Quite simply put, overselling is a poor way to describe resource management on servers.
It essentially only applies to disk space. Technically, it applies to bandwidth, but in reality there’s so much bandwidth available these days, that it doesn’t matter outside of DDoS mitigation.
So let’s take shared hosting (aka reseller hosting) as an example. There’s four concepts to keep in mind:
So you have to manage the server based on this key factor: Does the customer use the entire allocation of space? In almost all cases, the answer is no. The average website is under 1GB, and gets only modest traffic at best. To reserve X amount of space forever would be a waste, not to mention that it would significantly drive up costs. And therein lies the reason for overselling: to keep costs down for the customer.
To borrow some math from Stablehost — an excellent host, that is very transparent and honest — a single server might contain 1200GB. Their $10 plan gives 20GB, and allows for 60 accounts per server that is not oversold (1200/20=60). The server would bring in $600 (10 x $60), which is barely going to cover the costs of the server itself, if even that. While a home desktop is cheap, remember a server with RAID-10 SAS server-grade hard drives, multi-core Xeon CPUs, and 64GB+ of RAM is not. There’s also energy costs to run them 24/7, facility costs (co-location), personnel costs for support, bandwidth, etc. So that $10 needs to be like $30 or $40 to cover its costs!
In addition to that, the server would only use a tiny portion of CPU and RAM, which is a complete waste of resources. You’d be paying a high price for something you don’t use.
Suddenly overselling doesn’t sound like a bad thing, does it?
All hosts oversell, period. A shared/reseller host that says otherwise is either lying, or charging an amount commensurate to having such a service. (i.e. about $4 per GB)
Unfortunately for customers, almost all hosts hide this information. They often refer to it as “trade secrets” or similar nonsense. It’s most often hidden because it’s gone beyond mere overselling and entered the realm of overloading.
If you’re a reseller host, it simply means you can do this with your reseller account. A simple tick/check box in cPanel allows the reseller to also offer more than is available in their account. For example, a 20GB reseller with 20 x 2GB plans (40GB = overselling). The downside to this is the host is now one level removed as the provider, and too much overselling by the reseller may affect CPU and RAM on the server! It takes a really, really good host to provide reliable reseller hosting, because of this fact.
The key to “overselling” — or better yet (again!) smart resource management, which is what this really is — is to create a balance between server resources, including RAM and CPU, available disk space, and average customer needs. You want to be able keep your promises to the customer, while keeping costs in check.
Again, Stablehost has proven itself to be an honest host, and has shared those numbers with us! For them, the magic number is 50%, and a responsible level of overselling is:
If at any point a site causes these numbers to drop, Stablehost will move that site to another server. (Unless it’s just grown so large that it requires a VPS, but that’s another story for another time.)
It’s all about assessing your hardware, assessing your typical customer, and making intelligent decisions based on this data.
Sadly, a lot of hosts don’t do this — especially the “unlimited” hosts like like Dreamhost, Godaddy, and the various EIG brands (iPage, Fatcow, PowWeb, etc). What happens there is you end up with a server that is not just oversold, but overloaded. It runs slow, gets suspended for using “too many resources”, and is overall frustrating to use. In part two, we’ll examine What Is Overloading?, and which hosts are the typical offenders.