Today, when looking for dedicated server offers I have noticed that some providers offer a 1000GB bandwidth server let's say $79 for a month, but when you select 1500GB as an option, you add an extra $150 to the cart.

What is the logic behind that? It is like saying: "

Buy one donut for $1, but if you want to bite a little from the second, that's $5"

They've got to make their money somehow!

Andrew

Because those prices are oversold. Adding 500GB for $150 is a more reasonable price.

1,000GB for $79 (Without Hardware Costs) amounts to eight cents/GB.

500GB for $150 (Without Hardware Costs) amounts to .30/GB.

You would be better off buying 2-3 servers :)

From the perspective of the hosting company, if you are looking to add on to 1000 GB deal, then you will most likely use over 1000 GB of bandwidth. These types of $79/month deals are offered with the expectation that most who sign up for them will not use the majority of their available bandwidth. So they can afford to offer this type of bandwidth when most won't use it, but when someone does, they need to recoop their costs with the overage and add-on pricing. 1000 Gb for $79/month is a good deal. Maybe you should just get 2 servers if that solution will work for you.

Originally posted by lucky_s
What is the logic behind that? It is like saying: "

Buy one donut for $1, but if you want to bite a little from the second, that's $5"

Nope... it's more like saying:

You can eat up to 10 donuts for $3. Extra donuts are $1 each.

When you sell 'up to 10', you're working with averages. Most consummers won't eat all 10 donuts available, so you make a profit on average and have a nice number to advertize.

When a guy buy his 11th donut, that's because he already ate the 10 donuts in the main package, and you must find a way to compensate the loss you had in the first 10 donuts block...

So, it does make sense.

Humm... got hungry :D

That is a great explanation "rsferreira". I couldn't have explained it any more deliciously than that!

Actually, by definition, he didn't eat those initial donuts. But if he eats them and asks for more, he will have to really pay for them.

BTW, what is the real price of 1 Mbps? I've seen prices from $24.95 to 449.95...

Originally posted by Imago
Actually, by definition, he didn't eat those initial donuts. But if he eats them and asks for more, he will have to really pay for them.

BTW, what is the real price of 1 Mbps? I've seen prices from $24.95 to 449.95...

Well, by definition, if he has a ticket for 10, and pre order 2 more, there's a strong presumption that he WILL eat the first 10. Or, at least, that he’ll get so close of the 10 that he prefers to pay the extra 2 “just in case” to don’t take the risk of having to buy it later paying more.

Regarding the real price for 1mbps it really depends on the provider and link. For example, 1mbps over a 10mbps with cogent has a price. 1mbps over a Gig connection will be surely cheaper, and the guy selling for US$24.95 will be doing money.

Just for a notion on how price drops in quantity, check GNAX prices for conectivity:

http://tranxactglobal.com/colocation.php

[mods: if the link above is not allowed, fell free to edit it.]

Bottom of the barrell in terms of bandwidth would be BTN & HE.net at $25/Mbps on certain commits. If your provider has at least a 100Mbps commit, maximum cost per megabit that they're paying (not that you pay) should be around... $80/Mbps. I'm not sure what Internap bandwidth is running these days, though.

- Matt

What is the BTN network like?