Overselling, simply, is selling more of a product or service than what you have currently available (commonly in web hosting: bandwidth and disk space). The practice of overselling isn’t the real problem – managing the overselling is the problem. It’s a matter of overselling vs. overloading (overloading). There are bottlenecks when it comes to a server’s performance, but those bottlenecks aren’t related to the bandwidth available or the amount of disk space.

Is Overselling bad practice?

A web host can oversell as most users won’t ever come close to the disk space limit they are set. Overselling occurs with many web hosts. Overselling in and of itself has no affect on server performance. That’s because it is a marketing term and not a technical term. With good server management overselling can lead to an efficient use of resources. A web host that houses too many accounts and websites on the server without monitoring disk space and bandwidth usage may in fact be overloading the server.

When it leads to Overloading

Overloading the server can cause poor performance, MySQL crashes, slow websites, and even the whole server to crash. Offering insane “reseller plans” can cause the server to spiral out of control. It now becomes impossible to manage the hardware. There is no way to cap usage or to specify server density/population.