Pricing model for transit services

Mon Sep 23 22:17:29 UTC 2002

On Mon, Sep 23, 2002 at 05:28:15PM -0400, Joe Abley wrote:
> 
> I think the problem is not that there are multiple definitions of
> how to calculate the 95th percentile of a sample population, but
> that different peoples' sample populations are constructed in
> different ways.
> 
> I have seen billing based on:
> 
>   max(95th(to_cust), 95th(from_cust))
>   95th(max(to_cust, from_cust))
>   95th(to_cust + from_cust)
>   95th(to_cust)

There are really two things we're talking about, the mathmatical function 
for "95th percentile", which is quite simply take the highest sample after 
removing the top 5% of samples, and the "95th percentile billing system", 
which can only be defined as max(95th(to), 95th(from)).

Anything else is a varient which may or may not be useful as a billing
metric, but it is NOT "the 95th percentile billing system", it is "a
billing system which happens to use the 95th percentile function".

> I would be interested to find out how many customers of services
> billed by "95th percentile" do their own measurements and compare
> them with the bill. I suspect the number is not large.

I suspect most customers don't even fully understand 95th percentile. I
still see many people thinking its the average after the 5% is removed,
infact if you're a good you can convince sales people at "some major ISPs"
to write it that way in the contract.

> Maybe that's why most providers don't find it necessary to spell
> out exactly what calculations they are doing in order to arrive at
> a monthly figure with a dollar sign in front of it.

The stories I've heard from the few people who do their own measurements
for billing confirmation usually involve some significant over (or
sometimes under) billing. As they put it, "We get a bill for 750Mbit, we
send them the money for the 670Mbit we actually used, and they're happy."

-- 
Richard A Steenbergen <ras at e-gerbil.net>       http://www.e-gerbil.net/ras
PGP Key ID: 0x138EA177  (67 29 D7 BC E8 18 3E DA  B2 46 B3 D8 14 36 FE B6)