Wise Words Wednesday: How Unlimited/Oversold Hosting Affects Your Business

If you’ve spent any time at all looking for a web host, you’ve probably been bombarded by ads for unlimited bandwidth, Terrabytes of disk space and all that for less than $3 a month.

As a web host who sells reasonable, yet affordable, hosting accounts and hosted ecommerce solutions, I’ve been keeping a close eye on this trend towards promising customers the moon for $2.99 per month.

I like to keep up with publications and communities that discuss the web hosting industry and today, I found an article at Host Review that makes a few points I thought you’d be interested in.

First, the article points out that overselling is a reaction to competition, not customer demand. What does this mean for you? Simple. That company who is offering enough bandwidth to power a space shuttle isn’t as concered about you as it is about what the “Jones” Company is doing next door.

According to the Host Review article:

In fact, when practicing overselling a host has to hope and pray that
(even just a fraction of) users don’t try to use all of the disk space
and bandwidth allotted to them: if this was to occur, the host would be
too underfunded to provide all of the resources, and in serious
financial trouble. Even worse, however, overselling requires no
commitment from the host in terms of finances, intellectual property,
or human assets; this means that any host can engage in overselling, so
most do.

Does this sound like a company you want to put in charge of your uptime? In charge of your ability to do business on the Internet, when that is your main source of income for your company?

Second, your ability to spot a good hosting deal may have been affected by overselling.

Ten years ago, people spend $50 or more for a domain name and hundreds of dollars for hosting on a shared host. Today, people expect a 100 times more disk space and bandwidth for a fraction of the cost. It is true that bandwidth and other server resources are less expensive to offer these days. However, these hosting price wars are taking things too far.

Overselling has also distorted customer knowledge of the hosting market
and needs-based analysis of hosting plans. Instead of learning to use
rational evaluation techniques of each hosting plan under
consideration, customers have been “trained” through constant exposure
to ads emphasizing high disk space and bandwidth (and little else) to
choose the host that offers the most disk space and bandwidth for the
least amount of money. In this scenario, hosts not overselling really
don’t have any choice but to also oversell - customers only think
they’re getting a good value when purchasing services from an
overseller.

Let’s think about this. You’ve heard the old adage that you get what you pay for. What you’re getting from these companies who are overselling is a product you can’t fully use and a company that hopes you never do — and actually won’t let you. To me, this is starting out in a dishonest partnership from the beginning. If you can’t trust your host to tell you what you’re actually paying for, how can you trust them with the health of your business?

This is why I don’t oversell. I’d rather sell someone a $10 plan with 10 GB of bandwidth and 1000 MB of disk space that they can actually use. Some of my clients use every last bit of their resources, and then they have the option to purchase more. Or they can scale back to stay within their plan.

My customers don’t have to worry about their websites suddenly disappearing one day with no warning.

Host Review goes on to say that overselling is not a sustainable practice and that hosts will soon start raising their prices and adding extra services to increase prices.

My advice: Avoid the oversellers all together. Look for hosts that have built their accounts based on the needs of their customers, not on the desire to compete with other oversellers.

Additionally, learn how to evaluate what you need in a hosting account and what you an afford. If you only need 15 GB of bandwidth each month, it’s smart to buy 20 GB to be safe. It’s not smart to buy an “unlimited” bandwidth package, particularly since you have no idea how much of it that your host will actually let you use before they find a reason to get rid of you.

Also, find ways to store files offline, instead of on the server. You can buy a flash drive to keep files, or an external hard drive. This is better than storing your files on a server that may disappear one day when the host decides it can’t afford to stay in business. Once you’ve cleaned up your hosting account, check to see how much space you’re actually using.

Finally, determine how much you can actually afford. In my opinion, it’s better to spend $20 per month for resources you can use, than $2.99 a month for resources that may or may not be there and customer service who probably doesn’t care.

What are your thoughts?