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Oversell or die

M Bacon

New Member
Do you think that overselling is the standard? Have you noticed that bigger companies oversell quite a lot? Do you think getting more space and bandwidth is the reason why most people get high sales? Some people like to offer 50 gb of space for $20 for a reseller account? Is that even reasonable?
 

[JSH]John

JSHosts.com
NLC
It's a question I've been asked a lot by customers. Why should they join us if they can get 50 - 200GB of space for a lot less from other companies that I'm sure we all know.

50GB for $20 is way too much space, but not everyone uses that whole 50GB, this is the way oversellers think of it. If someone was to use all that space then I'm sure they would end up suspended for some smallprint in the ToS.
 
For small companies it is really Oversell AND Die. Some of the big multimillion dollar companies get away with it, but very few small companies do on a long term basis.
 

Decker

Officially Old!
NLC
Point is how many survive and how many die?

Most of the 'newer to the field' that come along go on the principal that all clients will not use it.
Unfortunately disk space kills that scenario as they can fill it easy even if no-one wants to download it, backups, files of all sorts.....

Usually you find server load is never considered, budget celeron and cramming 500 clients on it is a sure way to see you off quickly.

The 'kiddy host' sector gets hammered for this and it is the irresponsible ones that hide behind that, that cause this dislike for the previously mentioned. Not all but many do just spend birthday money on a cheap server and think they can host, and make a fortune. Wake up call - few of us make a fortune, and only after hard work and a lot of cash input.

Then some suffer and they're running very close and unable to cope so have to actually 'spend' some money' to keep it going and disappear. Sometimes having a years worth (or worse those one time payment hosts) of the clients cash in their pocket.

Responsibly done it can be managed if you have the finance to back it up but it does require carefull calculation. Not 100Gb disk space and 2000Gb transfer for $2.99 that's just stupidity kicking in without reason for appeal.

The big guys have cash to throw around and have various 'benifits' if they have to invest more - so they won't suffer.
 

Matt8

All? No, ALL!
NLC
I think the only way to survive is to oversell enough to get customers but not enough to bankrupt you.
 

AvailNetworks

Greetings
NLC
personally I think it depends on your target market.

I sell primarily to local business's for their websites. I average about $30/mo each and they use about 20mb space and about 1gb bandwidth each month. Knowing that data I have gathered I could easily offer 200gb space and 2000gb transfer each month for business accounts and it would make no difference at all. Generally these are "fully managed" sites and the end user relies on myself or another one of my associates to do whatever it is that needs to be done.

if you are advertising to the "hosting mass" you can more than likely safely oversell to whatever you feel like. globat.com is a fantastic example. they have thousands upon thousands of clients and they offer a minumum of 1TB storage and 5tb for their upgraded plan to each and every customer that buys there! but if you head on over to their network description page you will find out their ENTIRE storage array only contains 2TB capacity.

With a touch higher price point and massive storage/transfer offerings instead of averaging $2/mo per account, you average $7/mo per account for the EXACT same usage. Just make sure your TOS supports what you will and will not tolerate on your servers and don't hide anything and you are good to go.

if you plan to sell to the warez/mp3/anime/videop, etc. community it probably would be very silly to offer 1tb of space for $6.95/mo

plan and plan and plan some more where you want your business to head and you will discover you own pricing/business/overselling model and have a confident grasp of the whole process and be ready to take on the world
 

Volt.Networks

Bolded!
NLC
I think the only way to survive is to oversell enough to get customers but not enough to bankrupt you.
I think that's probably right for the hosts who try to advertise solely to the online masses.

If hosts target local markets, I think they stand a much better chance.
 

[ih]Demetris

New Member
We target both local markets and online as well, i think that mild overselling is completely managable if done properly. However new hosts that think that they can oversell and hang with the majors are the ones that usually turn belly up..
 

RavenServers

New Member
Hi,

I am totally against overselling and buy servers even if the old server is at 20% usage. This may sound strange but if you've done your calculations and maxed a server, you should move on - you never know when one of those sites may become popular.

I just think that someone should get what they pay for, even if they don't use it all and it should be there all the time. It's based in your company's pricing structure and shouldn't affect you anyway.

Best wishes

RavenServers
 

tmgavin

New Member
Well, I think that oveselling is usually the case when you see those impossible 2+GB offers, that are less than 10 bucks. To sell stuff like this, you would definitely have to oversell.. Or you fill up a server (assuming 200GB svr), for just a paltry 25 bucks.
 

.Andy

NLC
NLC
I belive oversell and you will die. on some of these companys that totaly oversell ( I saw one 500 gigs space 5tb bw for 5$ a month) I'm tempted to upload all that and watch there server crash.
 

AvailNetworks

Greetings
NLC
sounds like you guys don't have a full understanding of the business and what happens when you actually get a server near capacity. Overselling is not bad if you know what you are doing and your client base. There is a line between paranoia and proper planning.

There is 2 ways to do business:

1. research research research, then launch

2. launch and wing it
 

[ih]Demetris

New Member
I belive oversell and you will die. on some of these companys that totaly oversell ( I saw one 500 gigs space 5tb bw for 5$ a month) I'm tempted to upload all that and watch there server crash.
Their server wont crash, but your account will more than likely be suspended, if a client wants to know what the space can be used for, read the TOS. Avail is correct proper business planning is the absolute key.
 

Xcentric Media

New Member
Overselling on some level, is a core part of any web host that becomes successful. The only way to compete and be successful in this business without overselling, is to host local based clients, or clients in some sort of niche. Now with that said, I'm not implying that you oversell like a madman. It's a rather calculated risk, if done properly.
 

disedirata

New Member
A question for Availnetworks... Are your answers coming from a competitor's perspective? Although you have a point that many companies actually oversell, would it be a good to take your advice considering that you host as well?
 

tumble

Owner/Operator
NLC
The main issue with the agressive overselling is:

It tends to bring many accounts. Granted this accounts do not use up all the space you offer. The problem lays with your poor server ressponse that will happen after you load a "ton" of sites on your server or in your reseller account. the majority of these accounts are running some sort of PHP/MYSQL appllication Always taxing the resources of the parent machine.

Just look at the reasons the bigger companies are losing accounts. alot of the reasons is poor server response.

Overselling is fine up to a point. But i tell you what if your server owner allows overselling via WHM. I for one would not host a site with them. I actully like to see my site when i click on the link.

If you need to oversell to a point were you are lying about what you are able to support. Then that within in itself shows a bad bussiness "ethic".

A bussiness build on lies not only hurts the "buyer" but it hurts those that really try hard to be "honest" because it shines a bad light on us as well.

So in the end if you cannot back up immeditly what you say and offer then your bussiness is built on "Lies"

tumble
 

TSO

freezoka.ws
NLC
Do you think that overselling is the standard? Have you noticed that bigger companies oversell quite a lot? Do you think getting more space and bandwidth is the reason why most people get high sales? Some people like to offer 50 gb of space for $20 for a reseller account? Is that even reasonable?
Yes, I do believe overselling is the standard way to business now, and there's no escaping it. There is definitely a psychological reaction that takes place when folks see large amounts of space and bandwidth being offered for sale - even if they inherently know they'll never use it all. And finally, I do think that considering current market trends, the offer you mention is indeed reasonable.
 

JodoHost

New Member
The main problem with very cheap, high resource packages is not the the excessive disk space/bandwidth allocations you are selling, it is the type of customers you are attacting.

Webhosting packages which are aimed towards people seeking very high resource allocations, will attract a higher number of clients that will abuse the servers, and use high amounts of CPU time. As a result, you have more server issues and lesser uptime.

The problem with overselling has never been running out of space. The problem is reliability.. and that boils down to the type of customers you are appealing to.
 
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