Overselling is a big trend in web-hosting world at moment. It’s an easy way to get more out of your servers than normally is possible. The basic idea of overselling is that majority of your clients are only going to use a fraction of resources allocated to them so there’s going to be a lot of wasted bandwidth and space. Overselling involves taking a gamble and selling more than you can handle assuming that unused resources will cover it.
Let’s say for example that a server hard drive is 80GB and has 1200GB of bandwidth. The hosting company has a look around and decides that to be competitive they need to offer plans with 2GB of disk space and 40GB bandwidth. With these figures they can only offer 30 hosting packages per server. This leaves quite a bit of wasted disk space and after a few months company will probably notice that their users aren’t using all of available bandwidth. Because of this company then assumes that it can safely sell at least 10 more packages on one server. If original number of customers already covers general costs then extra packages provided by overselling are pure profit.
The advantage of overselling for host is that they make more money off each server than they otherwise normally would be able to. The advantage for client is that this extra revenue is usually transferred on (at least in theory) by cheaper hosting packages with more features. The problem is that these features are often ‘smoke and mirrors’. A few users would be able to use their entire allotment without any trouble, but if every single client were to build their website up to maximum capacity host wouldn’t be able to handle sudden increase in demand without adding extra hard drives, buying more bandwidth, or perhaps even another server. This would most likely lead to a fair amount of downtime.