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Understanding the Cost of Colocation

Posted by QuoteColo on July 09, 2013


So, you’re looking for colocation solutions however you are new to the managed hosting solutions industry and you have no idea what you should be spending on colocation costs. Well, don’t be troubled. We here at are here to help. Below is a simple guide on colocation costs and how you can save some money along the way.

Bandwidth is Going to Save You Money

As someone who is new to the block, the first thing you need to know about colocation costs is bandwidth pricing. Being that you’re new to colocation, we are going to assume you are currently managing your server internally. This means you are paying for your own DSL or T1 line which, at minimum, means you are paying anywhere from $100 – $300 per month on bandwidth (sometimes called transfer) rates. The beauty of colocation is once you move your internally managed web hosting solutions into a tiered data center, your colocation bandwidth costs dip while your transfer speed increases. So, how much should you spend on colocation bandwidth rates? The answer to this really comes down to how many servers you have (do you have one? do you have three racks worth) and where your provider is located. All in all though, when utilizing managed colocation solutions, your bandwidth prices per month are going to drop.

Managing Your Internal Server Is A Hassle

This one goes without saying: your internal IT server, be it for web hosting, exchange, telephony or Cloud VPS solutions, requires a lot of time and upkeep. Unless you are an IT expert, time and upkeep is going to come in the form of hiring an internal IT team to manage all your server needs. As you might imagine and possible already know, three or four highly skilled employees are going to cost you a good amount of money. When you invest in managed IT solutions, one of the things you’re investing in is a team of highly trained IT experts whose sole job is to look after your server(s) to ensure their continued uptime. The end point here: investing in managed services costs is a more cost effective utilization of your funds than investing your own team of IT experts.

Power is Everything in Colocation Services

The truth is, the monthly lease (remember, your leasing space in a data center, not buying it) cost of colocation solutions can vary widely. The reason for this is the tier of data center you choose to invest in – the higher tiered data center you choose, the higher the cost. But when it comes to dedicated server costs in a managed data center, one thing remains true, power is everything. Before you invest in colocation solutions know if your data center provider is going to charge you a fixed monthly rate for all your power needs, a pay for what you use rate for power or a power rate dependent how much floor space your racks consume/the estimated amount of electricity your floor space will consume.

Moving is a Pain

Just like moving from house to house, moving into a data center carries its own costs. Some of those data center costs include the moving and installation of your server racks, the power installation associated with your server racks and the fees associated with network cross connects. As colocation costs typically run, rack moving and installation can cost anywhere from $350 – $950 per rack (depending on the data center colocation firm). Power fees can range anywhere from $650 – a few thousand dollars and the network cross connect fees, like the power fees, range from a couple of hundred bucks to a few thousand dollars. Just now, network issues will vary widely and are dependent on the speed of your network.

At the end of the day, colocation costs, should be looked at as a long-term investment which, after all is said and done, can cost anywhere from a few hundred dollars per month to a few hundred thousand dollars per month. It all varies depending on your need.

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