A $5 reseller hosting account is merely a budget shared hosting account with reseller hosting features. If we consider that scaling down is not linear, and comes with an overhead, he's getting a pretty decent deal, assuming the quality is there.At 5$ you could have gotten much better specs.
Many thanks for the information. Oversell is bad thing to do, imo.Are you going to sell web hosting? If so, you'll want to make sure that your pricing will allow you to expand your services. Some providers choose to sell hosting plans for dirt cheap prices, and they end up failing because they cannot pay their bills.
The best advice I can give you is to not oversell. It can end up in a big mess and really isn't worth the hassle.