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GLOSSARY 709Table 6Sample MSP Pricing (as of April 2003)One-Time (Setup) MonthlyService Qty Each Total Each TotalCabinet Rental (per cabinet) 2 1200 $ 2,400 $ 700 $ 1,400
Web Server SLA 4 1500 $ 6,000 $ 500 $ 2,000
Application Server SLA 2 2500 $ 5,000 $1,500 $ 3,000
Database Server SLA 1 5000 $ 5,000 $2,500 $ 2,500
Bandwidth (per Mbps) 5 $ - $ 750 $ 3,750
Monitoring (per server) 7 $ - $ 300 $ 2,100
Firewall Service (per public server) 4 1000 $ 4,000 $1,200 $ 4,800
Load Balancing (per public server) 4 1000 $ 4,000 $ 800 $ 3,200
Security Services (per server) 7 1500 $10,500 $ 350 $ 2,450
Tape Backup/Restore (per server) 7 750 $ 5,250 $ 50 $ 350
Tape Backup/Restore (per GB) 50 $ - $ 50 $ 2,500
Professional Services Retainer (per hour) 20 $ - $ 175 $ 3,500
Totals $42,150 $31,550hope to generate $10,000 or more per cabinet per month
in revenues. The chart in Table 6 includes a low end at
this price with a single-cabinet customer. A four-cabinet
customer paying $15,000 per cabinet will spend $60,000
per month.Pricing Models
Most MSPs use a model of flat-rate fees for individual
components. Many vendors continue to use T& M pric-
ing (often based on a retainer) for some aspect of their
services, but by and large they have shifted most of their
charges into component-based pricing.
Here are some of the components that are often priced
individually on a flat-fee basis:A monthly charge for each cabinet
A monthly charge for each physical server (varying
according to the software running on it) that covers
management of the operating system and supported
applications
A monthly charge for tape backup based on the number
of servers and the amount of data being backed up
Separate monthly charges for load-balancing and firewall
services if they are provided
Monthly rental fees for hardware and software provided
by the MSPTable 6 shows a typical quotation from an MSP for a
midsize (by MSP standards) Web site.
Some interesting points in this example include the
following:Most components include an initial setup, nonrecurring
expense (NRE) and a monthly recurring expense. The
total NRE is $42,150 and the total monthly charge will
be $31,550.
This MSP uses a retainer model for pricing professional
services in addition to the component-based pricing.
The customer pays for a minimum of 20 hours each
month at a rate of $175 per hour. That amount isdue whether or not the hours are actually used during
the month. Additional hours are charged at the same
hourly rate.Unfortunately, managed-service providers do not post
their pricing on the Internet, so comparison shopping for
price requires getting a quotation from each prospective
vendor.CONCLUSION
Although Web-hosting services vary greatly, they can be
classified and compared using industry-standard crite-
ria and categories. In trying to select a Web-hosting ven-
dor, one can begin by determining one’s requirements in
terms of price, bandwidth (data transfer), disk storage,
processing power, and services. Once the proper category
is identified (shared, dedicated, colocation, or managed
services), these same criteria can be used as the basis for
identifying and evaluating specific vendors.GLOSSARY
Colocation A bare-bones hosting service in which the
vendor provides only physical space, power, air condi-
tioning, and Internet connectivity.
Facility-owner vendors A class of Web-hosting vendors
that own and operate their own data centers.
Managed service provider (MSP) A Web-hosting ven-
dor that takes responsibility for on-going management
of a Web site’s hardware and software.
95th percentile rule A method for measuring band-
width utilization in which samples are taken at regular
intervals, and the highest five percent are discarded.
The next-highest value is used.
Nonrecurring expenses (NRE) One-time expenses
such as installation and provisioning costs.
Peak bandwidth The highest volume of data transmis-
sion used or required by a Web site.
Rack unit A standard measure of the height of equip-
ment when rack mounted. One “U” equals 1.75 inches.