Placing a Dollar Value on System Usage? 26
Anonymous SysAdmin asks: "I wonder how do system admins put a dollar value on system resources? Nowadays we see many hosting providers calculating and summing system utilization like IO operations, processor usage, bandwidth, and RAM into the monthly charges (here's an example). How can they process this info and most importantly how can they put a dollar value on it? What are the common practices in the industry and what are the tools used?"
I thought it was traditional (Score:4, Informative)
hmm (Score:1, Insightful)
People don't want bandwidth or disk space or CPU cycles, they want a solution.
Because... (Score:1)
You can want solutions all day long - if you are willing to pay the bill.
And trust me - if you are supposed to pay for the use of a gazillion dollar supercomputer, you do not want to pay more than you use.
Efficiency & Fairness (Score:3, Insightful)
It's called accounting... (Score:5, Insightful)
The long answer is fixed costs + variable costs + margin = price. Fixed costs are things like rent, depreciation on the hardware, your salary, etc. Anything that doesn't really change according to how much you supply, or doesn't get used up in your supply. Divide this figure per unit of supply. Variable costs are whatever it costs you per unit of supply. And margin is how much profit you want to make.
BTW, IANAA.
Re:It's called accounting... (Score:2)
An Excellent point, but these pricing folks typically aren't accountants, but are finance people (ie CFO's, Controllers, VP's of Finance etc).
IANAFP...or an accountant
"Nowadays"? (Score:3, Interesting)
Times like these... (Score:3, Funny)
Re:Times like these... (Score:1)
Still, I'm not surprised if we went back to that system for supercomputing needs. Provide an OS, interface api and staff... And you either have your data or a nice core dump.
Have Fun
Re:Times like these... (Score:3, Funny)
Well, I'm going to hazard a guess... (Score:4, Insightful)
Figure out how much money you need... and who many customers you can expect, set your prices to get you there.
Or do the delibrate well-thought out option... that might work too.
common principle (Score:2, Insightful)
The real question is how much need is there for rel system administrator: I ask this because I can be called a systems adminitrator for raintree IT.
I keep the web servers and mail servers running.
They run without fail. these servers collect in accounts maybe 20K a year at most (its a nonprofit)
so how much am I w
Easy (Score:4, Insightful)
If you provide value and good service, they will pay alot.
If you do not, they won't.
Re:Easy (Score:2)
How very 19th century.
So how do you know if what you are charging is enough to cover your expenses? How do you know what is your profit? How do you calculate return on capital?
Guessing at a price for your service or product or just 'whatever your customers will pay' is a good way to go out of business.
system accounting (Score:5, Informative)
Re:system accounting (Score:3, Informative)
Re:system accounting (Score:2)
Variable prices (Score:3, Insightful)
Talk to your bean counter (Score:5, Informative)
The companie's CFO and I worked together on it. In general, take the cost of the machine, the depeciation cycle, the cost of maintaining the machine (admin time, support, replacement parts, bandwidth, hosting or space in the office, etc.) to get a cost per time unit. Then, using a system accounting package, estimate CPU, disk and bandwidth usage.
At this point, the accountant has to determine reasonable values for each of those, and not being an accountant, I can't speak to how that is done. Once you're this far, though, costing is simply division.
If you need to price it, that's a different matter entirely.
Re:Talk to your bean counter (Score:3, Insightful)
Good listing of how to figure costs! You have my virtual mod points:)
You allude to what is really the most insidious and difficult part: trying to place a value on each of the different services that your computer provides.
I recall people charging for CPU time, disk space and pages printed, but I've lately thought that other resources should be examined such as memory occupation time, network occupancy, or, possibly even bus occupancy. Some of these really depend on the contention with other users and oug
Re:Talk to your bean counter (Score:2)
If you're just trying to allocate costs internally, that's one thing - you don't need to worry about market issues quite so much. But if you're selling to others, pricing somehting like this is very complicated. There are whole companies that specialize in pricing things like this... (I've always wondered how they set thier prices.)
An economist might say there should be a spot market, with the price set by whatever someon
The REALLY simple method (Score:1)
Usage? irrelevant.
You laugh, but this is the way my company does it. No, really. And it kinda sorta works.
We did it this way: (Score:2, Interesting)
1) Cost of server hardware as a function of the time it would be in use
2) Cost of server OS (Window 2000 Server) over same time and over users
3) Cost of bandwidth used (fraction of total bandwidth)
4) Cost of maintaining server (personnel, electricity, hazard prevention, security, upgrades, general analysis tools)
5) How i