Placing a Dollar Value on System Usage?

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?"

Comments

hmm

[larry bagina]

Maybe a better wuestion is WHY "put a dollar value on system resources?".

People don't want bandwidth or disk space or CPU cycles, they want a solution.

It's called accounting...

[darkov]

Have you ever wondered why accountants exist and why they sometimes get paid heaps of money? Because things like costing and pricing can be difficult to calculate, especially for a large corporation. So the short answer is get yourself an accountant or some accounting advice.

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.

Well, I'm going to hazard a guess...

[djcapelis]

I'd imagine that instead of pricing carefully most providers just attempt to work miracles and use guesswork.

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

[peripatetic_bum]

It will be what the market will bare. ie, if a real systems administrator can be had for 20 thou a year, then systems administrator can expect to make 20 thou/52 weeks/5 days/8 dollars per hours.

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 worth? am I worth it all since without me there would be no servers and hence no accounts or can someone else be had for much much cheaper. Will there only be perhaps a few hundred real administrator (ie handling tens to hundred of servers) and how much is that worth?

The question really comes down to how many other people can do what You can do?
If a trained monkey can do it, expect to make as much as a trained monkey (see McDonalds)

QED

Easy

[duffbeer703]

Whatever your customers will pay.

If you provide value and good service, they will pay alot.

If you do not, they won't.

Variable prices

[__aafkqj3628]

When it comes to computer hackers, the simple storage of files can start to cost millions of dollars for some reason.

Efficiency & Fairness

[Detritus]

It encourages efficient and fair use of the system's resources. Rather than run just any program that will produce the desired result, it forces people to consider how their program will affect other users of the system. Maybe that bubble sort isn't such a great algorithm if it uses up your CPU quota for the month in one run.

Re:Talk to your bean counter

[4of12]

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 ought to be less costly during off-peak usage times.

Figuring out what is the relative cost among these seems tricky, but perhaps it could be done using a similar analysis where you figure out the incremental cost of upgrading the equipment to include either another CPU, more memory, another network card, another high throughput connection to the internet, etc.