Colocation pricing can be tricky. How does an $800 colocation special end up costing you $1,500 per month? Here’s what you should know about hidden costs to prepare for your next colocation negotiation.

hidden costs of colocation
Look out for what’s hidden underneath an attractive price tag

Make sure all that power you’re buying is usable

It’s common to see 2.4-kW colocation specials offered at $800 per month. That’s $333 per kilowatt ($800/2.4). On the surface, it looks like a good deal — until you realize what you’re really paying for.

Think you’ll be able to use all 2.4 kilowatts in that 2.4-kW cabinet? Think again.

The reality is that if you purchase a 2.4-kW cabinet, you’re only going to have access to 1.92 kilowatts of power. That’s because 20% of your cabinet’s power is reserved in order to meet code. While this 20% safety margin is a code requirement, including unusable power in a colocation special to make per-kilowatt pricing cheaper is not.

So once we base our cost-per-kilowatt on the 1.92 kilowatts of usable power, the $800 special’s cost-per-kilowatt is actually $416 ($800/1.92).

Notice what’s not included in low colocation special costs

Cheap colocation specials often omit basic components that add to the monthly bill:

Power distribution units

Within your cabinet, you will need to provide your own power distribution unit or lease one from your data center provider. Expect this to run an additional $50 per month.

Internet connectivity

Bandwidth is not included in colocation specials. For a 25-Mbps connection using the Chicago market average, you’re looking at $225/month.

Cross connections

In order to actually use your 25-Mbps connection, you’ll need a cross-connect to that network. That’s a $750 one-time setup fee in addition to $250/month, again at the Chicago market average.

Remote Hands support (whether you want it or not)

In order to qualify for the “special” price, many providers make you buy a minimum of one hour of Remote Hands support every month. That’ll cost you $250/hour whether you use it or not.

Redoing the math on that $800 colocation cabinet

When we add everything up, our $800 colocation special is really $1,575 per month — not including that pesky, $750 setup fee for a cross-connect:

$800 for 2.4 kW cabinet (1.92 kW usable power)
+ $50 PDU
+ $225 25-Mbps connectivity
+ $250 cross-connect
+ $250 Remote Hands support
= $1575 (not including the cross-connect setup fee)

Suddenly the $800 special isn’t so special — and we haven’t even discussed the operational risks of deploying a bare-minimum configuration.

Red flags to watch out for when your colocation is cheap

When it comes to cheap colocation, the old adage applies: you get what you pay for. This $800 colocation special carries with it a number of red flags, including:

Non-redundant power

Cheap colocation configurations don’t include redundant power. Having two, disparate power sources is critical if one power supply fails.

Non-redundant connectivity

Cheap colocation configurations don’t include redundant network connections. Again, having two sources of connectivity protects from one failure making your apps and data unavailable.

Costly cross-connect fees and long provisioning times

If you need a cross-connect to another company’s cabinet (such as a network or service provider) or even to one of your own cabinets, you’re going to run into more one-time and recurring fees. Of course, that doesn’t account for the length of time it will take the facility to actually provision the connection. Some providers take up to two weeks to make a cross connection inside their own facility.

Limited or expensive on-site support

It’s unlikely there will be 24/7/365 on-site support in a discount colocation environment. If there is, expedited support carries an additional fee.

Slow support-ticket response times

The result of not having quality support is that trouble ticket response times are slow. The biggest issue we see here is when the cheaper provider’s response times are outside of the SLA windows that you offer to your customers.

Tips for mitigating the risks of cheap colocation

Always be skeptical of “special” colocation costs. Mitigating these risks is possible, but you need to know they exist.

Don’t enter into an agreement for a colocation service that doesn’t include redundant power. Period.

If you don’t have redundant power, don’t sign the contract. Don’t pay extra for it — it should be included. This is data center best practice 101. The availability of your applications and data is critical to your success, and the risk associated with losing power on a single-powered configuration is unacceptable.

Never buy a colocation service that doesn’t include redundant network connectivity.

This is not only the connection to your cabinet but to the network providers behind it. If there isn’t a network blend to guarantee your packets will get out of the data center and your customers will be able to access your applications and data, walk away. Again, don’t pay extra — it should be included.

Be sure that your data center provider’s support is capable of handling any Remote Hands request.

When you open a support ticket, you shouldn’t have to endure escalation after escalation until you reach someone competent in the issue. Make sure the provider’s support team is seasoned — especially if your colocation package forces you to buy an hour of Remote Hands support whether you wanted it or not.

Finally, be certain that the ticket response time your data center provider is promising falls within the SLA you’ve guaranteed to your customers.

If your SLA is two hours, aim for your provider to have a maximum ticket response time of 30 minutes. That gives you plenty of time to address any issues.

There’s no question that the economics of colocation are complex. Just remember that what seems like a great deal usually isn’t.

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