Data Center Colocation Pricing – How to compare multiple providers?

Kevin Thomas

I have a newfound appreciation for individuals who perform a search for data center colocation services and can really figure out how to compare what they are being sold. Face it, this type of activity is not something that IT professionals or the C-level suite does very often – maybe every 3 to 5 years… or more.

It is for this reason that we are producing a webinar that should help provide clarity on what the industry is doing – from an insider’s perspective. A lot has changed – and remained the same (for some providers). For the most part, the industry has moved from a rack pricing model to a variable consumption pricing model that supports the growth of today’s IT infrastructure. Price per kilowatt, price based on circuits, metered, and all in – there a multiple bids that you will receive during a search. For circuit-based pricing you’ll want to know how much power you’re getting and can your power density be supported. The metered kilowatt-based pricing discussion will drill into maximum capacity based on the allowable density within the data center. Whereas, ‘All In’ kilowatt pricing differs because all your charges are included in the price per kilowatt. Keep in mind that you’ll always need to watch for common area fees, management fees, fuel charges, and more.

Why is there no standardization across the industry? Probably because companies have gotten ‘creative’ with the pricing models to confuse, hide, and drive maximum profitability for the company. However, this is not a nuisance reserved for the data center and colocation industry – take a look at your cell phone or cable bill… The pricing shell game allows data center providers to initiate a conversation with prospects on pricing that may be compared against the competition while ‘hiding’ or ‘adding’ fees ‘below the fold.’ Companies can easily confuse a buyer, who doesn’t purchase colocation space very often, to improperly compare price quotes and ultimately purchase services, enter a long-term contract, and then hit them with the real price – once the invoice arrives. Albeit, I could go into a full discussion regarding value, business requirements, and ensuring the provider delivers a service that meets your business needs, however I will assume that you’ve found a few providers that meet a majority of what you are looking for and it’s time to compare them – financially.

Data center colocation pricing comparisonThis is when you need to be prepared to ask the right questions. Ahhh, but what are the right questions to ask? Frankly, there are a lot of questions to ask regarding pricing: circuits and kilowatts, reservation fees, and management fees… and frankly I don’t have all the answers. This is exactly why I have asked Tim Nicols, our Director of Wholesale Sales, to join me on our January 31 webinar to discuss this exact subject. Tim knows this industry inside-out and will dig deep into the subject to help you become a more educated buyer. My goal with this webinar is for it to be strictly educational. If I can provide you with information that will help make you a more educated colocation buyer – then I’ve accomplished my goal. Please join me on January 31 from 11:30 to 12:30 Pacific Time by registering at: www.ragingwire.com/webinars/pricing-models.

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