MPLS billing model

For those of you who sell MPLS VPNs, what components of the service do
you charge for and how do you do the billing? E.g. per port + traffic,
per site + traffic, etc. I am not interested in buying MPLS services
just how the billing happens. Thanks!


We charge a flat fee per location, all traffic between locations is
"free" within a metro area. Anything going out to the Internet, or
outside a particular metro area is billable per their Internet transit

Dan Lockwood wrote:

I have seen (and use) three primary models:

1) "The Cogent Model". A customer pays $X amount per kind of port (say
$2000 for a FastE, or $8000 for a GigE, etc), and has the ability to
exchange traffic with any other such port they purchase, distance
insensitive, any point to any point, with no further usage charges.

2) "The Circuit Emulation Model". A customer pays $X amount for transport
between two points based on a fixed (by port capacity or rate-limit)
amount of bandwidth and the distance (or otherwise costs involved in
supplying transport). Remember that while it may be one or more point to
point circuit(s), it may be delivered over a single handoff (say a GigE
with vlan trunking).

3) "The Transit-like Model". A customer pays $X amount per Mbps, with a
minimum committment and measured 95th percentile burst. This may be on a
per-circuit basis, or it may be the sum of all circuits billed on an
aggregate and flat rate basis, depending on the product and locations.

Each has their advantages and disadvantages, varying wildly depending on
the pricing, customers' traffic and growth patterns, customers' financial
situation, locations involved, and even the way the customer chooses to
look at it. Nothing makes my head hurt faster than someone asking for a
pricing comparison between the different options so they can decide which
one is cheaper for them, but hey it's good to have options I guess. :slight_smile: