Overselling

Overselling, overbooking or 'load-factor' is sale of a volatile good or service in excess of actual supply. Overselling is a common practice in the travel and lodging industry, in which it is expected that some people will cancel. In telecommunications, sometimes the term 'load-factor' and oversubscription are preferred. The practice occurs as an intentional business strategy where sellers expect that some buyers will not consume all of the resources they are entitled to, or that some buyers will cancel. The practice of overselling ensures that 100% of available supply will be used resulting in the maximum return on investment. However, if most customers do wish to purchase or use the sold commodity, it may leave some customers lacking a service they expected to receive.

Overbooking is regulated (though rarely prohibited) in many countries and industries, and companies that do practice it are often required or forced by market competition to offer large amounts of compensation to customers as an incentive for them to not take up their purchase. An alternative to overbooking is discouraging consumers from buying services they do not actually intend to use. This can be done by making reservations non-refundable, a common practice among low-cost carriers and railways, or requiring customers wishing to cancel their right to a service to pay a termination fee.

A telephone company can experience problems when large numbers of callers attempt to use the system at the same time. This generally only happens in exceptional circumstances such as a disaster or national emergency, but can result in some calls not going through at all. The United States has the Government Emergency Telecommunications Service and Nationwide Wireless Priority Service, and the United Kingdom(UK) has the Government Telephone Preference Scheme and ACCOLC to allow official calls to go through reliably in emergencies.

Building for typical rather than peak demand is considerably less expensive.

ISPs regularly sell more bandwidth or connectivity than they have. When Internet bandwidth becomes overused, all customers' service tends to be degraded without necessarily failing completely.

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