The 95th percentile is a mathematical calculation widely used to evaluate the regular, sustained utilization of your Internet connection. The reason this statistic is so useful in measuring data throughput is that it gives a very accurate picture of the cost of the bandwidth. The 95th percentile says that 95% of the time, your usage is below this amount. Just the same, the remaining 5% of the time, your usage is above that amount. The 95th percentile is a good number to judge how much bandwidth you are actually utilizing and helps filter out usage spikes.
Here's an example. Suppose Agathon Group hosts your colocated server, but you're only using it to serve low-traffic sites. Even though you might occasionally download very large files (system updates, off-site backups, etc.) your cost to Agathon Group is negligible, because your usage is intermittent. Our connection to the backbone could easily support hundreds of such customers, and never become saturated. As another example, suppose you are hosting a very busy web site that half-way fills Agathon's bandwidth for several hours every day. This high usage causes Agathon's own usage (as tracked by our provider) to rise, and so we will in turn incur additional charges from our provider.
One alternative is to charge based on the volume of data transfer (e.g., number of gigabytes per month). This method is used by many other web hosting and colocation providers, but penalizes certain users. Namely, if you have intermittent traffic (say your web site gets a lot of traffic one day, but sees little traffic the rest of the month) you could get charged for a huge amount of bandwidth, even though the brief usage spurt costs Agathon Group almost nothing. Additionally, if you exceed your monthly gigabyte count, many hosting and colocation providers will simply turn off your access, or replace your pages with an administrative note that you have exceeded your limits. Agathon Group thinks this interruption in service is totally unacceptable, even as we think the method of measuring total number of gigabytes transferred is not optimal for our clients.
Another alternative that is more frequently used with high-speed Internet lines (including DSL lines) is to use a flat rate (e.g., 256Kbps capped). This has a couple of disadvantages; the more egregious is that occasional spikes in traffic (which can easily happen if an organization receives press attention, for example) cannot be accomodated. The upper bandwidth limit is an absolute limit. The positive side of a flat rate connection is that it produces a much more stable monthly bill; you know that regardless of your usage, you will be billed a fixed price for bandwidth.
The best way to track bandwidth is really up to you. We offer capped/flat rate bandwidth as an alternative to the 95th percentile method, recognizing that while most people will be happiest with the latter, you might prefer the stable bill that capped bandwidth provides. We can work with you to figure out which method works best for you!