Well, I did a little research last night to explorer solutions for better profiting the business i am running.

I did a few calculations on bandwidth only.
Here's what I found...

Calculations Methods Used
1mbps = 320GB (Roughly)

ThePlanet:
Dedicated servers at $99/month for 300GB of AT&T, UUNet, and Qwest. Those go for about $150/mbps combined, meaning, there has to be a lot of overselling to be able to make a profit.

$99/month for 300GB Transfer
AT&T, UUNet, Qwest = $150/mbps
(300GB / 320GB) * $150 = $140.63
Balance: -$41.63

Unitedcolo:
Example of Major Overselling.

$99/month for 1,000GB Transfer
Williams / Verio = $200/mbps.
(1000GB / 320GB) * $200 = $625.00
Balance: - $526.00

FDCServers:
$99/month for 1280GB Transfer (4mbps = (320GB x 4))
Yipes = $50/mbps.
(1280GB / 320GB) * $50 = $200.00
Balance: - $101.00

DedicatedNow:
$99.95/month for 500GB Transfer
NAC = $100/mbps.
(500GB / 320GB) * $100 = $156.25
Balance: - $56.30

FastServers.net:
$150/month for 300GB Transfer
HE.net = $100/mbps.
(300GB / 320GB) * $100 = $93.75
Balance: $56.25

Certain factors i should provide are...
- Bandwidth costs are not 100% accurate.
- Providers may be purchasing bandwidth in much higher quantities than 100mbps, altering the price per mbps.

From those simple calculations, it seems like FastServers is the only company on the 5 server providers i have chosen that do not oversell, or at least it does not seem like they do.
The main reason is because they resell for HE.net, another might be because their business practices are different.

EDIT: Thanks for the heads up Sprynex. Changed DedicatedNow HE to NAC.

FYI dedicated now isn't HE, they are on NAC.

you need to add in your otehr costs on that too - overhead - facility and the hardware depreciation.

everyone is overselling - it is based on averages. I think the more important question is - how much backbone do you have coming in and how much is your current utilization on it and can you handle growth in the next 90 days on networkand power and how are you handle a dos.

this is most important vs overselling on average dedicateds usage. of course always IMHO.

ThePlanet:
AT&T --> $100/mbps
UUnet --> $200/mbps
Qwest --> $100/mbps

Unitedcolo:
Williams --> $40/mbps (maybe lower)
Verio = $75/mbps.

FDCServers:
Yipes = $25/mbps.

DedicatedNow:
DCJN = $75/mbps.

FastServers.net:
HE.net = $50/mbps.



That is an estimate based upon their commitments I believe they have. Obviously can't be 100% sure but use your calculations now.

Yes. People seriously oversell to the point that makes me wonder how they stay in business. Overselling seems like a way to quickly make your business more profitable, but as sailor pointed out, there are a lot of variables for managing and maintaining good quality of service.

Originally posted by Revnet
[B]Well, I did a little research last night to explorer solutions for better profiting the business i am running.

I did a few calculations on bandwidth only.
Here's what I found...

Calculations Methods Used
1mbps = 320GB (Roughly)

I don't really understand how people are coming up with these calculations when providing burstable bandwidth with a dedicated server. For example we have a customer that does 4 megs of burstable bandwidth, however only uses 200 gigs of transfer. Or another customer does almost 2 megs but only uses 160 gigs of transfer. Both examples used above are based on 95th percentile burstable bandwidth. I don't think you can put an exact number of how many gigs are used per meg. The majority of companies that purchase bandwidth directlly through the backbone provider, pays per meg based on 95th percentile. So my question is how can people come up with 320 gigs per meg. Is this based on capping the server at one meg? If the bandwidth is burstable I don't think a flat rate 320 gigs per meg could apply, or am I missing something here?

Originally posted by Binx
I don't really understand how people are coming up with these calculations when providing burstable bandwidth with a dedicated server. For example we have a customer that does 4 megs of burstable bandwidth, however only uses 200 gigs of transfer. Or another customer does almost 2 megs but only uses 160 gigs of transfer. Both examples used above are based on 95th percentile burstable bandwidth. I don't think you can put an exact number of how many gigs are used per meg. The majority of companies that purchase bandwidth directlly through the backbone provider, pays per meg based on 95th percentile. So my question is how can people come up with 320 gigs per meg. Is this based on capping the server at one meg? If the bandwidth is burstable I don't think a flat rate 320 gigs per meg could apply, or am I missing something here?

It's 320GB transfered over a period of a month.
If you were constantly uploading at 1mbps, than you will end up transfering 320GB over a period of a month.
Even if it's burstable, you can still determine how much bandwidth was used.

What providers do is, they determine the bandwidth throughput every however many seconds, than they chop off the top 5% of the greatest throughput in that given month, and than they average the throughput.

say your average throughput after the top 5% are chopped off is 94.8kb/s or 0.948mbps. As you can see, it's less than the 1mbps you were allocated and therefore, you are not charged for overage. if however, the amount was 1.019mbps, you are charged for the extra 0.019mbps which is equal to... about 5GB.

People oversell, because of :

1. Competition, if they have 99/400 GB server you have to have it too

2. Unreasonable customers that want everything for nothing

and it's working quite good.

Originally posted by Revnet
It's 320GB transfered over a period of a month.
If you were constantly uploading at 1mbps, than you will end up transfering 320GB over a period of a month.
Even if it's burstable, you can still determine how much bandwidth was used.

What providers do is, they determine the bandwidth throughput every however many seconds, than they chop off the top 5% of the greatest throughput in that given month, and than they average the throughput.

I am not disputing the one meg capped rule. I know you can get approximately 300 - 320 gigs per meg. What I am saying, on a burstable 10/100 meg line that theory doesn't always hold true. Like the example I used in my ealier post. We have a customer that does 4 megs of bandwidth based on 95th percentile but only uses 200 gigs of transfer, which he only pays for the 200 gigs of transfer, however we paid for the 4 megs of bandwidth. See what I am saying. The answer I am trying to find is do most of these $99 dedicated server deals cap the one meg?

Originally posted by Binx
I am not disputing the one meg capped rule. I know you can get approximately 300 - 320 gigs per meg. What I am saying, on a burstable 10/100 meg line that theory doesn't always hold true. Like the example I used in my ealier post. We have a customer that does 4 megs of bandwidth based on 95th percentile but only uses 200 gigs of transfer, which he only pays for the 200 gigs of transfer, however we paid for the 4 megs of bandwidth. See what I am saying. The answer I am trying to find is do most of these $99 dedicated server deals cap the one meg?

Not likely, alot probably dont even have the correct switches to cap the ports.

Of course they do, and look around this forum, you'll see who it's bite on the a.. causing overloaded network and saturations.

First things first, Verio and Williams are cheap, nowhere near $200/Mbps. Tazzy has his numbers very much in line.

Second, yes, bursting users can produce very screwed up bandwidth-versus-transfer scenarios. It is very possible that a 95th-%ile of 4 Mbps can equal 200 GB of transfer, but you should keep in mind that you're not actually going to pay for that 4 Mbps to your upstream(s). Your other customers are going to even out the bursts, and eventually you'll get a hill-and-dale type of overall bandwidth graph.

This is where the concept of overselling starts to look really tasty. If you've got 4 folks bursting to 95th-%iles of 4 Mbps, you're not going to pay for 16 Mbps. It'll work itself out, and you'll probably pay for 4 Mbps, maybe more, maybe less.

The more customers you have, the more likely it'll all get smoothed out, with relatively incremental increase in your aggregate bandwidth usage.

we all oversell :) ....

Originally posted by tilted
First things first, Verio and Williams are cheap, nowhere near $200/Mbps. Tazzy has his numbers very much in line.

These numbers were taken based on 100mbps usage.
If these providers use more than that, than my prices do not apply.

Those are the numbers i have been quoted by sales reps from each network provider.

We don't oversubscribe bandwidth at all. In fact our links are kept at a level of usage so they are at a point where if one or even two of the links fail the rest still have the capacity to take the rest of the traffic without degrading performance. This is why we don't compete in the 'cheaper' market. I'm not sure if anyone really cares, but I thought I would post something just because, well, I haven't posted in a looonngg time :>

Well many of these facility are offering COLO and if you look at there colo pricing they compare closer to the actual price range per mbit from the providers.

I would think not everyone that commits to a 1mbit in colo is going to use it between now and say another 3 months till they get there other servers racked up etc.

So they are paying for bandwidth thjey are not using hence each provider can use these averages to sell there server bandwidth cheaper.

Regards
Phillip

I have to agree with FOONET on this one... "we all oversell" isn't true at all.

We have 1:1 contention for ALL our dedicated/colo customers and wouldn't have it any other way. We calculate the "worst case" senario and work out our pricing that way.

It means we don't really compete at the lower end of the market, but the flipside is that we have a solid business model and we're not going to suddenly fall over if all our clients decide to use their full bandwidth entitlement each month...

I second this... not everyone oversells. You have to think about a couple of things:

1) Transfer costs are cheaper for the provider and when they quote $x/Gb or $y/Mbit they are making a profit on that. With dedicated servers the margins are made elsewhere so you can include bandwidth at cost price.

2) Tier-1 providers don't really have a cost for bandwidth. Once they've built the infrastructure they only need to recoup their initial investment costs and after that's done bandwidth doesn't really cost much to provide. Maintenance costs are nothing compared to initial development costs.

Specifically, we as a company don't oversell on our dedicated servers and network usage never exceeds 60% of the network capacity.

I think the poster's point here was, if everyone used all the capacity allotted to them, that providers would be losing money. So they have to be overselling to make a profit.

Just because your network is at xx% of capacity doesn't mean you're not overselling. It means youre playing the stats (like you have to, imo) like everyone else.

Originally posted by Revnet
DedicatedNow:
$99.95/month for 500GB Transfer
NAC = $100/mbps.
(500GB / 320GB) * $100 = $156.25
Balance: - $56.30

Is this $100/mbps cost for DCJN bandwidth?

Most of those bandwidth prices are WAAAAYYY off IMHO, but the reality is about the same, the idea/layout is hitting the nail on the head, not to mention all the overheads (server costs, space, local loop, setup fee's [of the equipment space, security deposits, link setup], routers, switches, racks, apc's, techs, etc.).