With plenty of venture capital, $10,000 per month is not the greatest expense by far, in San Francisco. That’s 800 employees on Slack Plus, or enough space for about 20 employees with an open floor office and no meeting rooms, or less than 1/10 of the salary of an average software engineer.

Certainly, you should try to eliminate unnecessary expenses. That’s one of the appeals of cloud services: You no longer need to buy your own servers and get professional Internet service to reach the whole world. Nor do you need to spend the time running all that stuff, which can be significant.

If you do need fast Internet for your startup, have you considered Sonic.net? They have gigabit fiber only in the Sunset district of San Francisco and a few other neighborhoods in the Bay Area, but their price is only $90 for a small business, or $40 per employee when you have 5 or more “work stations.” That’s 250 work stations before you reach $10k/month, and by then probably you have enough money and need for room to pay for an actual SoMa office.

In some buildings, our (MonkeyBrains') pricing is less. Higher density = lower rates. The base rate covers hardware, wages, 100% employee health care, other infrastructure, and support. I imagine the costs between the two companies are similar.

I'm curious, why is it that business plans are so much more expensive than residential ones?

I think they expect businesses to use more traffic, and to require more expense to support.

Practically all Internet service is oversubscribed to some extent. The uplink is maybe 1 gigabit, but the downlink that has been sold is maybe 30 gigabits to 200 gigabits, when you add up all the customers. It is actually a feature of the Internet, that you don’t use any bandwidth when you don’t send anything, and you have the full bandwidth available to you when nobody else is sending anything. You can’t afford high-speed Internet if you had to pay for all the bandwidth yourself.

The problem comes if you use the bandwidth a lot. For most of the day, home service is idle, with a peak in the evening when everybody is watching YouTube and Netflix at the same time. And that traffic is mostly downstream, so a big company like Comcast can receive it for free, or even charge the source for “transit.” Businesses peak at business hours for their time zone, and a lot of businesses have a significant amount of upload traffic. If your company successfully expands overseas, then it will be uploading all the time. In theory, business plans cannot be oversubscribed as much.

If your web site doesn’t use HTTPS, then the big ISPs also tend to do deep packet inspection, and some of them inject their own ads. Fun times.

Of course, there are also captive audiences and rent-seeking.

Same reason a 64GB iPhone is so much more than a 16GB one.

Price discrimination. Businesses tend to be more able to pay than home users.

if by discrimination you mean guarantees versus best-efforts. business class services, speaking generally, are less or not at all over subscribed while providing contractual guarantees to service performance and problem resolution.

residential is best effort. they'll do their best to keep it up and give you the speeds you pay for, but if it doesn't work out that way sometimes, well, they're sorry about that.

Price discrimination is an economic concept - charging different prices for very similar products or services to get the value that each customer is willing to pay. That is often difficult and what normally happens is each customer is charged the same price.

Actually those are the rates for the best effort class of service. The business class service where you have guarantees is even more expensive.

That plus one or more of: SLAs, guaranteed minimum bandwidth, much higher upstream, better tech support, etc.

And static IPs, and a lack of language in the contract stating that servers cannot be hosted on it, and so on and so forth.