Home Others Colocation vs. Dedicated Server: Cost Comparison For Your Business

Colocation vs. Dedicated Server: Cost Comparison For Your Business


When deciding between colocation and a dedicated server, there will come a time where you perform a careful price comparison.

Luckily, the concepts of the two types of hosting accounts are straightforward. In simple terms, a dedicated server is a rental whereas choosing to co-locate is for equipment owners. With dedicated hosting, you pay a flat monthly fee, and the provider guarantees you a set amount of resources.

Deciding Between Bare Metal Servers or Colocation Depends on Needs.

Many companies step up to a dedicated server bare metal servers when they have enough website traffic or data to require fixed resources.

With flat pricing, it’s straightforward to forecast your budget. Like many other types of leases, over the long-term people who lease servers will pay more than someone who purchases on outright. The timeframe will differ, but for companies that have a two to three-year time horizon, there will be significant savings.

Companies that exist for an extended period on the internet eventually consider this route, especially when they are expert admins. In a nutshell, the debate then becomes which type of hosting works better overall for their needs. Developers often opt to put owned equipment at data centers because they want the tightest control possible over their server environment. Businesses who pay obsessive details to costs love to do it because it lowers their costs significantly.

Those who go the dedicated route enjoy the benefits of a lower initial upfront investment. Startup companies or businesses that don’t have a long record of stable revenues opt for this solution.

As the month’s progress and their revenue streams grow, they may choose to purchase a server. The most straightforward rule of thumb to consider is that the leasing of a server costs more over the long run, but does not require the significant investment like buying the equipment.

Will You Manage Your Equipment or Rely on a Third Party?

Co-locating servers requires intimate knowledge of server specifications and how it impacts website and app performance.

That’s why this realm is primarily for expert developers For those companies that don’t have server experts on staff; it’s doubtful that building servers are the way forward. The technical expertise alone tends to be a deal breaker for the average business. Also, enterprises that go this route need capital or credit.

Buying servers are not for the faint of heart, especially if you want the newest, best equipment around. For operators of busy websites, they may not be able to come up with cash fast enough to meet growing demand. In these instances, opting for the benefits of a flat, monthly rate is the only rational choice.

It’s worth bringing up a few caveats.

  • You don’t have to be an expert if you hire a third party to design and build servers.
  • You can hire management services to handle the day to day maintenance of your equipment.

Naturally, add those costs to see if the deal still wins against the hosted server option. It may or may not, depending on vendors. Again, it’s easy to see why a company with excellent cash flow would opt to purchase equipment. Servers may last a long time (up to 5 years say, experts.) Companies may not want their main website or app running on an old server, but they certainly don’t mind specific services running on paid off devices.

Management services are something else that you can contract on a flat, monthly basis. If all you have is the data center charges from co-locating your equipment, a separate bill for management will probably not be a big deal. Business is all about making rational compromises between costs and features. Luckily for you, the hosting industry has more than enough solutions for every industry and type of company.

Dedicated Hosting Guarantees You Server Resources for a Flat Rate.

Bare metal servers give you the benefit of a full machine’s worth of resources.

If your company wants to ensure you pay a flat rate every month, this type of dedicated hosting is the right choice. If you don’t know how much traffic you’ll get, the monthly payment is a prudent way to start.

Once you have lots of data, and a payment history to calculate costs, the equation may change drastically. One disadvantage of monthly hosting is that you’ll pay forever! Just like renting a house is waste of payment at a certain point in a timeline, so is doing the same with a server.

Deciding on the best deal could be a simple as projecting all of your costs (including capital outlay) across a precise time frame so you can correctly compute which deal wins. It’s also worth doing apples to apple comparisons when it comes to service level agreements and guarantees. Too many times webmasters and companies forget to add critical costs when they compare prices and deals. The methodical research will eliminate any problems like that.

Less Expensive Paid off Equipment Can Do a Ton of Work.

For enterprises that have a lot of web and app services, the decision to buy at least a small amount of equipment will invariably crop up. Running facilities that process email or data in the backend behind web servers may not need anything other than purchasing inexpensive servers that get the job done. Since visitors won’t directly access the machine, it will drive down the costs of the whole venture. For example, backing up your businesses files may perform adequately on inexpensive equipment.

Don’t forget that servers have resale value. Most owners will be able to get some money for them when it comes time to upgrade. Servers tend to be reliable, although the constant usage can wear out parts.

There’s a liquid market for buyers and sellers for equipment, so the idea of finding a fantastic deal is always possible. Just like some people and companies use vehicles until they no longer run, many do the same with servers.

Those who purchase dedicated hosting can leave the investments up to the data center. When they want newer equipment, they will be able to upgrade. The process for decision making is not very complicated, just because they don’t have physical access to hardware.

For businesses that already own equipment, co-locating it in a data center frees up space and maintenance at their office. It’s worth contacting a hosting company to see what alternatives they have for your current situations. You will be able to find a beneficial deal that solves your most pressing contemporary problems.


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