What is Overselling?

In the 1920’s, many American banks because of financial insolvency. A small dip in the stock market made many people want to take their money out of the banks. The banks practiced overselling, so there wasn’t enough money on hand to meet demand, and they shut down.

Overselling Bandwidth

Web hosting companies play a similar game to lending institutions, though with less dire consequences. Because most web sites don’t use their full allotment of bandwidth, and those that do only do it for short periods of time, web hosting companies can sell more bandwidth than they actually have.

Here’s a simplified example: a website has a plan that lets it transfer 100 Gb a month to visitors. The bandwidth pipe can transfer 1,000 Gb a month. that means that the company could offer 10 plans on that pipe.

However, the host notices that each site usually only uses 10 Gb a month. So rather than offer only 10 plans, the company offers 1000 instead.

In reality, the calculation is a bit more complicated than that, with bandwidth being limited on a transfer per second basis rather than a monthly allotment. But the idea holds. Overselling bandwidth can dramatically boost a host’s profits if done right.

Is Overselling Bad?

Overselling isn’t a bad practice in and of itself, but it can be abused. If a web hosting company oversells its bandwidth too much, the performance of every site on that connection will suffer.

Take the example above. If the sites need more bandwidth than the host predicted they would, well, they are out of luck. That extra bandwidth is already tied up by other web sites on the same server. This is the same problem that the US banking industry ran into in the 1920’s, but where the Federal government established a government bank and imposed limits on how much could be lent, hosting companies really don’t face those types of consequences (except hearing from some angry customers).

If the proper precautions are taken, then overselling really shouldn’t impact your website performance at all. At most you might have a few moments each month where your website takes longer to respond than usual.

Overselling also drives down the cost of hosting. All other things being equal, a web host that oversells can offer cheaper plans than a host that doesn’t. So in practice, even the best web hosts not running large, resource-intensive sites like Amazon or YouTube are overselling.

What if you Really Need Your Full Pipe?

Some sites care more about performance than others. While having your connection throttled occasionally might be acceptable on a small recipe site, it probably wouldn’t be acceptable for a site like Facebook. There are many web hosts that cater specifically to these types of clients, though their prices usually put them out of the reach of mere mortals. These services guarantee uptime and a bulletproof server capable of withstanding small DDOS attacks.

But for most of us, oversold hosting is just fine.

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