October 26, 2022

What does Overselling mean in the Hosting world?

Overselling or an opaque practice of many hosting providers to the detriment of their customers.

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What is overselling?

Overselling is one of the common business practices which is prominent in many sectors such as the travel industry, telecommunication industry, hospitality industry, IT industry etc. The overselling technique is practiced to obtain the maximum return on investment. The overselling journey is based on the expectation that customers do not take full advantage of the resources available to them and that they can cancel their services or reservations. The company sells more than readily available resources, which ensures that the gap created between the average resource usage and the maximum allocation limit is filled. In some industries overselling is regulated and in the event that customers are denied a service they expected from the company, the company is required to compensate customers.

This is a gray area of ​​companies that is used to maximize ROI. The practice of overselling also prevails in the web hosting industry and has almost the same effects as those in other industries.

At the level of operational research, we could say that overselling embodies the famous saying "Maximizing profits, minimizing costs", however we must always keep in mind that the quality of the service must remain excellent and that it is always better and more profitable entrepreneurially speaking. , provide a quality service that brings added value to the customer, rather than a mediocre service that brings no value or even harms the customer.

What is web hosting overselling?

Overselling can be done for any type of web hosting especially shared hosting and VPS. Let's consider the shared hosting instance. In shared hosting, many websites are hosted on a physical server and all resources are grouped and distributed among users on the same server. Even though each user is assigned a maximum resource limit, web hosting providers regularly monitor server usage and know that all users are not using the maximum available resources.

In reality, the full resources of the server are barely used by the users and if in case the server is underallocated, the hosting provider will continue to add users to the server. In this case, the hosting provider is selling the resources it no longer has, this is overselling.

Web hosting overselling has become more important with unlimited web hosting packages. In an unlimited web hosting package, the web hosting provider does not define the exact amount of resources that the wall should be allocated to each customer. Even if the hosting package is promoted unlimited, this may not be the reality. That said, there are also hosting providers who offer genuine unlimited web hosting packages. Therefore, it is important to read the web hosting company's terms of service (TOS) before signing up for any unlimited web hosting package.

Overselling web hosting providers rely on the belief that users are not very wise. If the user's website is up and running, the loading times seem ok, and there is no downtime or outage, the user will continue to be satisfied with the service. If overselling is done to the extreme, it can have detrimental effects on the quality of the service provided. Hosting more and more users on a single server (crowding users) until the server can no longer bear the load will result in a catastrophic situation and there will be many angry customers who will no longer trust the hosting provider.

While overselling is one way hosting companies try to get a higher return on their investment, it's a risky move and can cause long-term damage to the hosting company's name and trustworthiness.

Overselling in practice

To give you a better example of overselling, we'll reproduce a typical scenario that is fairly common in the industry. Let's say hosting provider X has 100GB of free disk space and 1500GB of bandwidth each month to sell. They offer a single package that includes 5GB of disk space and 75GB of bandwidth per customer; this means they can actually hire a total of 20 clients.

Now, it is quite common for most of their customers to not use their monthly deductible and have unused disk space and bandwidth. For the sake of argument, let's assume that each client uses only 80% of its allocated resources each month, leaving a balance of 20GB of disk space and 300GB of bandwidth unused each month. The remaining amount is enough for the hosting provider to add four more clients to their server to create more profits at no additional cost.

The problems with overselling

When over-selling methods are used, there is only one winner, the hosting provider. They are essentially making instant profit for every customer they earn above what they can handle, while the customer is receiving suboptimal service. What many providers fail to realize is this: when a server is running at full capacity, processing power, memory usage, and maximum throughput are affected.

A server can be built to host 500 websites and transfer 5000GB of bandwidth, but when put into practice that's not always the case. Servers running extremely crowded forums or websites that contain a lot of content, databases or scripts using code that requires resources, every other website on that server can face reduced performance and even possible security threats as a result.
These issues usually manifest during the holiday season and peak Internet browsing hours (17pm to 00pm), overselling will cause a website to time out or increase page load speed, which it's not good for companies. For example, if you run an online retail store that sells physical products, your busiest time will be around holidays like Christmas, when people are shopping for gifts for each other. Choosing a hosting provider that practices overselling can drastically reduce your profits if your website is always timing out or if the pages don't load fast enough for your users to browse.

Private servers virtual and shared hosting

Two other hosting options available are private servers virtual and shared hosting, even if cheap have a number of problems.

Shared hosting - as the name suggests, shared hosting is when you share a server with other customers - sometimes called web hotels, customers who may require more resources at certain times of the day that affect your service. These are known as bad neighbors in the industry, and hosting your site using a shared hosting plan can affect your website in the following ways:

  • Slower response times
  • Influence SEO rankings (lowest rank in Google)
  • Increase your website's bounce rate
  • Create more security threats
  • Increase timeouts (website offline)

If you run an online business using a shared hosting plan, this method puts too many things out of your scope, giving you no influence or control when neighbors hoard resources.

VPS - has the advantage over shared hosting in the fact that it doesn't share a lot of things with its neighbors, this is because it is able to separate server resources and implement limits, but still has some problems. For one, the only thing that separates one site from another is what is known as a "software wall", although offering some level of security usually won't be as secure as the separation you can find on ManagedServer. it.

Most VPS hosting providers do not implement "throttle limits" during peak periods, a customer who abuses the server with heavy demands will affect the performance of your website. “CPU Steal” is one such metric that shows how much of the CPU's processing capacity has been taken up by noisy neighbors. Finally, the disk space on a VPS is shared by all customers, if multiple users have to read and write at the same time, the disk performance can severely affect site performance and it is very problematic for databases besides opening other sites Web on the server open to possible backdoor security threats.

And we sell in overselling?

It is a very important question to ask and a must when deciding which hosting provider to use. ManagedServer.it does not oversell and our hosting structure is designed to maximize the customer experience. Our server processing power, memory usage as well as network capacity and disk space for each client are isolated, and monitored via netdata which means it is impossible for other clients to access or monopolize your resources, resulting in the absence of negative experiences and total security.

Netdata Screenshot Screenshot

We recognize that overselling will not only cause short-term problems for our customers, but will also have long-term implications on performance and output. Running servers at full capacity can essentially “downgrade” hardware performance over time. Sometimes to the point where it's not solvable causing huge problems for everyone else on the server. Unlike a VPS, in addition to maintaining large excess capacity, we use technologies such as DRS, which automatically moves sudden noisy clients to hardware with better capacity when needed, ensuring consistently high performance at all times.

With ManagedServer.it your website will work with optimal performance 24 hours a day, seven days a week and 365 days a year.

If you have any further questions about overselling, VPS, shared hosting or our services, please email us, we are more than happy to help!

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