Factors Should Consider When Evaluating Colocation Services Pricing

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Colocation

Evaluating colocation service pricing can be challenging due to the numerous factors involved. Several factors determine the total cost, including the location of the data center, power usage, bandwidth needs, and contract terms. This guide explains the key factors, helping you make informed decisions that align with your budget and business needs.

Geographic Location as a Key Factor in Colocation Pricing

Colocation pricing is primarily determined by location. Colocation service costs can vary significantly depending on the location of the data center.

  • Regional Cost Variations: Colocation prices can range from $120 per kilowatt (kW) in areas like Atlanta to as much as $250 per kW in high-cost regions such as Silicon Valley. This difference reflects local real estate prices and energy costs.
  • Proximity to Users: While focusing on cost, it’s also essential to consider proximity to users. Selecting a data center closer to your main operations can significantly reduce latency, which is crucial for real-time applications.

When evaluating server colocation pricing, businesses need to balance the convenience of a remote, less expensive location with the performance benefits of a closer data center.

Colocation Services

Assessing Your Space and Power Needs

Once you’ve narrowed down potential locations, it’s time to consider your specific space and power needs. These factors play a major role in determining your overall colocation cost.

Rack Space Pricing Models

Most colocation providers charge based on the physical space your equipment occupies. This is typically measured in:

Power Consumption

Your power usage is another key factor in colocation pricing. Many facilities bill based on how much power your equipment consumes, especially for high-load operations.

Colocation Pricing Models

Pricing ModelDescriptionBest For
Per Rack Unit (RU)Charged based on the number of rack units usedBusinesses with varying equipment sizes
Full RackFixed price for an entire rack, regardless of usageCompanies needing a complete rack or planning to scale quickly
Per kWBilled based on power consumptionHigh-performance computing or power-intensive applications
Square FootageCharges based on floor space occupiedLarge-scale deployments or custom configurations

This table compares different colocation pricing models based on space and power requirements. Understanding these models can help you choose the most cost-effective option for your needs.

Scalability Options

When evaluating colocation pricing, consider not just your current needs, but your future growth as well. Providers that offer flexible scaling options can help you manage costs more effectively as your business expands.

Seamless Data Flow: Connectivity and Bandwidth

After addressing space and power, connectivity becomes the next crucial factor in colocation costs.

  • Carrier-neutral options: Facilities offering connections to multiple carriers typically provide better pricing flexibility. This can lead to lower server colocation costs compared to those tied to a single carrier.
  • Bandwidth costs: Bandwidth charges can vary significantly based on usage. Accurately estimating your bandwidth requirements is crucial to avoiding unnecessary costs.

Overestimating your bandwidth needs can quickly drive up your colocation costs. Be realistic about your requirements to keep expenses in check.

Prioritizing Uptime with Redundancy and Reliability

While connectivity ensures a smooth flow of data, redundancy assures that your infrastructure stays up during occasioned, unexpected disruption.

  • Power and cooling redundancy: Some service providers provide high levels of redundancy, such as backup power, cooling, and failover systems. These come in at a higher cost because such requirements are necessary to prevent downtime or loss of service.
  • Network reliability: Assessing the network redundancy of a colocation facility can further protect against unexpected outages.

Remember, while redundant systems increase your colocation cost, they’re crucial for businesses that can’t afford downtime.

Security and Compliance: Protecting Your Assets

Considering a colocation facility’s physical and digital infrastructure protection is essential after reliability assurance.

  • Physical and digital security: Strong security measures (such as biometric access, 24/7 monitoring, and fire suppression systems) increase costs but are necessary for safeguarding sensitive data.
  • Regulatory compliance: Facilities with certifications like HIPAA, PCI-DSS, or GDPR compliance typically charge more but are essential for businesses handling sensitive information.

Additional Services and Support: Beyond Basic Colocation

Many colocation providers offer value-added services that can complement your basic colocation package. While these increase your overall colocation price, they can provide significant operational benefits:

  • Remote hands support
  • Managed services
  • Hardware support
  • Monitoring
  • Disaster recovery

Carefully assess which additional services you truly need to avoid unnecessary costs.

Energy Efficiency and Sustainability: Long-Term Savings

As businesses become more environmentally conscious, energy efficiency is increasingly important in colocation pricing:

  • Energy-efficient hardware: Investing in energy-efficient equipment can lead to significant long-term savings on power costs.
  • Green data centers: Some providers offer sustainability-focused services, such as using renewable energy sources. While this might affect initial pricing, it can lead to cost savings over time and align with corporate sustainability goals.

Contract Length and Flexibility: Balancing Savings and Adaptability

Finally, the terms of your colocation contract can significantly influence your costs:

  • Long-term contracts: Some colocation providers offer discounted rates for long-term commitments.
  • Short-term flexibility: Shorter agreements allow easier adaptation to changing needs but may come at a higher price point.

Balance the potential savings of a long-term contract against the flexibility your business might need in the future.

Finding the Right Balance Between Cost and Performance

When assessing colocation pricing, looking beyond just the price tag is crucial. By factoring in location, power, connectivity, and scalability, you can find a solution that aligns with your business goals. Carefully evaluating these aspects ensures you get the right balance between cost and performance, setting your business up for success.

FAQs

Q: How do colocation providers calculate pricing? 

Colocation pricing is typically calculated based on factors like rack space, power consumption, bandwidth, and additional services such as managed support and remote hands.

Q: What level of redundancy should I expect in colocation pricing? 

Redundancy options—especially for power and cooling—greatly affect pricing. Businesses requiring high availability should budget for more expensive setups that include backup power, network failover, and multiple carriers.

Q: Can I reduce colocation costs without sacrificing service quality? 

Yes, by right-sizing your infrastructure (e.g., avoiding over-provisioning space or power) and selecting only the services you truly need, you can optimize costs without compromising on performance.

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