Are you familiar with the concept of booking a plane ticket for a trip, then arriving at the airport and being told that you cannot board the flight since it is full? How is that possible if you have booked and paid for your ticket?
Welcome to the world of overselling.
Everyone oversells - from the air travel companies to the cell phone operators. Overselling is a business model where the business sells more of a resource than they actually have to a group of customers since they know that a large percentage of these customers will never use 100% of the resource.
For example: Airplane companies regularly overbook their flights since they know that not everyone will pitch for the flight. In this way they can make sure that their flights are full regardless of the fact that a percentage of people will cancel or not arrive.
Cell phone companies oversell their talk time - offering huge packages of possible talk time minutes to customers for a very low price since the know that it is not humanly possible to utilize all those talk time minutes in a month. Why do they do it? It offers a very attractive and competitive package to potential clients (Wow! Look at how many talk time minutes I have, for only $very-little).
During the past couple of years the concept of overselling has also started to take place in the hosting world. What, you mean you thought you were REALLY getting 350GB of hard disk space and 3000GB bandwidth for $5 a month?
Basically overselling in the hosting arena is what makes it seems like you are getting a really good deal - tons of hard disk space and bandwidth for very little money. Hosting companies know that the average web site probably do not use more than about 150Mb to 250Mb of hard disk space for a website, so why offer 350GB? And can you really use the full 350GB?
Firstly, they offer it because it makes them stand out as offering exceptional value for money. A good deal, or getting something for practically nothing is always irresistible, even though most people, in the back of their minds, know that if the offer is too good to be true, it probably is not true.
Let us see if a hosting company can offer such huge packages and still be true.
Unfortunately there is no way of really know whether a hosting company is operating on a reselling basis or not, unless use your common sense with regards to the prices on offer. Overselling in the hosting industry is not necessarily a bad thing, it is just something that you might want to be aware of when you buy a hosting package. If the hosting provider provides good service, monitors its server usage and is able to scale its resources when necessary - what more can you ask for?
If you are concerned about overselling, enquire from your hosting provider whether they have their own infrastructure of not - if they are resellers and they offer enormous packages you might want to be careful before you sign up.
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