What does it mean - to get billed to the 95th percentile at $x.xx per meg?

I got a quote from a colo, saying

"I could do 3U, the power and 20 megs burstable to 100 for $250 a month with each additional meg billed to the 95th percentile at 6.50 per meg..so you would have he ability to burst if you needed it but not pay for the full 24/7 amount of the IP."

I'm assuming it means - 20Mbits unmetered, anything above is billed on the 95th percentile at the rate of $6.50/Mbit. Am I right? And how do you measure the $x.xx per meg, at 95th percentile?

It basically means throwing away the top 5% of samples of the bandwidth used above the 20-megabit/second contract rate... This is an unmetered link, so you can use 100 megabits/second when you need it... but the average usage needs to be below 20 megabit/second. The purpose is to determine your realistic and sustained usage pattern.

This is also described in greater detail in the Wikipedia "Burstable Billing" article.