After choosing to go with dedicated hosting, which is great because you own it and can set it up how you want to, you still must decide whether to rent or buy the hosting.

When you are renting a server from a web hosting company, you are paying for dedicated hosting. You can also choose to purchase your own server but still pay a hosting center to house the server at their location and connect it to the internet for you. This is called collocated hosting.

Collocated hosting has the same advantages as dedicated hosting, because you still own and have control of your server. The added benefit you receive with collocated hosting is a reduced cost per month.

Because you now own the server, you are not paying rental charges, except the cost of the space needed to store the server.

This requires a larger investment initially, but the long-term costs are much lower.

What is the cost for collocation?

Your cost depends on the space your sever uses. Data centers will usually keep the servers in racks, which are kept in cabinets.

A cabinet is usually 40 units in measurement, which one rack measuring 1.75'. Rack units are the standard measurement method for servers that are rack mounted - 1U = 1.75 ft. Server cost is determined by server size, with 1U, 2U, and 4U being the most common server sizes.

Another thing to consider with collocated hosting is how much bandwidth your site will require and how much the bandwidth will cost. Your bandwidth cost is dependent upon both the amount of bandwidth allocated to your particular server, and the total amount of data transfer, as your server's traffic is routed through the data center.

Comparing Collocation with Dedicated Hosting

With collocation, you own the hardware and that means that if anything goes wrong, you have the responsibility of fixing it. In the event that you experience a hard drive or CPU failure, a replacement will be mandatory.

With dedicated hosting, these issues are the responsibility of the web hosting company, so they will attend to any problems that come up.

With collocated servers, you also have to pay for costs associated with software licenses for operating systems and any needed software for the servers. Normally the software needed to run your server is included with a dedicated host.

You'll have to ask yourself whether you're willing to pay more for dedicated hosting in order to save time compared to collocated hosting.

If the resources are available to you to maintain a collocated service, and your needs are high, your best option might be collocation.