3 ms·

It’s not a loss leader. Cloud bandwidth pricing is almost pure profit.

by api 3y ago

martinald 3y ago
It's absolutely amazing that so many devs don't realise this. They seem to think that bandwidth should cost a few cents a month, when in reality it is virtually free. Perhaps the 7c/GB charge was reasonable when AWS came out 15 years ago, but networking has got orders of magnitude cheaper and faster in the intervening time period. What's more odd now that 1gigabit+ home connections are available, it should be obvious to anyone doing the math that it can't cost that much, otherwise a 200GB CoD install would be costing the ISP $20.
- unclebucknasty 3y ago
  >it is virtually free The infrastructure comes at some cost though, right? And there must be some cap on the bandwidth / throughput that a given infrastructure can handle. So, given these, does it make sense to price bandwidth as a throttle?
  - martinald 3y ago
    That's why I said 'virtually'. Hurricane Electric does 40gig/sec IP transit for $2k/month. Assuming you used 50% of the capacity of that link that's about 1/200th (I think, numbers are so small) of the cost of AWS for bandwidth.
    - Aissen 3y ago
      And at scale, AWS does not pay the HE price. So add another factor 3 to 10 there.
      - api 3y ago
        Yep. Big cloud bandwidth is a 200X markup from list price. Its ludicrous. It serves two purposes for them. One is obviously a nice profit center. The other is that free ingress but expensive egress causes data to flow in but not out, creating a center of gravity and a form of lock in.
    - unclebucknasty 3y ago
      >That's why I said 'virtually'. I hear you, and that is an egregious margin. Just wondering if part of their bandwidth pricing calculation is driven by a goal of constraining their infrastructure costs (or other considerations beyond profit). I'm actually wondering this exactly because it is so egregious. There is of course a thing wherein if something is free people mindlessly use it. If all AWS customers did this with bandwidth, I wonder how it would impact total usage and AWS's subsequent infrastructure considerations. I'm no fan of their pricing and I'm sure there's an unhealthy dose of greed in there. Your phrasing just prompted me to consider what other factors might also be involved. And, if part of the rationale is actually to influence customer behavior with disincentives, then by definition there would have to be some pain involved.
      - martinald 3y ago
        No. It's pure margin. OVH and Hertzner et al offer "realistic" bandwidth pricing and they are all fine. I am almost certain there will be some sort of cartel investigation into this pricing between the big cloud players.
- api 3y ago
  I feel like an entire generation of devs have been weirdly brainwashed by cloud to believe that a ton of things need to be very complex and expensive. Of course it’s also a zero interest rate phenomenon. We are exiting a >10 year era when the name of the game was simply to grow and anything in your way could be dealt with by just throwing money at it. Nobody cared about cost as long as growth numbers went up.
- akira2501 3y ago
  > when in reality it is virtually free They're not paying for bandwidth, but their connections are not asymmetric, so they need to balance egress and ingress or they will incur fees or dropped traffic. The pricing is there to maintain this balance. Since they're obviously egress heavy, it makes sense for them to charge for egress, and make ingress free. People think AWS is using costs to "tax" you, what they're really doing is using to control the shape and size of their traffic.
  - api 3y ago
    If this is true then how do so many other companies not charge this way? VPS companies that charge radically less and bare metal / colocation hosts that charge flat rates are all profitable and their networks work fine. Add to that the fact that people often explicitly choose these smaller providers because they have cheap bandwidth, meaning they're going to be a magnet for high bandwidth users like DIY CDNs, streaming, game servers, TURN servers, video conferencing relays, etc. I find it hard to believe that AWS or GCP are getting core Internet bandwidth on worse terms than much smaller companies like Vultr, Hivelocity, Datapacket, or OVH. I call BS.
    - akira2501 3y ago
      The other companies have significantly different SLAs and drop packets far more readily. They also charge for bandwidth, in my experience, you get your 1TB/mo with your $5 VPS sure, but once you go over, you're facing per/GB charges that are very close to AWS default egress price. They're not a magnet for these services for the reasons I just described as you reach your per VPS limit very quickly, and to get more "cheap bandwidth" you have to be prepared to run 100s of VMs per provider, and have to consider provisioning VMs you don't need just to get access to another $5 TB of transfer, or you're just going to end up paying the per GB fee anyways. The terms aren't worse, but the service and their guarantees are different. Again, if you ask AWS for a bandwidth deal, they'll cut you one within a few minutes that will more than halve the price of your transfer if you pay up front. Which is AWSs way of saying, "if you make your usage predictable, we can make it way cheaper." Why? Because they have fixed _capacity_ on their links. The costs manage that _capacity_.
- mad182 3y ago
  Yep. I got over 250TB/month traffic (150TB+ outbound) on Hetzner, and I don't pay anything additional for that, just ~800$ month for 11 servers. At 7c/GB that would be over 10500$ just for the traffic alone, and probably about the same for the processing power.
quickthrower2 3y ago
Ok “loss” is a relative word here… a loss compared to what they could have got from you. Some how AWS has to rip you off so if there is a non rip off gateway to the ripoff then if you can use the non rip off to avoid another rip off, they will close the “loophole”.

It’s not a loss leader. Cloud bandwidth pricing is almost pure profit.

by api 3y ago

It’s not a loss leader. Cloud bandwidth pricing is almost pure profit.

It's absolutely amazing that so many devs don't realise this. They seem to think that bandwidth should cost a few cents a month, when in reality it is virtually free. Perhaps the 7c/GB charge was reasonable when AWS came out 15 years ago, but networking has got orders of magnitude cheaper and faster in the intervening time period. What's more odd now that 1gigabit+ home connections are available, it should be obvious to anyone doing the math that it can't cost that much, otherwise a 200GB CoD install would be costing the ISP $20.

unclebucknasty 3y ago
>it is virtually free The infrastructure comes at some cost though, right? And there must be some cap on the bandwidth / throughput that a given infrastructure can handle. So, given these, does it make sense to price bandwidth as a throttle?
- martinald 3y ago
  That's why I said 'virtually'. Hurricane Electric does 40gig/sec IP transit for $2k/month. Assuming you used 50% of the capacity of that link that's about 1/200th (I think, numbers are so small) of the cost of AWS for bandwidth.
  - Aissen 3y ago
    And at scale, AWS does not pay the HE price. So add another factor 3 to 10 there.
    - api 3y ago
      Yep. Big cloud bandwidth is a 200X markup from list price. Its ludicrous. It serves two purposes for them. One is obviously a nice profit center. The other is that free ingress but expensive egress causes data to flow in but not out, creating a center of gravity and a form of lock in.
  - unclebucknasty 3y ago
    >That's why I said 'virtually'. I hear you, and that is an egregious margin. Just wondering if part of their bandwidth pricing calculation is driven by a goal of constraining their infrastructure costs (or other considerations beyond profit). I'm actually wondering this exactly because it is so egregious. There is of course a thing wherein if something is free people mindlessly use it. If all AWS customers did this with bandwidth, I wonder how it would impact total usage and AWS's subsequent infrastructure considerations. I'm no fan of their pricing and I'm sure there's an unhealthy dose of greed in there. Your phrasing just prompted me to consider what other factors might also be involved. And, if part of the rationale is actually to influence customer behavior with disincentives, then by definition there would have to be some pain involved.
    - martinald 3y ago
      No. It's pure margin. OVH and Hertzner et al offer "realistic" bandwidth pricing and they are all fine. I am almost certain there will be some sort of cartel investigation into this pricing between the big cloud players.
api 3y ago
I feel like an entire generation of devs have been weirdly brainwashed by cloud to believe that a ton of things need to be very complex and expensive. Of course it’s also a zero interest rate phenomenon. We are exiting a >10 year era when the name of the game was simply to grow and anything in your way could be dealt with by just throwing money at it. Nobody cared about cost as long as growth numbers went up.
akira2501 3y ago
> when in reality it is virtually free They're not paying for bandwidth, but their connections are not asymmetric, so they need to balance egress and ingress or they will incur fees or dropped traffic. The pricing is there to maintain this balance. Since they're obviously egress heavy, it makes sense for them to charge for egress, and make ingress free. People think AWS is using costs to "tax" you, what they're really doing is using to control the shape and size of their traffic.
- api 3y ago
  If this is true then how do so many other companies not charge this way? VPS companies that charge radically less and bare metal / colocation hosts that charge flat rates are all profitable and their networks work fine. Add to that the fact that people often explicitly choose these smaller providers because they have cheap bandwidth, meaning they're going to be a magnet for high bandwidth users like DIY CDNs, streaming, game servers, TURN servers, video conferencing relays, etc. I find it hard to believe that AWS or GCP are getting core Internet bandwidth on worse terms than much smaller companies like Vultr, Hivelocity, Datapacket, or OVH. I call BS.
  - akira2501 3y ago
    The other companies have significantly different SLAs and drop packets far more readily. They also charge for bandwidth, in my experience, you get your 1TB/mo with your $5 VPS sure, but once you go over, you're facing per/GB charges that are very close to AWS default egress price. They're not a magnet for these services for the reasons I just described as you reach your per VPS limit very quickly, and to get more "cheap bandwidth" you have to be prepared to run 100s of VMs per provider, and have to consider provisioning VMs you don't need just to get access to another $5 TB of transfer, or you're just going to end up paying the per GB fee anyways. The terms aren't worse, but the service and their guarantees are different. Again, if you ask AWS for a bandwidth deal, they'll cut you one within a few minutes that will more than halve the price of your transfer if you pay up front. Which is AWSs way of saying, "if you make your usage predictable, we can make it way cheaper." Why? Because they have fixed _capacity_ on their links. The costs manage that _capacity_.
mad182 3y ago
Yep. I got over 250TB/month traffic (150TB+ outbound) on Hetzner, and I don't pay anything additional for that, just ~800$ month for 11 servers. At 7c/GB that would be over 10500$ just for the traffic alone, and probably about the same for the processing power.

quickthrower2 3y ago

Ok “loss” is a relative word here… a loss compared to what they could have got from you. Some how AWS has to rip you off so if there is a non rip off gateway to the ripoff then if you can use the non rip off to avoid another rip off, they will close the “loophole”.