1. Overselling Introduction



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 web space, bandwidth and the service after the selling.

Below is an example about overselling in web hosting:

If web hosting company has a server with memory 4GB, and they host 20 web sites for different customers, and promise 200MB memory for each, then overselling happens.

2. Why Overselling

Overselling is a marketing strategy. For the case like we have a server with 100GB, when web hosting companies provide 20GB disk space for each customer, and only host 5 web sites 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.

3. Is Overselling harmful?

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.

4. 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:

- How to Win by Using Overselling Strategy

- No one response for the support tickets, customer service turn out to be very bad.

- Connection speed become slow

As a web hosting company, in order to fall into the trouble brought by overselling, below are some methods which definitely should be referred to:

- 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.

- 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

- 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.

5. 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.