When it comes to data center pricing, the lack of transparency often makes it difficult for customers 
to compare data centers, prices, and services. As a result, it is not uncommon for pricing pages to turn potential buyers away.

However, colocation operators have become aware of this, and there’s a recent trend toward use-based pricing that’s helping to minimize confusion. With used-based pricing trends, customers can achieve significant savings over time.

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Pricing Models Have Significantly Evolved

Colocation operators have been trying to price these costly items more efficiently to remain competitive in the marketplace. For example, in the wholesale market, we saw the emergence of capacity pricing that reflected the resources reserved for each customer based on each leased square foot.

Although fixed costs for power and cooling by rack are still common, the use-based model has created a rapid delivery model. This, in turn, has a direct impact on data center pricing as it cuts down on the following:

  • Overbuying
  • Overpaying
  • Overbuilding

Traditional Colocation Pricing Model Has Negative Impact on Sales

Customers require cooling capacity and space that they can grow into without making use of the conditioned UPS power for a while. This trend is normal as it is quite rare for a data center tenant to utilize 100% of the leased space.

There are many factors that can impact the costs associated with leasing space. Various elements that contribute to changes in the IT loads are difficult to predict because they are influenced by the following:

  • Compute efficiency
  • Project delivery schedules
  • Technology refresh cycles
  • Variations in the client’s business

As a result, most clients will probably over-provision within their multi-year contracts. Further, this will be their primary motivation to seek a colocation provider offering transparency. Customers will also look for specific pricing of resources and enhanced flexibility.

When data center pricing is transparent, IT leaders will be able to find ways to operate cost-effectively by aligning the following:

This approach will enable colocation providers to provide pricing that reflects the client’s specific needs. As data center leases can be anywhere from 5 to 15 years long, potential customers will be looking for a solution that can help grow their footprint within the colocation center cost-effectively.

The Bottom Line

The traditional approach will only hurt data center providers as it is a single charge for the leased infrastructure regardless of how much was used. Customers have evolved and are looking for better options. If data centers do not offer more flexibility, it will be difficult to remain competitive in the marketplace.

As potential customers are already aware that they will be paying for unused resources, they will seek out data center pricing pages offering transparency and efficiency.

What do you look for in colocation pricing? Let us know your thoughts in the Comments box below.

Learn more about Colocation Data Center Providers and Go-to-Market Strategy (GTM) for Growth.

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