Affordable Colocation: Does the Pricing Model Make Sense? Part 2

In part 1 of this series, I talked about how pricing models for outsource data center and colocation providers vary greatly.  To recap, a colocation facility typically provides

1. hardened building
2. redundant power
3. redundant cooling
4. rack space, private cages, or both
5. security
6. access to telecommunications services
7. professional services

From this list of seven services, the first five relate to facilities, or physical plant.  It’s pretty easy to compare building quality, power and cooling infrastructures.  But outsource data center providers differ greatly on how they offer up space to clients.  And security can also vary greatly.

Some outsource data centers offer space in their shared racks only.  Others allow you to bring your racks/cabinets into shared spaces. Others provide private cages or suites.  Private cages or suites give you additional security and a “branch office,” in the data center. Pricing is usually per cabinet or by floor space, or both.

Since security will vary greatly, make sure that the data center provider matches up with any regulatory issues that govern your business, along with any company-specific concerns.  More sophisticated security often carries a higher cost.

Prices and add-on charges also vary greatly for telecommunications services.  Some data centers offer their own bandwidth and point-to-point circuits to clients.  These circuits are typically telecom carrier circuits that are being resold to you at a markup.  Watch for multiple add-on fees like port charges and maintenance charges.  Other data centers offer access directly to the carriers, but charge a monthly fee for the privilege of remaining connected.  This add-on fee is called a cross-connect fee and they usually run $50 to $200 per month.  Carrier neutral data centers offer bandwidth from many carriers.  Many do not charge monthly cross-connect fees.  More choices and less add-on fees are better when it comes to telecom.  Carrier neutral data centers provide more competitive pricing,  and that benefits you, the client.

Power is another area where add-on fees are rampant.  Many outsource data centers provide a base level of power per cabinet and charge add-on fees for additional power used over that base level.  While this makes sense (power is one of the biggest overhead items), some charge by circuit size rather than by actual power draw, which may penalizes you greatly depending on your power usage.  Some colocation providers charge by amps, some charge by KW.  You should do the conversions so you clearly understand what your additional power may cost in comparison to other providers.  The provider should be able to help you estimate what your actual power draws will be based on the equipment you have.

Pricing for Rated-4 data centers would seem to be higher than lower tiers, but this is often not the case. Rated-4 facilities are hardened data centers and have redundant “AB” power and redundant cooling systems that are concurrently maintainable. Rated-4 data centers provide the highest levels of uptime, which is one of the the main reasons you should consider an outsource data center.  Strongly weigh the tier level in your selection.

Finally professional services pricing varies greatly as well.  Some data centers charge hourly based on usage, some force you to buy block hours, and some require you to use their professional services for certain tasks.  Ask yourself if the rules match your needs and if the pricing seems reasonable compared to your other choices.

If you have a hard time understanding the outsource data center’s pricing model, you may want to consider that to be a red flag.  Simple pricing models often are indicators of how easy it will be to do business with an enterprise data center provider.

Alex Carroll

Managing Member at Lifeline Data Centers

Alex, co-owner, is responsible for all real estate, construction and mission critical facilities: hardened buildings, power systems, cooling systems, fire suppression, and environmentals. Alex also manages relationships with the telecommunications providers and has an extensive background in IT infrastructure support, database administration and software design and development. Alex architected Lifeline’s proprietary GRCA system and is hands-on every day in the data center.