Is a simpler data center pricing model better?

Is a simpler data center pricing model better? Is the data center pricing model itself a decision factor when companies are reviewing colocation? We believe the answer is yes. Let's look at the history of outsource data centers, also known as colocation, for some perspective.

In the early days of colocation (the mid-1990s) many colocation providers grew out of the telecommunications space. A Director of Operations at a local telecom branch office probably looked at some empty space in his building. He then called the Sales Manager and asked if he could find a client who might be interested in renting the space. The Sales Manager found a client, so they had to come up with a pricing model. As many of us already know, telecom providers have some of the most complex and convoluted pricing models of any vendor. Many of the complexities of telecom pricing models came to the colocation world. Colocation seems to have been born with a complex pricing model.

How many line items are on the typical monthly colocation invoice? I've had clients who use other data centers tell me that they have 10 line items to rent a single cabinet and a little bandwidth.

But an outsource data center is really not that complex. All colocation facilities provide real estate, power, cooling, and access to bandwidth. Midwest colocation provides hardened data center facilities and F5 tornado resistant data centers. West coast colocation is often earthquake resistant. The offerings seem simple enough. Why should the colocation pricing models be complex?

Here are some features to look for in a pricing model:

How is real estate delivered? Many outsource computer room providers dictate the amount of floor space each rack is allocated. Some allow you to purchase extra space for a less dense footprint or for growth over time. Does the data center give you the flexibility you need to grow and change?

Is the power pricing based on actual draw? It is common for outsourced data center providers to bill based on a circuit size rather than the actual power used by a client. This circuit size billing method is inherently inequitable, because power needs shift over time, and circuit utilization is never more than 50% in a highly reliable data center. Look for pay-as-you-use-it power pricing.

How is the power for cooling calculated? Data center equipment (servers, network gear and storage) require about 1 kW of cooling for each 1 kW of power to operate the equipment. Does the pricing model charge you for the cooling power in a sensible manner?

How is the capital overhead of generators, UPS systems, HVAC charged? Every rack in every data center uses a portion of the power and cooling infrastructures, along with the staffing and the data center compliance overhead. Are you being charged fairly for your share of these complex and expensive infrastructures?

Does the colocation provider charge monthly cross-connect fees? Many data centers offer access to multiple carriers. But most charge you a monthly fee for the privilege of connecting to these carriers. A few data centers charge no cross connect fees. This can be a huge savings over time, especially when companies employ multiple carriers in a complex wide area network.

Use these features to compare data center outsource costs. A simple data center pricing model lets you understand what you're spending, better forecast changes, and control the overall cost of operating your data center.

Alex Carroll

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.
Alex Carroll