Two Dirt Cheap Web Hosting Possibilities:

When your hosting deal is just too good to be true, more often than not one of two things has happened both of which are not good for you.

Either the web host is overselling hosting resources, which means that you will inevitably end up with lousy services and a site that loads at snail pace and many times is not even accessible at all. In other words, the cheap will end up being so expensive that it will clearly be unaffordable to you in terms of lost clients and revenue because people cannot access your site most of the time.

The second reason could be that the web hosting business is out to try and grab as many clients as possible collecting the maximum amount of revenue in advance and then filing for bankruptcy. This has happened many times and naturally chances are that you will never see a refund. This is the only road such a business strategy will end up on. Many have had the idea of using a business model where they go out for as much market share as they possibly can at a price that is below cost with the intention of raising prices later. In reality this will hardly work in an industry that is as competitive as web hosting is.

Hosts Who Oversell Resources:

Overselling refers to the situation where a host goes out for more clients than what their available resources can support. Webmasters usually sign up like crazy and at the beginning when the resources are yet to be stretched all looks well and happy webmasters refer the cheap service to others and the result is that the client base grows at blinding speed.

What follows after that is disaster as suddenly users find that their sites take too long to load and inevitably they lose many hits in this way, because impatient prospective visitors just click their way out of the site that is taking ages to load and end up going elsewhere. Downtimes also become so frequent that your site ends up not loading at all most of the times. The result is a classic illustration of why cheaper can often end up being much more expensive.

Hosting Business Model From Hell:

An increasing number of new web hosts have been offering increasingly more bandwidth for less. This has really not caused concern because most people have heard that the prices of resources used in web hosting have been dropping in price in recent times. However the truth is that some hosting rates have been dropping much faster while offering virtually unlimited bandwidth and resources. There is no such word as 'unlimited' in business because somebody has to pay the bills.

The whole idea here is to secure as many hosting clients as possible and then raise prices in future. Or in some cases declare bankruptcy. Both options will leave you, the hosting client in big trouble.

In Conclusion:

This article has clearly shown some of the reasons why you need to get very nervous when the hosting deal is too good to be true because even when everything appears to be alright at the beginning, you may well have signed up for a disaster that is waiting to happen.