5 Top Factors Affecting Colocation Data Center Pricing

Updated on Aug 26, 2022 by

Your business is unique, and so are its maintenance and operational requirements. Due to the financially taxing and time-consuming nature of system and data maintenance, more and more organizations are wisely opting for colocation facilities that offer managed services. However, the inability to understand the exact nature of services provided by these and the associated costs can offset your plan for optimized data protection and management.

If opting for a colocation facility is on your list, consider the following colocation data center pricing factors for reducing the costs of operation and boosting performance.

5 Top Factoers Affecting Colocation Data Center Pricing

Spacing Requirements

Spacing requirements are the number one factor that drives the data center colocation costs. Business customers can rent a varying amount of space in a facility, usually measured in square footage or rack units. Depending on the physical area used and the operating expenses of the building, facilities can charge clients varying prices. Some facilities offer minimal space requirements, while others may charge based on the power allocated instead of the space used. Nevertheless, the floor space will still be a deciding factor.

Suppose you’re looking for greater control over the equipment and management of the colocation facilities. Businesses can apply for private space with a lockable area, but these also tend to mount costs.

Bandwidth and Connectivity Capabilities

Suppose you’re opting to use your equipment at the colocation facility. In that case, there will be a monthly cost or a one-time installation fee for connecting the equipment to the other parts of the colocation facility. Services such as connectivity to multiple internet service providers will increase operating costs. Any additional charge for the provider will eventually factor into your colocation costs.

Cross-connect fees are another typical connectivity expense for businesses. With cross-connects, you can set up an interface with external telecom providers. There are various types of cross-connect services. Your organization may want several fiber optic cross-connects for a multi-cloud environment. The number and type of cross-connects that businesses use to decrease latency will also drive the overall pricing for connectivity.

Other than connectivity, organizations also incur bandwidth costs at a colocation facility. Bandwidth is the connection’s ability to transmit the amount of data over a network at a particular time. The bandwidth needed to boost your business’s performance and lower the latency will depend on the applications that you deploy to the cloud and the workload managed by them. The more bandwidth your organization requires, the greater the expense will be. While bandwidth services must be purchased separately, some colocation facilities include them in the monthly subscription fees.

Ensure that your colo provider uses the most streamlined environment to reduce bandwidth and connectivity costs. Typically, the connectivity costs offered by a provider are lower than the costs of investing in data cables to maintain connectivity on site.

Power & Cooling Requirements and Associated Redundancies

Power and cooling are one of the main drivers of colo data center costs. Also, several components here can increase or decrease these costs. The price of electricity is one of the key variables here. Facilities will charge differently based on how efficiently they can manage using the electricity. Facilities calculate the power costs based on the kilowatt-hours (kWh) used; charge a flat rate, or resort to other standards.

The location also determines the electricity costs. Local electricity codes drive the costs with their restrictions on electricity usage. Equipment responsible for ensuring an uninterrupted power supply will also factor your colocation costs. For example, your provider must ensure an additional supply of generators and several UPSs to prevent any possible downtime.

Cooling a business’s hardware also requires extensive costs. You may have to purchase additional racks to exchange heat, specialty cages, cabinets, etc. The costs for all additional leased or purchased equipment will factor into your overall colocation costs.

Keep in mind that each facility runs and operates its equipment differently. Make sure to research their cost distribution method carefully before opting for one.

To reduce power costs, ensure that your data center uses efficiency-boosting monitoring devices. These intelligent monitoring tools keep the centers from overusing power. Also, check if your provider uses modern cooling equipment as traditional cooling can also mount charges quickly.

Physical Security

Security is one of the critical concerns with organizations that opt for a colocation facility. Ideally, you will want to hire a provider who can optimally address these concerns. Providers rely on several security mechanisms, such as video surveillance, perimeter fences, biometric systems, key card access, multi-layered access, protection for the racks and cages, etc. The security expenses are passed on to the customer business.

Once again, building your DR plans and executing them can be very costly. A colocation center will most likely offer a subsidized plan with better facilities, but you must be aware there are no redundancies involved.

Technical Support and Maintenance

While there are businesses that opt to deploy their own IT teams and cloud experts to manage the hardware, it is impractical and mounts costs quickly. Colocation providers offer onsite support and technicians as fully-managed services.

These onsite technicians are responsible for several key operational tasks such as setting up the equipment, installing the software, managing the cooling of the equipment, etc. Businesses will have to pay additional costs for these remote hands and overage. Providers can also charge based on remote time instead of an overall support cost.

To ensure that your provider doesn’t charge you extra, keep tabs on the time the remote hands are in service and the time it should typically take to resolve the problem. While businesses tend to favor facilities that don’t offer 24/7 service uptimes, it can hamper connectivity issues. Suppose there’s a problem with the server and an onsite technician is unavailable to fix the issue; the additional time required to deliver the technician onsite can levy financial losses on your business. It is better to opt for a colocation facility with 24*7 support.

Simple Measures to Reduce Data Center Colocation Costs

  • The number one way to reduce the data center colocation costs is to educate yourself on the main contributing factors contributing to such expenses. As a customer, you must ask your facility the right questions and uncover any surcharges buried in the fine print.

  • When setting up the spacing for equipment, a business can take a few measures to cut back on the spacing costs. One of them is to deploy high-density servers or blade systems. However, be careful because deploying such a system can sometimes bring additional power requirements that can offset the savings.

  • You must know how your provider calculates power costs, which is often supported by guaranteed backup power systems.

  • Check if the colocation area is outside the disaster zones and complies with the local operational policies.

  • It is up to the decision-makers and IT experts working in an organization to ensure optimized services from a colocation provider by acquainting themselves with all parameters, bandwidth solutions, equipment maintenance, and usage.

  • One last thing to bear in mind is that cheaper facilities sometimes tend to offset the discounts/subsidy with insufficient services. Ensure that your plans for target savings are not put off by substandard support services, disaster recovery, connective, power, spacing system, security, and other vital aspects.

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