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Originally Posted by Lenny2
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.
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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....