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jcremin

join:2009-12-22
Siren, WI
kudos:2

Wholesale price per meg vs retail price

I'm in the process of working with my upstream provider to increase the amount of bandwidth I am able to get from them and in the process will be lowering my cost per meg. I was just curious how much everyone else is paying for their bandwidth, and what plans and prices do you turn around and sell it for. I would like to re-work my plans to be a bit more competitive, but I also don't want to undercharge and create any issues for myself. Also, if you happen to know your contention ratio (total megs sold vs how many you are actually purchasing) and your peak consumption, that would help me out too.



Inssomniak
The Glitch
Premium
join:2005-04-06
Cayuga, ON
kudos:2

Im running a 10:1 ratio right now.

I think though you are gonna find it wildly varies on BW pricing depending on where you are?
--
OptionsDSL Wireless Internet
»www.optionsdsl.ca


Chele

join:2003-07-23
kudos:1
reply to jcremin

What people pay and/or charge is irrelevant:(, as that doesn't do anything for you. But to give you an idea, I have a friend that is paying $4.50(yes, four and a half dollars) per meg and sells it for as much as $180 to another WISP. Other customers pay as little as $65 to as much as $125/meg---how do like them potatoes:) That same friend was quoted $900 per T1 just 90 miles away!


jcremin

join:2009-12-22
Siren, WI
kudos:2
reply to Inssomniak

said by Inssomniak:

Im running a 10:1 ratio right now.

That's pretty close to where I'm at too. Last I checked, I believe I was about 8:1 (12% of total sold bandwidth consumed during peak times).

jcremin

join:2009-12-22
Siren, WI
kudos:2
reply to Chele

said by Chele:

What people pay and/or charge is irrelevant:(, as that doesn't do anything for you.

I think either on their own is irrelevant, but the two together combined with the actual network usage helps show where people are able to successfully run their networks without running into troubles.

said by Chele:

But to give you an idea, I have a friend that is paying $4.50(yes, four and a half dollars) per meg and sells it for as much as $180 to another WISP.

The $4.50/meg sounds similar to what I could get from Cogent pricing on a gigabit line, but the cost of getting that bandwidth to me is about 10x what the actual bandwidth costs.

I just realized that I didn't include my own information in my first post. I currently purchase 30 megs from another WISP for $1500 ($50/meg) and offer 768k for $40/mo, 1 meg for $60/mo, and 1.5 megs for $80 mo.

I will soon be upgrading to 50 megs for $2000/mo ($40/meg) and plan on increasing my speeds somewhat due to my lower costs. For now, I'm not looking at a huge leap. I'm debating between 1 meg @ $40, 1.5 megs @ $60, and 2 megs @ $80, or possibly 1 meg @$40, 2 megs @ $60, and 3 megs @ $80.


treichhart

join:2006-12-12
reply to jcremin

Joe I got priced for 100meg fiber from cogent off-net was like 1500-1600 here in Rural NW Ohio.

Then from TWC it was like 3570 for 3 year with 13 ip's then 2950 for 5 year for 100meg fiber.


jcremin

join:2009-12-22
Siren, WI
kudos:2

I should be a bit more specific. I'm not concerned with just what people can get bandwidth for. I'm specifically looking for the wholesale cost people pay compared to the retail prices they charge, along with actual network usage.



treichhart

join:2006-12-12
reply to jcremin

Well Joe I charge customers @ these speeds

1.5meg $25
2.5meg $35
4Meg $45
6meg $55
8meg $75

the reason why my prices are so low for 1.5-4meg because I got other WISP's around my area so I gotta compete with them.


petecarlson

join:2004-11-06
Baltimore, MD
reply to jcremin

For DIA, we do (BW costs+core costs) to get a rough cost of bandwidth delivered, and then add 25%. This comes out to ~$49 per meg + transit from the core to the customer. The bandwidth cost isn't really relevant after you get big enough.



viperm
Carpe Diem
Premium
join:2002-07-09
Winchester, CA

Pete what do you include in your core costs? Things such as CPE, AP's, tower rent, cost of install etc

Our cost on a a 100x100 meg fiber is $1480 tower rent $600

Those are my MRC.
--
»www.accelwireless.com
ComTrain Certified Tower Climber.
Wireless and IT consultant.
Proficient in Mikrotik


petecarlson

join:2004-11-06
Baltimore, MD

Core costs is just my core/distribution network. If I just had one tower and was buying bandwidth at the tower then it would be all the costs of running that tower. Equipment, lease, support, etc. Don't forget to add a % of admin costs to that. (office rent, etc).

I include APs and CPEs in transit costs but you can draw the line where you like. I know the capacity of my APs and for PMP customers, we break out a % of the AP cost into the transit cost. DIA is 1/1 and best effort is 10/1 so on a 40m 430, a 5/5 DIA circuit would include 25% of the APs cost and the CPEs cost. A devices monthly cost is roughly price/10 which assumes a three year equipment life cycle. first 10 months pay for the equipment, second 10 pay for the install, 3rd 10 is profit, and the last 6 pay for shit happens.

Doing things this way helps prevent magical thinking and makes it much easier to see where were making money and where throwing it into the wind. Sometimes we need to eat a little of the cost to make something work for a customer, but at least were making that decision knowing were eating into our profit.


j2sw

join:2006-05-02
Williamsport, IN
reply to jcremin

Location Location Location.

I know folks paying .30 cents a meg for the same bandwidth they are paying $4 a meg in other locations (transport not included).
--
»www.mtin.net/blog
»j2sw.mtin.net/blog



battleop

join:2005-09-28
00000

+1 on Location, Location, Location. In one place I am paying less than $10/mb to get it to our edge router and another I am paying over $300/mb to get it to that network's edge.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.


jcremin

join:2009-12-22
Siren, WI
kudos:2
reply to jcremin

I probably could have been a bit more specific in my initial question, but I'm NOT simply asking the "how much does bandwidth cost" question. I know it varies all over the board, and by itself isn't very helpful for running a WISP.

What I am specifically wondering is what everyone's wholesale cost for their bandwidth is compared to the retail cost they sell it for, along with the over subscription ratios they are safety running.

So far I have typically taken the approach of pricing my plans around what my actual cost per meg is, knowing that I'm probably only using 10 to 20% of the bandwidth I have sold, and chalking the difference up to covering the rest of the cost.

That approach helped ensure that I wouldn't actually lose money on the bandwidth side of things while I was just starting and my bandwidth bill was my single most expensive part of running the business. Things are changing and as the quantity of my bandwidth increases, my cost per meg is decreasing and the rest of the costs of running the business have now surpassed bandwidth as the primary cost of the service.

Moving forward, I'm working on doing some better calculations on what it really costs to provide the service. Obviously, bandwidth is still a portion of the cost, but if I price my plans based on the actual costs of bandwidth once a contention ratio is factored in, I think I can offer faster speeds and be more competitive, spreading my largest costs of the business out over a larger customer base and therefore reducing my cost per customer even more.

Basically, it's time for me to get serious about competing on more than just customer service. While some people rank that quite high, if my speeds are too low, many people will just pass me up and never give me a chance.

Hopefully that clarifies my question.