Bulk reselling

Many large web hosting companies like Site5 and Hostgator offer bulk reselling programs.  The reseller purchases hosting in bulk and and then subdivides the disk space and bandwidth into smaller sections for use by individual customers.

The reseller has to pay a large amount upfront and his profits depend to a large extent on the number of customer he is able to get. If he gets only a few customers, he may not be able to recover costs. One option is that some of the space can be used for hosting his or her own websites and the rest of the space can be resold.  If the customers use less hosting resources (CPU, Hard disk space, Bandwidth), overselling is possible.