Colocation - 95th percentile billing

95th percentile billing is also called burstable billing, and it’s a way of calculating the cost of internet use which ignores the top 5% of internet usage peaks.

How is 95th percentile billing calculated?

Over the course of the month (or other billing period, but for the purposes of this article we’ll assume you’re billed monthly) your data usage is recorded. Every 5 minutes a measure of your bandwidth will be taken and the Mbps you’re using at that time will be recorded.

At the end of the month these bandwidth recordings are sorted from highest to lowest. The highest 5% of bandwidth usage is then discounted. This totals about 36 hours over the course of the month. Your bill is then calculated using the remaining 95% of bandwidth, thus the name 95th percentile billing.

The benefits of 95th percentile billing

The contract you have with your internet service provider will charge you based on your Committed Data Rate (CDR). 95th percentile billing allows you to burst beyond your CDR without having to pay any additional fees.

Committed Data Rate (CDR) – The amount of bandwidth you’re committed to using in a contract. Your CDR dictates what you will be charged by your ISP each month, and the bandwidth you have available to use without bursting.

95th percentile billing allows you to maximize the use of your internet connection while not having to pay significantly more for this increased bandwidth usage. You save money in two ways using this billing model:

• You’re not charged for the top 5% of bursting, meaning that you don’t have anything extra to pay on top of your usual monthly bill.

• Since you have this flexibility to burst, you can sustain a lower monthly CDR, and your monthly bill is lower than it would otherwise need to be.

You also have the reliability of always having the bandwidth you need, compared to other billing methods which can put a cap on your internet speed. But this uncapped data use can be dangerous. If you launch a new regular offsite backup or something similar that will eat up your bandwidth, you risk bursting beyond your CDR for more than 5% of the time and will have extra fees to pay if this happens.

When do you use 95th percentile billing?

The most common usage of 95th percentile billing is with the internet services provided by a data centre to their customers who have cloud or colocation services hosted with them. When a business has an IT system hosted in a data centre, they’re connecting to it remotely from other IT systems or from their office where people are working, and they can make full use of this this bursting when demand spikes.