Josh Jones of DreamHost wrote about the truth of overselling. A great and insightful article, with an obvious bias towards DreamHost, the web hosting company that introduced 20Gb storage + 1Tb bandwidth for budget hosting at the beginning of this year. In this blog entry he talked about why “overselling” is the only feasible business practise for web hosting companies, and how DreamHost handles these issues.

Things that’s notes worthy:

• “Overselling” is terrible at all, but an essential business practise if customers have wildly varying usage which they themselves cannot predict.

• DreamHost is paying (1) $90/month for 3Mbps pipe (2) $200 for 20Gb space including costs associated with RAID and backup (3) $2,000 + $25/month for dual Xeon server boxes plus monthly power + space, and that is excluding cost for sysadmins, developers, supports. Crazy Domain Insane customers pay $7.99/month if pre-paid for 2 years.

• DreamHost always kept diskspace at 90% full and 85% of bandwidth saturated at peak level. That gives them pretty good buffer. I can verify the diskspace level on DreamHost boxes, although their network feels slow to me sometime.

• CPU minute is much harder to “oversell” than diskspace and bandwidth, which results all these account termination issues when they are trying to protect their servers. However it looks like they are working on something where customers can buy extra CPU minutes. Nice.

I think DreamHost has got it right by moving file system onto NFS and MySQL onto dedicated servers, so it makes “overselling” easier to manage. Many cPanel based web hosting are doing everything on localhost, which makes your storage and MySQL CPU power harder to oversell (they are limited to per-server instead of per-rack or even entire hosting company). However with NFS and remote MySQL server you do have other issues like latency and file locking, etc.

Currently I am using 5% of allocated storage and 2.5% of bandwidth on my DreamHost account. So far I am pretty happy.