Overselling occurs when a hosting company sells more hosting packages than their server resources can handle, in order to maximize profits. This results in resources like RAM and CPU being divided among more users, degrading performance for each user. As a result, end users experience slower site loads and more frequent downtime, while the hosting company earns significantly more revenue. Customers should research hosting companies to avoid those that engage in overselling.

1. Overselling and why it is bad - 08-22-2011
by Intizone - Intizone - Tech Savvy's Choice, Tech Blog on Latest News, hosting, reviews, howto, freebies -
http://intizone.net
Overselling and why it is bad
by Intizone - Monday, August 22, 2011
http://intizone.net/2011/08/22/overselling-and-why-it-is-bad/
Overselling
Does your site loads like a squid? Wondering why is your site so slow? Of course, there are a lot of
reasons to it but I will talk on overselling today which is one of the main factor that causes your site to
load slower than ever.
What is that?
What is overselling? Overselling is basically the hosting company selling hosting packages more than
their server could handle. This problem often happens in shared hosting as there are a lot of users
sharing resources of one server.
Scenario
Hosting Company A is providing a shared hosting package and the server used for the shared hosting
package is as follows:
2.0 ghz intel processor
2 TB bandwidth
400 GB space
512 MB ram
while the shared hosting package are as follows:
10 GB bandwidth
2 GB space
3 addon domain
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2. Overselling and why it is bad - 08-22-2011
by Intizone - Intizone - Tech Savvy's Choice, Tech Blog on Latest News, hosting, reviews, howto, freebies -
http://intizone.net
After some calculations, you will notice that this server is only capable of sharing resources with 200
users(based on what the hosting package promotes). However, these are merely the marketing skills made
by the hosting company.
Why?
Why do hosting company oversell? The main reason is to maximise profit as the hosting company know
that most of their users will not use all of the resources allocated to them. Even if there are users who
managed to use most of the resources as promoted by the package, the hosting company will notify the
user and request them to upgrade to a better hosting package such as vps hosting or dedicated server
hosting.
Profit
To maximise the profit, a hosting company will oversell to a number of users larger than 200(maybe
400,500 and some even until 1000 or even more) so that they can earn the most profit out of it.
I will take the situation where the hosting company oversells until 500 users as it is quite a common
number in reality.
Hosting Company View - Profit Factor
Let's consider that the price of hosting for a year is RM 50.
Revenue = Price x Number of users, it is also the total sales amount.
Revenue of 200 users: 50 * 200 = RM 10000
Revenue of 500 users: 50 * 500 = RM 25000
Additional Profit: RM 25000 - RM 10000 = RM 15000
End User View - Speed, Uptime Factor
RAM Factor
The 512mb RAM will be divided with more people, each user will have less RAM to use.
Average ram for each user for 200 user: 512 / 200 = 2.56mb ram
Average ram for each user for 500 user: 512 / 500 = 1.024mb ram
CPU Factor
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3. Overselling and why it is bad - 08-22-2011
by Intizone - Intizone - Tech Savvy's Choice, Tech Blog on Latest News, hosting, reviews, howto, freebies -
http://intizone.net
Average cpu allocation of each user for 200 user: 2000 / 200 = 100 mhz
Average cpu allocation of each user for 500 user: 2000 / 500 = 40 mhz
These calculations are made based on the fact that every user is utilising their resources to the maximum
which is not true in the reality. This figure is just to show you what will happen when the company
oversells and why you will gain a slowdown in performance and sometimes even a downtime as the
server is overloaded.
Result of overselling
As a result, a hosting company gains a whooping amount of profit and the end users gain a slowdown in
performance and a more frequent downtime as well.
NOTE: Not every hosting company oversells. Some of them don't but in the reality, many of them do.
Lesson gained
Do not buy cheap webhosting packages for the sake of $$ and please do some research on the hosting
company before buying any hosting package.
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