Are you familiar with the concept of booking a plane ticket for a trip, then arriving at the airport and telling you that you cannot board the flight because it is full? How is this possible if you have booked and paid your ticket?
Welcome to the world of resale.
All resell – from airline companies to mobile phone operators. Excess is a business model where businesses sell more of the resource than they actually have to a group of clients, as they know that a large percentage of those customers will never use 100% of the resource.
For example: Airlines regularly rebook their flights because they know that not everyone will file a flight. This way, they can make sure that their flights are full, even though a percentage of people will cancel or not arrive.
Mobile phone companies are reselling their call time – offering their customers huge packages of possible call minutes for a very low price, knowing that it is not humanly possible to use all those minutes for a month. Why do they do it? It offers a very attractive and competitive package for potential clients (Wow! See how many minutes of talk time I have, for only $ very, very little).
Over the last few years, the concept of resale has also begun to take hold in the hosting world. What, you mean you thought you were really getting 350GB of hard disk space and 3000GB of bandwidth for $ 5 a month?
In general, reselling the hosting arena is what makes you feel 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 website probably doesn't 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?
First, they offer it because it makes them stand out by offering exceptional value for money. A good deal or getting something for virtually nothing is always irresistible, though most people behind the back of their minds know that if the offer is too good to be true, it is probably not true.
Let's see if a hosting company can offer such huge packages and yet be true.
- It is definitely true that not everyone will ever use all this space. Then the trick comes with calculating odds and working with averages. If they have enough customers and have worked long enough, they can soon determine what percentage of customers tend to use what percentage of the disk space. They can then base their resale functions on these numbers.
- On the other hand, they need to be prepared for the small percentage of customers who will use the space. Maybe someone buys the package to backup off site or uploads large videos or images. The hosting company needs to be prepared for these clients and be able to provide the space if they really require it. Therefore, the hosting company must be able to quickly scale up and deploy additional hardware in the form of additional hard disk space or servers to meet this demand.
- Most hosting companies offer reseller services where they sell a certain amount of hard disk space and distributor traffic, which then cuts the resources into smaller packages and resells them. The danger comes if both the parent hosting company and the distributor resell! This can quickly lead to a lack of resources and the client will suffer.
Unfortunately, there is no way to really know if a hosting company is operating on a resale basis or not unless you are using your common sense on the prices on offer. Excessive hosting is not necessarily a bad thing, it's just something you may want to be aware of when buying a hosting package. If the hosting service provider provides good services, monitors server usage and is able to scale its resources when needed – what more can you ask for?
If you are worried about reselling, ask your hosting provider if they have their own infrastructure – if they are distributors and offer huge packages, you may want to be careful before signing up.