I have to agree to a point... Not all companies are like this. Don't get me wrong, I am a firm believer in the saying "you get what you pay for" and normally I would preach it to people. But, in my companies case, we are not like that... I started this company based on the fact that hosting was way too expencieve and the fact that I needed to cover my own costs for my servers which was running up into the hundreds of dollars.
I sat down and figured out exactly how many accounts I would have to sell at a set rate just to break even. Then I added a little to get ahead and make a little profit. I also included the cost of upgrades for when new servers or equipement is needed. There are many more things that are involved in creating prices like max # of accounts on the servers and exc...
Most companies, kiddie companies (I figure about ~75% are), don't think about resources, limits, upgrades, and most important of all, quality. I took all of this into concederation and created my own company.
Every day, I get at one or two messages asking how we could possibly make any profit with prices set this low. Some say that we must overload our servers. This is not true. Our servers will never be overloaded. Some say we oversell... Yes, we do, but what company doesn't? Not many. My guess, about 3% of hosting companies don't oversell. Some that do oversell, oversell sooo much that it puts them out of bussiness leaving customers on the street.
People say, "Why would anyone oversell their server? This will kill them in the long run." This is not so. 90% of customers will only use 10-20% of their alloted space and BW. Yes, there are some that will use all of their alloted space/BW. This is why you must take this into account too.
Concider this: You sell 10 accounts at 1000mb space and 30000mb BW.
All the account limits add up to about 10Gigs space and 300Gigs BW. Say, if 3 of 10 customers use all their alloted limits, thats 3 gigs space and 90gigs bw. Then you add the other 7 accounts that only use say 40% of their limits. Your total Actual usage of all accounts is only 5.8 of 10 Gigs Space and 174 of 300 Gigs BW. That's just over half of what you have alloted. This space may/will never get used. Is it ok to sell this space? Yes and No. If you can afford it to buy extra space/BW if the clients actually start using all their limits, then sure, sell away. If not, I don't think you should. You also need to concider that if you have 1000Gigs of BW per month to sell and you try to use it all, most processors cannot handle it. The sites responce will be very very slow and overloaded.
This is just my views on hosting services. You can take it for what it's worth. I suggest you research any company that you plan on renting from. As most companies that offer cheap prices are cheap quality too. They tend to come hand-in-hand.