There is an old saying – “you can’t get a quart out of a pint pot”. Well, server overselling is one way of trying to achieve just that. Server overselling means that the web hosting company sells more disk space or bandwidth, or both, than the server can actually accommodate.
The reasoning behind this is quite simple. Most web sites hosted on shared servers do not use their entire allocation of either disk space or bandwidth. This can leave a lot of unused capacity. Web hosting companies see this, and try to add extra web sites to under-utilized servers in order to use up this excess space. It is very similar to the practice of airlines’ over-booking flights, in the expectation that not all passengers that book seats will actually take the flight.
However, when airlines find that too many passengers turn up for a flight, they are able to bump some off, offer seats on later flights, and cash or other forms of compensation. Unfortunately, an “overbooked” server is not able to do this. Instead, the performance of the server is drastically slowed, affecting all of the web sites hosted on that server. There may also be service interruptions, and possibly the whole server may crash, with the result that all of those web sites will be unavailable until the situation is resolved.
The reason that web hosting companies oversell is purely economic. If they are able to host more sites than their hardware should theoretically be able to handle, then they will make more money. For example, a company may have a server with a 120 GB hard disk and 1000 GB of bandwidth. Their standard plan may offer 4 GB of disk space, and 50 GB bandwidth. Based on these figures, the available bandwidth would only allow the server to host 20 web sites.
However this would leave 40 GB of disk space free, enough to host another 10 sites. If the web hosting company oversold all of this space, their monthly income would be 50% higher, at no extra cost to the company.
If a hosting company does a limited amount of server overselling, it is probable that none of their clients will ever notice. It is true that most web sites do not use all of their allocated resources. It is also true that overselling means that web hosting companies may be able to offer lower prices to their clients.
It is difficult to tell which web hosting companies oversell, and to what extent they do this. Companies certainly don’t advertise the fact that they use overselling. You may find that a particular web hosting company has a reputation for unreliability, which may be an indicator that they are overselling excessively. Or you may be able to get some information on a particular company through message boards or forums, but this may not always be the case. However, if you see deals that seem too good to be true, maybe a company offering prices way below those offered by similar companies, then you will need to tread carefully.