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Overcome Informational Asymmetry on the Hosting Market

Web hosting market is often called “market for lemons”, which points out the fact that it’s very difficult or even impossible to determine the quality of hosting services prior to signing on, and features of the plan extolling hosting offers won’t shed any light on the type of product you’re going to buy.

Problem Posing

The asymmetry of information is manifested in the fact that the only real limit that applies to the majority of hosting companies is the CPU and RAM usage, and these features aren’t stated in the package plans, often they are limited in the TOS. And it’s not disc space or bandwidth that may cause you site to perform ineffectively or even make your hoster ask you to leave the server for violating CPU usage rules in the TOS.

If the hardware discs are big, the server has to process bigger amount of information. The speed and often reliability isn’t very high. Such server should be used for storing files and hosting non-mission critical sites running few scripts. If SCSI disc is installed into RAID, the server performance gets better than in the first case. You can host highly visited and mission critical sites on it. But the cost of the disc space on the second server will be higher. So, 500Mbs of disc space on one server is absolutely different from 500Mbs on the other server.

Hosting providers usually tell about “the best ratio between price and quality” to their clients instead of explaining them what their hosting service should be used for. One company can provide low-cost hosting, another powerful hosting, the third can deliver reliable DDOS protection to their customers. This is how things really are, but choosing a hosting company the client doesn’t have all this information. He has to judge only by the disc space.

Hosting Features

It was traffic that reflected server load some time ago. The more traffic, the more visits to the site, so the greater load on the server. More bandwidth in package plans meant more system resources. But today things have changed, overselling has come here to stay.

The feature “the number of MySQL” is simply neglected by the number of hosting providers. You can often see “unlimited MySQL” in beginners’ plans. And that’s MySQL usage that creates additional load on the server. Such features as the number of email boxes, ftp accounts, PHP support can be the same in different hosting packages. You can’t judge about the package plan by them.

So, disc space is what’s left to go by. This is what majority do. But this is a common misconception. Often sites “fitting” into the disc space use more resources than allotted in the package price. Then the hoster has to ask his client to upgrade to a bigger plan or to leave the server.

How does one mitigate the effect of a market for lemons? The best way is to make the client aware that there is a limit to the number of processes executed on the server per second for every account, and especially, for every hosting provider. This variable should be used to go by when choosing a hosting provider, as it makes your site perform with a different degree of effectiveness. So, looking for powerful hosting, don’t think that disc space is the most important feature.