I've seen hosts that offer like 100GB of traffic for ridiculously low prices. I can understand how you could price things that way if you were using Cogent. But, where else can you get connectivity that you can sell for such low pricing?

thank you,
Sean

Hy,

i don't know the english word for this method of calculating. But you calculate that with the monthly fee of the user you can buy 10 Gig's of Traffic.

Then you calculate that only 5% of the Users use the full 100Gig's, another 20% use 10 Gig's and all others are using less than 10 Gig's. But all pay for the (imagine) 100 Gig's.

So for 5% of the users you have to pay more than they pay you. 20% of the users pay what you have to pay. And the other 75% refinance the big traffic users.

You can call it a Mix-Calculation, but i don't know if it is the correct english word.

Greetings
Oliver

The magic word is "Overselling". LOL

You pay less you get less features.

CJCS,

How accurate is your formula for breaking down actual bandwidth usage?
Is there anywhere I can actually lookup this kind of information in aggregate for large numbers of hosts?

thank you!

omen,

no sorry this is just an example. I think it differs from hoster to hoster because every hoster has another customer base. The standard (german) home user wants much traffic, much space but does not need this (they don't know this and when you say this to them they say they need it), on the other side a company looks more onto what they really need.

I think the only way to get a formula (if one exists) you have to take a look at your customers and make your own mathematics based on your informations.

Greetings
Oliver

Originally posted by omenoracle
I've seen hosts that offer like 100GB of traffic for ridiculously low prices. I can understand how you could price things that way if you were using Cogent. But, where else can you get connectivity that you can sell for such low pricing?

thank you,
Sean

As others said, overselling. They buy bandwidth (that's oversold to begin with) and just oversell it again. It's almost an endless loop of overselling.

For an example, a dedicated server company 4 hours from me offers 1 Mbps of Big Pipe bandwidth for $99/month (with the server). Well, big pipe charges $1500/month per 1 (or was it 1.5) Mbps, how can they (the dedicated server company) offer it?? Oversell. Will you get the bandwidth you bought, for now maybe. In a year, I donno.

Does anyone know if its possible to compete without overselling, or without overselling at such a high rate?

buy bandwidth and high speed lines in bulk. I mean BULK!

The more b/width you buy - the cheaper it gets.

Where does it bottom out as far as cost is concerned?
If I want to pay $0.40 per kbs how much am I going to have to buy? 50/75/100Mbits? A Gigabit?

How much do I have to buy so that it becomes free and the sky opens and I ascend to web hosters heaven?

How much do bandwidth costs fluctuate over time?

you should easily be able to find colocation bandwidth for 0.40 / kbps.

its just a rumor that u cant get cheap bandwidth without using cogent.

As said above, its all about bulk. You can get verio banwidth for way under $1/gb aswell.

Verio bandwidth for under a dollar,, what kind of bulk buying would you have to do for that though??

What is the cheapest(barring cogent) that you've ever bought bandwidth for?

It looks like over selling but it isn't.

All the major telco's do it for the long distance links. People use different amounts of traffic at different times.

I think you can use a normal (gaussian) distribution. Look up statistics on the web.

The trick is to manage the capacity utilisation so that the capacity you have is sufficient to handle what user need when they need it. To do this you really need to have graphs of traffic versus time. Once you can predict when the peak capacity periods are you can buy extra bandwidth just for that period.

EG: If a carrier has say some customers in Australia, Some in the US and Some in the UK who do business only during business hours the same capcity can be sold three times for different time zones.

Easier to find a carrier that will allow you to pay only for data that you use - and let them sort out the calculations - They will buy extra bandwith themselves when needed.

A cool marketing trick would be to sell users peak say 10 gig per month - and offer them a refund (of sorts) for unused bandwidth Give them a bandwidth account - rollover unused capcaity to the next month and if at the end of a year they have not used it all up - give them a discount of their next years service, and zero the account. (which will encourage them to stick with you)

go west. the entire west coast has killer prices on bandwidth. Most of them don't charge per GB anymore. it's simple pay a flat fee for a 100/mb connection and for rackspace.

People often think that to have cheep deals on bandwidth you have to have cheepier service. Truth is pricing is often just more agressive in places with more providers to choose from. Some of the best companies in the world to by bandwidth from are also damn near the cheepest. Except cogent, they suck, and will always suck.

We buy bandwidth in bulk, because we started primarily as a backbone provider. For this reason our bandwidth pricing is very inexpensive (I think!) We started reselling Cogent, then added other carriers as we outgrew the 100 mbps Cogent circuit. We are now to the point where we are purchasing so much bandwidth that it makes financial sense to buy bandwidth elsewhere. In fact, that's exactly our plan... we expect to discontinue our Cogent service in about 30 days, yet retain the same pricing that we always have.

Grant