As a group we buy bandwidth, and a certain amount is given to each member(this is the 'guaranteed' number above). Only if the entire co-op goes over it's alloted bandwidth only then do we charge for overages, throttle, or otherwise maintain our bandwidth. Overages are charge by percentage, and you are only charged a percentage of our costs based on what percentage of the _total_ overage (not total bandwidth used) you are responsible for.
We re-sell our bandwidth at cost, exactly, and do all we can to avoid excess costs. One thing to note is that, in the entire time we've been doing this, we've _never_ had to charge for an overage.
Bandwidth is a great expense, and we have a strict policy being honest to our members about the actual capacity. Many hosting organizations promise many GB's of transfer, but will actually throttle your transfer rate. We maintain no such illusions.
There are a few different options available for those who expect to consistently exceed their allotment:
1) We can simply cut you off at a perscribed limit, thus assuring you never go over. Nobody chooses this option. :) 2) We can throttle (slow down the transfer rate) of your account once a certain limit is reached thus ensuring your site stays up, but you are not charged. 3) We do nothing, and charge you based on the model above should an overage occur.
You can buy some extra guaranteed capacity in advance at $1/GB, or if you think you'll need a significant amount, we'll work out other options.
As we grow we're hoping to minimize our bandwidth costs some more, but regardless the co-operative model usually works quite well to keeps costs down.