The truth about unlimited Web hosting

As many of you may already know, we have updated our shared hosting and reseller hosting plans yesterday. The plans went from crazy to just downright insane in terms of us adding HUGE amounts of disk space and bandwidth without increasing the price. I’m going to do my best to explain the whole situation and assure you that the new plans aren’t going to put HostGator out of business.

We have many customers who are going hysterical from being so happy about the plan increases. These are the same customers with whom the majority were using less then 1% of the old plan. It’s like going into an all you can eat buffet and being told you can eat more. I really don’t understand why everyone gets so excited because all we really did was go from unlimited to more unlimited.
Yes I said unlimited! The forbidden word we use to worn potential hosting customers to stay away from, and now HostGator has officially sold out and joined the competition with offering scam plans (we actually did this the last time when we increased our plans, but shhhh).

What exactly is unlimited? Well, I just got done going to the top 5 largest web hosting companies I could think of and the lowest plan I could find was for a few 100 gigs of disk space with thousands of gigs of bandwidth for less then $10 a month. These are all scam plans because like most hosts we have something called a Terms of Service that mentions CPU and memory limits. It is close to impossible to use what we are all selling you without being suspended for going over CPU and memory.

Of course many of you reading this will be shocked and rush off to one of our competitors to ask them if you can really use all the disk space and bandwidth without being suspended, and I’m positive they’ll tell you yes. In fact, my employees would have told you the same thing if they didn’t read this blog post.

Just ask yourself one thing…

How do all us shared web hosting companies sell more disk space and bandwidth for ten bucks then the dedicated server providers sell for hundreds?

It’s an easy concept really. Every web host has a terms of service with CPU and memory limits. If your website consumed too much of its share of CPU or memory then most web hosts will require you to upgrade. When you purchase a dedicated server you can’t get shut down for CPU or memory abuse so they have to sell you a plan based on what your site could use with less restrictions. At HostGator, we pretty much get an unlimited amount of bandwidth from our provider thanks to having thousands of servers. We also have 10,000′s of gigs disk space not being used. Giving away unlimited disk space and bandwidth doesn’t really cost us anything. It’s the CPU and memory that has a real value. A server will usually become extremely overloaded way before you ever get close to using the amount of disk quota and bandwidth it comes with.

If you plan on reading a hosting companies TOS to find out if they have CPU and memory limits it’s usually going to be a waste of time. We are all going to put some CPU and memory limit in there that can’t truly be tracked. However all us hosts have to provide a mystical usage number in order to answer a customers question which is… “how much CPU and memory can I use.” It really is as simple as if you crash a server or slow it down you will be suspended. At HostGator we put 200′ish customers per box and if the server load increases, it can generally be attributed to just one person on that server causing 90% of the problem. Sure, we have ways to track but in the end boils down to not wanting to sacrifice every other users’ experience on that same sever for just one or two websites using all the resources.

The number ends up being less then half a percent of customers per box that get suspended. I know this sounds terrible but if we didn’t suspend the .5% of customers that are a problem the other 99.5% would have many outages and slow load times. The .5% we suspend usually are the ones that even if they were on the server by them self they would still be crashing it. They are the ones that truly need dedicated servers.

Yeah I know how screwed up everything I just said is, but unfortunately this is the cut-throat marketplace that Hostgator is playing in. Take a look at our old hosting tips page written many years ago. Things have definitely changed since then. We’ve held out longer then any of the other larger hosts with offering these scam plans that I can think of, but in the end trying to educate potential customers has failed. It was either follow the trend to stay competitive or start shrinking as a company.

This is my plan for becoming so scummy…

Anyone we find crashing a server will be moved onto a server with only twenty accounts on it for the same monthly hosting price, instead of being suspended. Twenty customers will be paying us just shy of $200 a month on a server which at our cost has a $1,200 setup and about $250 a month leasing fee. You heard me… We are going to be giving abusers hosting below our cost. I’m not even factoring in merchant fees, support costs, or server administration time! If this isn’t good enough for the less then .5% of customers that crash our servers then there just isn’t any pleasing them.

I guarantee if HostGator starts sucking it’s not going to have anything to do with the crazy plans we are offering. Our new offering is no different then the last due to the TOS limiting the CPU and memory which is what truly affects performance. The reason most hosting companies start going downhill after a plan increase is a result from sales skyrocketing and the lack of man power to keep up with growth. If HostGator starts having this problem I’ll switch the site back to the old plans in a heartbeat. There’s no way I’m going to risk everything we built in exchange for a few more sales.

I could have lied as most hosting company blogs and CEO’s do by saying something along the lines of… “We are very excited that our growth has allowed us to negotiate better pricing which we are passing on to our customers in the form of larger plans.” HostGator is one of biggest hosting companies in the world so I know a statement like this is BS. I’m sure many of you will be upset with me writing this as the truth hurts, and I’m sure some of you would even prefer I lie to you, but really in the end honesty is the best way to go.