Shortly after posting today’s news regarding our upgraded web hosting plans I received an email from a client inquiring just how we determine the amount of resources to include with each of our plans.
This was doubly cool for me, because:
1) It means someone took the time to subscribe to the News RSS Feed. That someone out there in the great big internet (a client of course, but still!) is interested enough to add our rss feed to their newsreader just so they can keep abreast of any on goings around here, and then took the time to send in an email about something they saw on the feed, that makes me giddy, it means the site is working in the way we intended, promoting communication and dialog.
2) It’s a valid question, and something I had thought I previously blogged about, but a quick search tells me that no, I didn’t; so I want to, and an excuse for a blog entry is always something to be happy about.
So, anyway, here’s the situation… it’s all nothing but secret black magic. No, that’s not entirely true, but it does feel like it sometimes, especially when I look at some of the offerings from other companies that I find online.
Overselling: Lets get it out there, the dirty little secret of the web hosting industry. It’s not something that the hosting industry invented by any means. Many service based businesses are, in part, based on or utilize overselling. If every single person who has a membership at your local gym showed up at lunchtime this Friday to work out, you couldn’t fit them all in the parking lot, let alone find them all a StairMaster to call their own. If everyone in your town tried to pick up the phone at 9pm Friday night to call their mothers, the system would become quickly overloaded. But while overselling is not something unique to just the web hosting marketplace, it’s definitely something that has played a very large role in shaping our industry.
The concept of overselling in the hosting market dates back to it’s roots in the Internet Service Provider business, reaching back as far as the days of dial up internet service. One business metric carefully watched by dial up ISPs back in the day was their “User/Port Ratio” which determined how many telephone lines and modems they needed to have provisioned in a particular city to answer calls and handle their client-base. Some ISPs operated with a User/Port ratio as low as 10:1 (1 inbound line for every 10 customers), while others would push this ratio as high as 150:1 or higher. The idea was that “Not every customer will try to be online at the same time, so we don’t need anywhere near a 1:1 ratio”, and of course, a higher ratio meant less costs for the ISP, which is of course, their path to higher profits.
Even today, phone companies, ISPs, and hosting providers all oversell in some manner or degree. And it works out okay the majority of the time when it’s done in a reasonable and rational manner. It’s when people get caught up in the marketing hype and the rush to offer “The biggest, the baddest, the most unlimitedist plan ever!” for the lowest cost that things can go wrong. (yes, I know, “Unlimitedist” isn’t a real word…)
How we, specifically, determine resource limits
When we first set up shop so long ago, we looked around at what other providers were offering resource wise at various price points, looked at our costs and took an educated guess at what plans we should offer that would be sustainable and marketable. The thinking was along the lines of “Okay, here’s what the competition is doing, can we match it? Can we beat it? Is this something we can sustain as an ongoing concern? Okay, lets do it.”
Over the time since then, the market has evolved a bit, and the technology has evolved a bit, hard drives have gotten bigger, bandwidth has gotten reasonably cheaper, we’ve replaced older servers with newer, faster machines sporting more RAM and larger drives, and we’ve been able to adjust our plans to increase their limits while keeping the same price levels.
There’s no cut and dry formula for determining how much we adjust the plans, the only real “rule” is that we try and review them at least once a year, other than that we really just look at the overall situation and try to get a feel for what is safe and sustainable for us, while at the same time keeping an eye on the overall marketplace.
One thing that we’ve always tried to prevent is “Selling the moon, but not delivering”… if we sell a client X disk space and Y transfer, we want them to be able to use it, when they want, how they want. A number of places that offer “Unlimited Disk and Bandwidth” then place restrictions on that via their Terms of Service. I’ve seen everything from “You can only have X files” restrictions, to “You can’t run these types of sites” restrictions, to “Only to be used for web accessible content, no backups or archives”. That’s ridiculous to me. If you want to build the next YouTube (or Rapidshare, or imageshack) using our service, and you can do it (or at-least start it) using the resources of one of our plans, more power to you! If you want to backup the pictures from your son’s birthday party and store them in your account for the next 5 years, it’s your disk space, you pay for it each month, you should be able to use it how you wish.
Yes, our own Terms of Service has what some people consider a “vague out for anything we don’t want to host”, that being the “…You may not use resource-intensive programs which negatively impact other customers or the performances of Pure Energy’s servers or networks. Pure Energy Systems reserves the right to terminate or limit such activities…” portion. This clause is another favorite of many “Unlimited” providers. The moment your site consumes more then some arbitrary amount of resources, they contact you and either try to up-sell you to a VPS or dedicated server, or simply tell you your site is in violation of their Terms and disconnect the account.
It’s true, we’ve always had that clause, and I think we’ve had a concern about using it… twice that I can think of in the history of our service, once when a client had this really neat but CPU intensive graphics script (think on the fly web based ray tracing), and once when someone’s MySQL based site (A blog search engine of sorts) had simply too much load generated by a massive uptick in visitors… in both cases we were able to work with the client to reduce the stress their sites, and both continued to be hosted with us after the event.
Ultimately, the theory around here is simple, provide the best plans we can, at a reasonable price, and whatever package we do sell you, let you actually use it all if you want. Every so often we go back and review how the current plans are working out based on the current situation, and adapt from there.