Overselling Website Hosting Is Still Rife Within The Industry

Have you ever wondered why website hosting costs vary so much from company to company? If you haven’t then maybe you should look a little further than your nose on this one. For over 14 or so years now there has been a very popular technique called “overselling”. The basic concept is to offer everything you can and then some but charge as close to zero as you can for it.

To give you a clearer example which will help you understand it better. Let’s assume that a web host has a server or a series of virtual servers in a cloud environment. Each server consists of a reasonable amount of processing power, memory and disk space. They couple this with an easy to use the system like CPanel or Plesk.

This server then needs to be sold off in smaller chunks so that the company can start covering operational costs. The problem is that covering these costs requires a good sales pitch in order for them to be competitive. In short, this is what they do:

1. There is an assumption that the average website will be no bigger than say 2-3GB.
2. It is safe to say the host servers have about 500-1,000GB of storage they can use.
3. The servers usually have a good amount of included bandwidth/traffic included from the datacentre.
4. The cost for some common features are FREE but have a huge amount of perceived value around them.
5. They have a fixed cost for the overall server which may be a couple of hundred dollars. This figure may not be 100% right but it is a fairly good guestimate for this example.

What is an Example of Someone “overselling” their Website Hosting?

A given host comes up with packages where they will say to a customer something like the following:

• You will get “unlimited” or “unmetered” amounts of storage
• We will give you “unlimited” or “unmetered” amounts of bandwidth/traffic
• Don’t forget our “unlimited” or “unmetered” amounts of email accounts
• Our service comes with “unlimited” or “unmetered” amounts of MySQL databases
• We will through in give you “FREE” technical support and a “Website Builder” because we are super nice.
• We will give you all of the above for a great low price of $3 per month

Now that we have a great understanding of what is on offer it is sounding fantastic right? Well, maybe this deal is just so unbelievable that I cannot wait to buy it. You are right, this is a great deal, but it also is a terrible one. They are betting that you are not going to use anywhere near the 2-3GB of storage, unlimited everything else. The web hosting provider is also going to make sure that they don’t fall into the old trap they use to fall for. The trap was people were uploading EVERYTHING they had to these accounts and said it didn’t violate their offer. There have to be limits somewhere otherwise it is a terrible bet.

The Fine Print is Crucial to this Problem

In the fine print, you get clauses like “the disk space used on our servers must be for the operation of website files only” and “if you exceed more than x% of the total system resources for longer than x amount of seconds you violate our terms”. To be even cheekier about the whole thing they put soft file limits and email limits allowed into each plan. They also “throttle/limit” system resources allowed to be consumed. Then finally for the nasty little thing they don’t tell you, there are clauses like:

• Your use of the Services is at your own risk. We are not is not responsible for files and/or data residing on your account. You agree to take full responsibility for files and data transferred and to maintain all backup of User Content stored on our servers including without limitation your website files.
• The customer’s resource usage shall not exceed: 10% CPU Usage, 5% Memory Usage or 512 MB Memory, 500 outgoing email messages per 60 minute period.

• Pricing Reflects A One Time Discount* (note that prices may triple or quadruple on next bill)

• Shared hosting space may not be used for storage (whether of media, emails, or other data), including, as offsite storage of electronic files, email or FTP hosts.

Putting all of this into perspective, they have now just dropped what seems like a great deal into a terrible one. Your monthly hosting has now gone from $3 per month to up to $12 or so per month minimum. The tech support is the next shocking thing that happens. It involves either logging in and submitting a ticket (which can be not so painful if you know what you are talking about), waiting in a queue on live chat or the better option of waiting on hold after calling an international number.

Why Does all of this Matter? It is Cheap Website Hosting

How does this equate to honest pricing for website hosting? Well very easily actually. If you are either a business owner or an owner of a website that generates contributes to your monthly income. To be conservative we will say that you are being paid an hourly rate / fixed wage that equates to $25-30 per hour (maybe a little low but it is sufficient for this example).

The average time spent during a technical issue either waiting for support or attempting to contact them advising them of the issue is probably going to take you at least 30-40 minutes. Then you will probably have that followed by a bit of back and forth.

This will end up taking up to 2 hours or longer in some cases. If this happens once a month or every few months it could end up costing you more than it would be paying for a premium service.

When you are paying a premium for these sorts of services you will probably have tighter restrictions on what is on offer. It would also translate to how much time you spend contacting the hosting provider asking for help.

What You Should Consider

If you are hosting your website with a “large” hosting company and paying almost nothing for the service that offers the world. You may want to consider a better alternative for your business. It could become a great insurance policy to protect you against downtime and the need for excess technical support.

To find out more about our hosting services visit our web hosting page or give us a call today on 07 5479 3888.