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The math on host survival

Deals & Offers by sarahjey 5 replies 443 views
sarahjey

Member OP

#1

I keep seeing "lifetime deal" VPS threads and I'm trying to understand how the math works? Like if Contabo sells a €40 lifetime plan, how many new subscribers do they need per year to not go broke?

I tried to model it: say server costs them $5/mo per user, that's $60/year. So they lose $20 year one. If they put the $40 in a bond at 5% that's $2/year. So they need... new users to pay for old users? Like a pyramid? Sorry if I'm being dumb!

learning on $5 VPS and prayers
SY

Member

#2

Not pyramid, same same but different, it is growth model need churn to work, your math too simple, they oversell, cpu not dedicated, so $5 cost wrong, maybe $1, same same but different, you see,

annexbi

Member

#3

(dear Sarah, not dumb at all) (the pyramid comparison is (unfortunately) apt in some cases) (though legally distinct (they'll tell you)) (your bond assumption is generous (who gets 5% anymore?)) (the real trick is (and I hesitate to even say this (someone will correct me (probably with nested parentheses)))) they bank on most LTD buyers churning to paid support or upgrades within 18 months (the "lifetime" being (ironically) short in practice)

push. done. coffee.
FyreJun

Member

#4

Let us consider that the required growth rate may be unsustainable. I apologize for intruding, yet I must note that many providers in this space fail to account for support burden scaling non-linearly. Let us hope that I am not overstepping.

steveipw

Member

#5

For that money you get:

  • 3-year old E5 v3 from auction
  • 4x4TB HGST refurbs, RAIDz1
  • 512GB RAM, oversold 10:1
  • Bandwidth at $0.50/Mbps if you're lucky

Real cost per "lifetime" user: maybe $8/year if they last 5 years. Your $40 covers 5 years hardware. They need 40% annual growth to cover opex. Someone leaked Vultr's actuals last month. Model was optimistic by 300%. They burned the bond money on marketing.

zfs send | zfs receive. repeat.
CarlosBilby

Member

#6

What's the actual cpu model in that E5 v3? Single or dual socket

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