start up again the following day under a new name.
Part of the blame has to go to the end user as well, for expecting "champagne and caviar" on a beer budget.

[ldcdc]

You are right, I am sure some operators do make an art out of deceiving people. They offer unsustainable hosting plans, secure as many sales as possible in a short while, and when the customers start using anything remote to what they were buying, they just leave with the cash and dissapear into the night (or sell the so called "business", which will be bought by another ill prepared host/person/business).

As time goes on, I read more and more about customers being unhappy for various reasons, and the more I understand the people who have started a hosting business of their own, just because they were unable to find a host they could truly trust.

When it comes to the customer, I'm sure plenty of people feel 99% sure that they've made a good choice when they went with one of the often mentioned "top hosts" out there. After all, if my mother would see a company featured on 20 sites as one of the top 10, she would be convinced she made "good research". When all the top hosts are cheap she'll just think: "Well, computers are getting cheaper by the minute. It's understandable, hosting must be cheap." She has no idea what overselling is, that hosts are using it and that it can affect the service.

We webmasters tend to forget that the average man/woman knows next to nothing about computers, how they work, their limitations etc. The even bigger problem is that they have little or no time (or motivation) to become experts at understanding the hosting industry.

I don't want to know how a shoe is made or the problems related to that process, but I want it to be reliable, comfortable, affordable, and I expect the people in the shoe manufacturing business to know their job and deliver a product that meets at least a certain minimum of quality.

[dg]

As to overselling in general, I don't have an issue with it, provided it's managed properly.

My thoughts exactly.

I know I'm not saying anything new here, and you all probably know this, but what gives overselling a bad name, in my opinion, is the fact that there are, a lot of small hosting companies that using a reseller account oversell as much as they can until obviously they ran out of bandwidth and space and then they just disappear.

I belive every hosting company has used overselling at one time or another. What matters most is how you manage it and with what purpose. I would sign up with a hosting company, that oversells bandwidth and disk space on their current server before moving customers on a new server, I see nothing wrong with that.

Do you oversell? (A hard question to ask a host, I know! )

Well first I would have to be a real host, and I highly doubt my small project can claim that status , but as I said, as long as you know how to manage it I see nothing wrong with it.

[ldcdc]

I know I'm not saying anything new here, and you all probably know this, but what gives overselling a bad name, in my opinion, is the fact that there are, a lot of small hosting companies that using a reseller account oversell as much as they can until obviously they ran out of bandwidth and space and then they just disappear.

You're right Mihai. The huge number of small hosts is partially responsible for the many examples of missmanaged hosting businesses out there.

However, while the small hosts with one or two people running the show in their free time can be (partially) forgiven because they did not know any better, there are examples of big hosts taking overselling to such extremes that it starts to seriously affect the level of service. I fail to understand why the knowledgeable professionals working for these companies let such a thing happen.

[thomasrau]

I fail to understand why the knowledgeable professionals working for these companies let such a thing happen.

Dan,

There is a difference between knowlegeable and professional and thats where the problem comes in.  I believe that these larger hosts you refer to have people knowledgeable enough to know they are heading into trouble, but lack the professionalism to address it.
A professional treats their clients as they themselves would want to be treated.  A professional will tell their client the truth, even if that sometimes means telling a client no and a lost sale.
As an example, I am a network engineer and support a number of small to medium sized companies.  I have actually lost count of the number of potential new clients I have lost due to their only wanting someone to "patch" the problem instead of fixing it.  I refuse to work that way, it does the client a disservice in the long run.  On the plus side quite a few of those "lost sales" come back later on after they have been burned by other support companies.

[ldcdc]

Dan,

There is a difference between knowlegeable and professional and thats where the problem comes in.  I believe that these larger hosts you refer to have people knowledgeable enough to know they are heading into trouble, but lack the professionalism to address it.

That can be an explanation indeed.

On the plus side quite a few of those "lost sales" come back later on after they have been burned by other support companies.

I've heard quite often about such things happening. What seems initially like a lost sale, turns out to be a customer that will stick to you for years to come.

[pvthosting]

Do you oversell? (A hard question to ask a host, I know! )

I over sell and I admit it. I do it wisely however. I monitor my domains, I have many domains that have 20GB/month and don't even come close to using 100MB/month. These are mainly customers who just wanted an email address and domain name.  If I didn't oversell in this case I'd have large portions of unused bandwidth. I like operating a profitable business. If I can be more profitable by utilizing that unused bandwidth I will. However, I do monitor closely and can and will move sites to another server to balance out the usage if needed.

I admit I am pretty much a no name host. My clients are local business and organizations. Hosting is not my primary source of revenue, most of my revenue is from consulting work and outsourced server administration. With my limited advertising budget I don't get many off-the-net customers although I do have a few. This does allow me to control the bandwidth consumption. Since I sit down with the client and talk to them I can usually tell if the client is going to be a bandwidth hog or not.

The main reason I include such high numbers for bandwidth is not because I believe it's ever going to be used, but because some customers like to hear the big numbers. I had a particular customer buy my biggest package and asked me how much extra bandwidth would cost him to buy it ahead of time. I quoted him a price and then started asking him what he was going to use the site for. He was using it for a forum for a hobby of his. I told him he'd be better off not buying the extra bandwidth upfront. He wouldn't need it. I promised him if he did go over his limit I'd work with him. He never went over his usage or even came close.

[ldcdc]

If I didn't oversell in this case I'd have large portions of unused bandwidth. I like operating a profitable business. If I can be more profitable by utilizing that unused bandwidth I will. However, I do monitor closely and can and will move sites to another server to balance out the usage if needed.

You're certainly right. I know of hosts who have started with a strict non-overselling policy. Life (business experience) quickly made it clear it's not the best thing to do. It leads to huge waste, and that waste in the end only serves to make the company less competitive.

For as long as hosting will be sold in packages with quotas, overselling will make sense.

People will generally use their hosting like they use the car's fuel tank. They'll always be carefull not to use it all up, and many will actively maintain a serious buffer. The host, in a way, re-manages these buffers, and it can do so more cost efficiently than the customer himself can.

However, it all comes down to being careful to not overdo it.