In the web hosting industry, the term is used to describe a situation in which a company provides hosting plans that are unsustainable if every one of its customers uses the full extent of services advertised. The term is usually referred to the web space and bandwidth transfer allowance. A hosting company may offer unlimited space and unlimited bandwidth, however, they put other restrictions in place such as CPU usage or inode limit. They may have onerous restrictions and one-sided contracts that lets them cancel the hosting of anybody that puts a strain on their system or fully uses their claimed allotments.

This practice usually incurs little ill-effect since most customers do not use any significant portion of their allocated share. If a customer has a small, low-traffic site serving static HTML pages, few resources will be used. If a customer wishes to run a high-traffic, professional, or business website an oversold hosting account can be detrimental. In these cases, a shared hosting provider that does not oversell, a virtual private server or dedicated server is a preferred option.

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