The price of Internet backups just dropped suddenly with CrashPlan's change to fixed rates for family and individual backups to its CrashPlan Central service. CrashPlan, like several other firms, previously charged a recurring fee based on the amount of storage you'd consumed. That has now changed.

The new CrashPlan Central plans for personal use for two or more computers costs $100 per year, which works out to $8.33 per month. CrashPlan offers two- and three-year contracts for $150 and $180 ($6.25 per month and $5 per month, respectively). For a single computer, CrashPlan's yearly $54 fee ($4.50 per month) is comparable to several competitors, including Mozy.

Hosted backup software lets you transfer data from your computer to a data center where your archives are stored in encrypted form. Most backup services, including CrashPlan, store multiple or unlimited older copies of changed files.

Bandwidth use after initial backups is kept as low as possible by sending only "differentials" - the pieces of files that have changed - instead of the entire file. This is also how older versions are retained (and reassembled on restoration) without consuming excessive space.

Backblaze, Carbonite, and Mozy, which all offer unlimited storage as well, each charge a per-computer price. For each computer, Backblaze collects $5 per month or discounts the fee to $50 per year; Carbonite charges $54.95 per year (no monthly option); and Mozy is $4.95 per month, throwing in one month free with a year's payment ($54.45 total).

For three home computers - as I have - paying a year at a time with CrashPlan Central would save me $50 to $65 per year over the equivalent service from the other three unlimited storage firms. For one or two computers, the cost is comparable.

Other firms like iDrive, Jungle Disk, and SpiderOak charge based on total storage consumed by all computers backed up through a single account. Prices for 50 to 100 GB of storage and two computers work out to be about the same; higher levels of data start to rack up costs much more quickly, however.

Unlimited storage works as a practical business matter because bandwidth has become exceptionally cheap, inexpensive hard drives store vast amounts (and are getting vaster and cheaper all the time), and most people won't consume hundreds of gigabytes of storage.

The factor working against those elements is that running a data center that requires absolute perfection costs quite a lot. However, many costs are relatively fixed for the data center as a whole, while others increase as a small fraction for each additional user or chunk of storage.

CrashPlan's plan, therefore, relies on receiving significant recurring revenue that lets them cover operational costs; more users make it easier for those costs to be divided over a larger user base, even as users potentially back up much more data. Some of CrashPlan's competitors outsource data storage - such as Jungle Disk, which uses Amazon S3 - which means their primary costs to pass along are per-gigabyte transfer and storage fees, which decrease only gradually with higher volume.

Hosted backups rely on our confidence that companies will continue to remain in existence to the point at which we may need to restore a file. We at TidBITS recommend that you have at least two backups, one of which could be an Internet-hosted backup.

Ideally, you'd have at least one local backup of your entire hard disk for fast recovery and file restoration, and a remote backup of your essential files; it's not necessary to back up applications or the operating system over a relatively slow Internet connection. Some of us use Time Machine or CrashPlan for one backup that archives multiple versions of files, SuperDuper or Carbon Copy Cloner for a bootable duplicate, and CrashPlan Central or another Internet backup service for offsite backups.

This may sound excessive, but most of us have had to resort to multiple backups at various times to deal with data corruption and hardware failure. Without this breadth of backup, we would have lost both critical current and important archival data and in-house software.

Adam Engst and Rich Mogull both use CrashPlan's peer-to-peer option for Internet backups, having installed hard disks at local friends' houses to host their backups. When used in this mode, CrashPlan's offsite backups are entirely free, and they trust that a local disaster will wipe out only one set of data, leaving the remote backup unharmed.

Our backup guru Joe Kissell prefers hosted storage like CrashPlan Central because of the bandwidth and other requirements needed to exchange data with friends. Since I live in an earthquake, flood, volcano, and tsunami zone - Seattle - I assume that the worst case could destroy data storage devices not just at my home and office, but also at multiple other local locations. For more about backup strategies and how CrashPlan fits into them see Joe's "Take Control of Mac OS X Backups" and its more-focused sibling, "Take Control of Easy Backups in Leopard."

What sets CrashPlan apart from other backup services is that its software can accomplish all three functions. The same software that backs up to CrashPlan Central can also archive files to a local drive or folder, to CrashPlan Central, and to a computer operated by a friend also running CrashPlan. See "CrashPlan Adds Direct-to-Disk Backups" (2008-12-15), for more background on CrashPlan's features.

CrashPlan's one major limitation is an inability to choose different backup sets for each destination. You must archive the same files to local, remote, and peer storage.

The basic version of CrashPlan is free and enables all the forms of backup described. However, for constant backups, a higher level of encryption, and data compression for local and peer-to-peer backups, you need the $59.99 CrashPlan+. Computers backing up to each other can use a mix of CrashPlan and CrashPlan+ software, however, making CrashPlan also especially useful for backing up data from non-technical friends and relatives.

We expect CrashPlan's pricing may provoke a price war among competing services, as the main differentiator between reliable hosted backup systems is price and a preference for one software package or another.