Shopping for a Decent Deal on Internet Service? Check the Cost Per Mbps

When we're shopping for home internet, we consider price first. Depending on what providers are available in your area and what kind of internet connection type you're opting for (Cable? Fiber? Going cordless with 5G?) that price tag will fluctuate.

It's confusing and frustrating to compare internet plans, and little wonder why the internet as an industry consistently ranks lower than airlines and the post office. To make it a little easier to compare plans and figure out which works better for you, look at the speed of each internet plan as it compares to the price. The cost per Mbps is a simple way to determine how cost-efficient an internet plan is and a good way to find internet deals and competitive pricing.

Knowing the cost per Mbps of a plan can help you distinguish between a decent internet deal or a service that is just plain cheap. But what, exactly, is the cost per Mbps, and how do you find it? For that matter, what is Mbps? Let’s dive right in.

What is Mbps? 

Mbps, or megabits per second, is a measure of how fast the data transmitted through your internet connection is sent or received per second -- the miles per hour that data travels along the information superhighway, if you will. A faster connection means you can have more devices on your network without being slowed down, and it'll take less time to complete tasks like downloading an app on your Wi-Fi-connected tablet or uploading a video to social media.

Most internet service providers advertise a plan’s max speeds using Mbps, though some may also display Gbps, or gigabits (1 gigabit = 1,000 megabits) per second. Many ISPs offer a variety of speeds. AT&T Fiber, for example, offers 300Mbps, 500Mbps, 1Gbps, 2Gbps and 5Gbps plans. 

Available speeds will vary by provider, but the FCC recently ruled that speeds must be 100Mbps down and 20Mbps up or higher to be considered broadband.

If you have questions about how much speed your household needs, be sure to check out our household guide on internet usage.

What does 'cost per Mbps' mean?

Cost per Mbps is the ratio between an internet plan’s monthly rate and its advertised speeds. Specifically, it estimates what you pay for 1Mbps, not including taxes and fees.

You may have come across per-unit pricing while at the grocery store (and if you haven’t, it’s a good idea to look for it, given our national discourse on shrinkflation). The purpose of per-unit pricing is to quickly compare the value of multiple products by showing the cost per unit, like how much you’re paying for one ounce of soup in a small can versus a larger can of the same soup, for example. 

Cost per Mbps is essentially the same thing. It’s per-unit pricing for your internet to help you quickly compare value. Unlike at the grocery store, however, the cost per Mbps isn’t typically on display, so you will have to calculate it yourself. Don’t worry, it’s not hard.

How to calculate cost per Mbps

To find the cost per Mbps, divide the plan’s advertised monthly rate (excluding any anticipated taxes and fees other than for equipment) by its max speed. 

Take the Verizon Fios 300Mbps plan. Service starts at $50 a month for download speeds up to 300Mbps. $50 divided by 300 equals a cost of around 17 cents per Mbps. That's not bad, but Verizon's slightly faster Fios plan offers up to 500Mbps starting at $75 monthly. $75 divided by 500 gives us a cost per Mbps of 15 cents. So, while the 300Mbps plan is cheaper, the 500Mbps speed tier is the better overall value. 

Again, you’ll want to omit potential taxes and fees from the equation, but it may be worthwhile to include the cost of equipment rental in the price. For example, Spectrum Internet offers speeds up to 500Mbps starting at $50 a month (10 cents per Mbps), but renting a router (it’s optional) will add $10 to your bill for an all-in cost of $60 a month or 12 cents per Mbps. Other providers, such as Cox and Xfinity, may charge up to $15 for equipment rental, which can make a big difference in determining the overall value, especially when compared with a provider with no equipment fees.

Additionally, it’s a good idea to be aware of introductory versus standard rates, if applicable. Sure, Xfinity’s Connect More plan starts at a low $35 a month for speeds up to 300Mbps (cost per Mbps below 12 cents), but after the first year, the monthly rate jumps to $69, bringing the cost per Mbps up to around 23 cents. 

What is a good cost per Mbps?

There's no right answer, but I would describe a cost per Mbps between 10 and 25 cents as "good" and anything lower as "great." Going higher than a quarter doesn’t necessarily indicate a bad internet deal, but I would recommend plans with a bit more value, if available. 

Similar to how the larger can of soup is likely to have a better price per unit than the smaller can, internet plans with more speed are typically the ones with the lowest cost per Mbps. Going back to our Verizon Fios example, the 500Mbps plan is a better value compared to the 300Mbps, but gig service, with speeds up to 940Mbps starting at $90 a month, tops them both with a cost per Mbps of less than a dime. 

It’s a similar story with almost every top internet provider and its selection of plans: the value goes up -- and cost per Mbps goes down -- with each upgrade to a faster speed. While the value is tempting, don’t let it convince you to sign up for a plan with more speed than you need.

Even if it’s a better deal, paying $80 for gig service (up to 1,000Mbps, cost per Mbps of 8 cents) from AT&T Fiber when you can get by on 500Mbps (starting at $65 per month, cost per Mbps of 13 cents) will have you paying more for internet than you need to. It’s like purchasing a 20-ounce can of soup when you’re only hungry for 12 ounces. The bigger can is a better value, sure, but a lot of soup will go to waste, and you’ll pay more for it than the 12-ounce can.

It’s most useful when comparing plans between providers

Evaluating the cost per Mbps of a single provider’s plans will show the value of upgrading to a faster speed tier, but it’s most practical when used to determine the value among providers with similar speed tiers.

Say you’re comparing the cheapest plans from Cox and AT&T Fiber. Cox starts at $50 per month for speeds up to 250Mbps in select areas, whereas AT&T Fiber is $55 for 300Mbps. Cox is $5 cheaper but has a cost per Mbps of 20 cents, while AT&T Fiber’s cost per Mbps is 18 cents. AT&T Fiber is the better deal, though slightly more expensive.

Here’s a look at the average cost per Mbps of some of the top cable and fiber internet providers. Since these are averages, individual plans from each provider will have a higher or lower starting price, faster or slower speeds and thus a higher or lower cost per Mbps. 

Also, keep in mind that the average starting price reflects introductory pricing and may increase significantly after the first year or two, depending on the provider.

Average cost per Mbps by provider

Source: CNET analysis of provider data.

Final thoughts on comparing home internet plans

Cost per Mbps is worth considering when shopping for home internet, but it shouldn't be the sole deciding factor when choosing a provider or plan. In fact, if you go by cost per Mbps alone, you're probably going to end up with the fastest and most expensive plan, and it'll likely be a fiber internet plan since fiber offers lightning-fast speeds, up to 50,000Mbps.

To simplify the process, start by comparing the connection types, speeds and pricing available at your address. Next, look at the service conditions -- equipment fees, data caps and contracts -- which usually give one provider the advantage over another. Finally, when it’s time to choose a specific plan, assess the cost per Mbps of the top contenders to determine which plans offer the speed you need for the best value.

For more tips on finding the right internet provider and plan for your home and making the most of your services, visit the CNET Home Internet hub page.