How Does 95th Percentile Billing Work?

How Does 95th Percentile Billing Work?
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Many web businesses are hosted through a datacenter, and there are many pricing plans depending on your bandwidth needs. If your site is heavily text based without a lot of images and steady traffic, then a flat rate might be best for you . If you are like most web businesses, then you need dynamic bandwidth that can handle spikes, but don’t want to overpay for unused traffic. Much like cell phone plans, you don’t want to overpay for minutes you’re not using but don’t want to guess too short and have to pay overage charges. A 95th percentile pricing schedule can dynamically bill you based on your bandwidth needs, but is a little complicated to follow.

I discovered the pitfalls of this pricing schedule last month when I posted commercials from SuperBowl 40. Since the OCModShop server has 100Mbit port to the internet, I figured that I could use up to 95% of that and be within my billable limit. I severely misunderstood how this pricing schedule works, as probably do most datacenter customers.

95th Percentile is a method of measuring bandwidth that bases your bill on peak utilization. Your bandwidth is measured from the switch or router and recorded in a log file. At the end of the month, your usage statistics are sorted, and the top 5% (approximately 36 hours of a 30-day billing cycle) of data is thrown away, and that next measurement becomes your ‘billable utilization’ for the month. Usually only a few services are billed using 95th percentile pricing: Dedicated T1 and Colocated servers. DSL and Wireless customers are usually billed on the total bandwidth used over the entire billing period.

Some will argue that the 95th percentile billing method favors the datacenter, others will counter that it benefits the customer. It is true that there is potential for paying for bandwidth you didn’t use, but it also allows you to dip into peak bandwidth when you need it. Based on the 95th percentile model, the top 36 hours (top 5% of 720 hours) of peak traffic aren’t considered when billing for an entire month. If your website was slashdotted for an entire weekend (48 hours) then you would be billed based on a higher rate just because of the one weekend. A good datacenter will allow you to upgrade or change your plan if you notice these type of peak patterns.

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