I need 10Mbps dedicated. Can anyone REPUTABLE beat $399?

Of course not....but you also said that you could get Level3 for $15 a meg with a big enough commitment.
So let's do the math.

On a 10meg capped line the customer will be able to use max 7 megs. Any more and their site will be too slow during peak times and they'll have to upgrade to another package with a bigger port.
So if they use 7megs (at 95th percentile) and they're paying you $399 then you're getting $57 a meg on bandwidth that you paid $15 for.
That's more than triple your cost....hell its almost quadruple.

As for hardware costs...well if this was your only customer then you'd have major problems....but if you have 100 guys with boxes like this (10 megs capped @$399) then you're taking in 40K a month for one gige commitment which according to your $15 figure before costs you 15K.
That's 35K a month over and above your bandwidth cost to maintain your hardware and pay your techs etc etc.

Doesn't seem too unreasonable to me....unless you only have 5 customers.

EXCELLENT
Excatly what I wanted to say but didnt have the time to

just like any other business, it's all about volume

webair is a fuckjob host?

Not possible, even if you commit to 2-3 gull gigs from one provider (not a smart idea) you will not get traffic cheaper then $15 a Meg. Now even though i did not take math in close to 10 years I still believe I can count. $15 per Meg X 100 Megs = $1,500
Plus lets say you have a server in stock and it?s paid for and you are willing not to charge for it (why wouldn't you?). You still have a fully managed option, and if you are truly managing the server you need to pay salary. And then like someone just said you have all these hidden costs if you truly are a hosting company, like power and space and salaries, etc.

So here is how you can sell it for this price:
- Cap your 100 Mbps client to about 50 Mbps
- Make sure to throw them on Cogent or HE line but allow them one shared IP from a different provider on the upstream side where it will point to Level3 or something like that
- Use one of your old workstations as a server

Once again when something seems too good to be true it usually is. But here is the kicker if you don?t care that you are being scammed what do you care?

First of all any client that is capped to 10 Begs will not have any problems untill about 9 or so.
Second you are forgetting the cost of Hardware and Managed that was included in that same $399

You're assuming that someones traffic graph will be a straight line across...it doesn't work that way.
If you average 5 you need a capacity of 10 in order to handle the spikes, or else your site will be slow/unreachable during peak times.
Which is why I say with 10megs capped you'll get about 7 out of it....if you're doing more than 7 you'll have to take the cap off the line to handle the traffic spikes and then that's a whole new hosting plan.

Also, I didn't forget about hardware and tech support costs....I said very plainly that on a gige commitment you would have 35K a month (scratch that....did the math wrong....its 25K)over and above your bandwidth cost to pay for hardware, techs salaries, and profit.
Plus in the math I did for the gige commitment I didn't even mention that the people buying 10 will only do 7....I simply dividied the gig line into 10MB increments for 100 customers paying $400 each.
Since each will only be using around 7 (some will only use 2 or 3) you can probably sell this package to more than 100 people without increasing your bandwidth commitment with the provider and still have a stable healthy network.

:2cents:

Yes but here is the point
if you cap someone to 10 Megs and sell that same 10 Megs to someone else banking on the fact that no one will use all that traffic you can sell for that price. But what happens if they do use all that traffic, do you really want your galaries getting 404s or slow as my grandmas fiero?

Your calculation doesn't work this way. With only a level3 contract/commitment you can't run a company. So you need several carriers to offer redundancy. This means several commitments. That way your total costs on bandwidth is probably higher than $15 per mbit. Furthermore you need good equipment for BGP routing. You can buy a good refurnished M40 on Ebay for around $19.000. You probably need at least two of them if you want to offer redundancy. Than you need to hire a cage in a good datacentre. I'm not sure what we pay now but it will cost around $200 per footprint per month. Now we have to buy a cabinet (Good Rittal will cost around $800). One cabinet per footprint. Oh btw, lets don't forget the managed switched we need a LOT of them. They will cost probably around $350 per piece. Did I mention the loadbalancers?? Only $5000 per piece for acceptible ones.
Need I have to mention the spare parts for all the equipment you need to have?? Oh and I forgot the annual $5000 for Ripe. You need it for the ip's.

Ok we bought it all, hired engineers and now we start selling $2.95 hosting accounts.

I probably forgot a lot but feel free to add....

I didn't say to double sell the network....that would be ridiculous.

I was pointing out that you could sell a "little" more than you have....maybe 20% or so.....of course this means you need to keep an eye on things but you should do that anyways.

Also, for the people in here boo-hooing about their hardware costs....I don't give a fuck.
You don't have overhead that anyone else in the business doesn't have.

Its the same shit when I buy a car and the salesman starts saying they can't sell the car for this much because they have this overhead and that overhead.....I'm the customer, I don't give a fuck, I just want the best deal.

That being said....to some degree you do get what you pay for, which is why you should do thorough research on a company before sending them money....check out their network, talk to their existing and former customers etc etc.
But I'm not going to pay more money for the same service if I don't have to.

Dont forget that for EVERY gigabit youre pushing you need to get ANOTHER $20-$30K (THOUSAND) PIC for your router.

Oh, and also do you guys know that a router takes up lik 1-2 racks of space, so calculate that into cost too

we don't cap at 50Mbps
primary provider is Verio
lol, we don't use old workstations as servers

I think its fun having datacenter discussions here on gfy

This is a funny thread..

All I can say, is the $399 for 10meg price point 2 years ago, was a huge gamble. Today, it's definitely profitable IF you have a decent sized customer base.

Ask any of our customers with this plan if they can or cannot push 10meg.. They can, and we even allow uncapped usage on these, overage based on 95th percentile.

I think some people simply do not realize the scale that many hosts are at these days. Also keep in mind not all traffic goes out transit links, if you're anywhere near competent. I can't divulge our peer:transit ratios, but I think a lot of the much smaller hosts would be amazed at how much traffic you can peer off settlement free once you get to a certain point (without sacrificing performance, most of the time it's actually an improvement).

Really it comes down to hardware pricing, datacenter (space/power/cooling), and people costs. The bandwidth costs are somewhere around 10-20% of a 10mbit sale. Sure, the profit isn't amazing for each machine, but aggregated into 50+ the numbers really start to make a lot of sense.

I can't speak for other hosts, but we don't "oversell". We carefully manage growth so that no trunk ports are ever contesting for bandwidth. We also maintain more than double our *bandwidth commitments* (not actual usage, which is of course less) in internet facing transit capacity. We could have every person burst to 5 times their commit on a given aggregation switch, and we'd still have plenty of headroom. This plan allows us to grow WITH our customers, instead of disrupting their business to play musical ethernet ports.


Plus, when you get to a certain size, and have enough technical ability large carriers will cut "special deals", which I also won't get into. However, you need to have an actual engineering staff who knows wtf their doing and has a good network of colleagues at other companies for these deals to even present themselves to you. The game definitely gets interesting at a certain level.

Again, bandwidth on a 10mbit plan is a very small part of the overall cost matrix. People by far is the largest, and equipment/maintenance of said equipment is the second largest. Equipment costs can be somewhat defrayed if you buy in enough volume (say, commit to delivery of 200 servers/mo) from a large manuf. like Dell or HP and have the credit to get a major lease signed. I know hosts (not us, we don't push enough volume, since this isn't our business focus) who can lease dual xeons for less than $43/mo each...

Still think the model is unworkable? I used to say the same thing, when we were much smaller. However, as you gain experience and knowledge of how things work, the numbers definitely start to make sense.

I'm not saying we're the greatest ever, but we work hard at it, and are improving every day. The most least profitable plans for us are the tiny little commit folks (1-2mbit), since there is almost zero margin in them as bandwidth pricing scales much better than hardware/staffing..

Just some food for thought.

-Phil