A seldom reviewed aspect of running a website hosting business is the process of carefully monitoring and reacting to how users absorb hosting resources such as bandwidth and disk space. Having worked for or within many dozens of hosting firms, I can definitively say that every single hosting company faces a challenge in this regard. So why does this factor so much into a website hosting company’s success?

Consider this article which recently appeared in the Los Angeles Times. It points out how the telecom giant AT and T is limiting bandwidth use by subscribers of its Internet connectivity service. The piece goes on to mention a staggering statistic: half of AT and T’s bandwidth is used up by just 5 percent of its users. The usage is generally related to downloads, and clearly those users who are downloading the largest files (usually movies) are soaking up the majority of the bandwidth. The company’s solution is to create a usage-based model that charges customers based on the amount of bandwidth they consume each month.

As applied to a website hosting business model (most relevant for shared website hosting), preventing abuse of resources equates to increased profitability. The principal is easily generalized beyond bandwidth to any service that consumes corporate resources. Here are a few examples.

Technical Support - Monitoring the number of calls per month and the tech support minutes required for resolution may identify certain customers that are perpetually relying on your web hosting staff to do tasks that should be the responsibility of the customer (like setting up new email boxes). Charging these customers for support over a certain threshold can serve to reduce the reliance on tech support - or to make the time spent helping them profitable.

Disk Space - In a shared hosting environment, the number of accounts that can be housed comfortably per server is a key metric of profitability. Carefully measuring exactly how much disk space each customer uses (and whether this usage is steady state or if there are dramatic spikes in usage) can lead to more customers per server. Consider charging customers above a disk space threshold extra fees for the privilege.

Bandwidth - The same logic as outlined above applies as well to bandwidth usage. Monitoring carefully can identify users who are in effect ‘under-paying’ for the amount of resources that they consume. So exactly how much bandwidth is required for typical activities? According to the L.A. Times article on AT and T bandwidth usage, ”Downloading a full-length standard movie requires about 2 gigabytes. A 5-gigabyte cap limits customers to watching 500 minutes of YouTube videos per month or downloading 1,000 songs from iTunes, but once you do either of those things, you won’t have enough bandwidth remaining to read your email.”

Daniel Foster, founder of website hosting company 34sp.com comments on the issue of website hosting and bandwidth abusers, ”Web servers can be used to throttle bandwidth, only allowing a restricted traffic flow from individual websites. This can be used as a very effective measure against specific problem domains. We also always work with our customers - if we see a problem with a particular site, we’ll contact the site’s owner to see if they’re aware of the excessive traffic they’re generating. If it’s due to a hacked script or similar problem then we can fix that for them. As we have never offered unlimited resources with accounts, we don’t find a big problem with it. Customers know that if they use a huge amount of traffic, they’re going to receive a bill for it at the end of the month.”

One other approach is to simply go to unmetered. Last week HostGator announced that it would upgrade its shared plans to offer unlimited disk space and bandwidth. According to information released by the company, ”With this change, there will be no space and bandwidth restrictions on any shared hosting plans from HostGator. The differentiation between the company’s three shared hosting plans will lie in the extra features offered with each plan. “I’m thrilled to see that the disk space and bandwidth arms race is finally coming to an end,” said Brent Oxley, HostGator’s CEO and founder. “We can now focus on what we do best, which is provide a reliable and affordable service with unbeatable customer service.”

Great approach - if you can afford it.

This content was written by Derek Vaughan exclusively for WebHostBlog.com.