When it comes to data center installation pricing trends for tenants, it’s not an easy subject. Many factors impact the end cost to tenants, and these variables continue to evolve. Throughout the U.S., each market is unique and comes with its own diverse dynamics.

Currently, the industry is moving past power and has started to focus on other services.

All these factors come with their own complications and make it almost impossible to state if data center installation costs are rising or falling. But the consensus among experts is that the U.S. data center market has basically reached its lowest point when it comes to pricing and firmer pricing is expected to follow soon.

Subscribe to the  Data Center Sales & Marketing  (DCSMI) Update Newsletter

Multi-Tenant Data Centers Keep Costs Down

Over the past five years, there has been a steady drop in data center pricing as competition increased. Now prices are expected to level out. Another trend that’s popping up again is the convergence of IT and infrastructure (and data centers are also becoming IT service providers).

As a result, multi-tenant data centers have started to offer much more than managed or cloud services. This becomes a key cost driver as tenants now look for more than space and power.

This, in turn, will see colocation providers continuing to focus on large, strategic wholesale deals and make their money on higher-margin clients. One main driver of the cost of data center installation will continue to be location. Prices will significantly vary from location to location.

Data centers have started to spread out far and wide, increasing competition and driving prices down.

As customers have become better at evaluating their own colocation needs, providers have now started to deliver customized space making the price vary within each feature. If the provider does not know the tenant costs function, the operator can only predict the tenant supply function and come up with a price that is based on projections.

Building vs. Outsourcing

Outsourcing is always going to be more cost-effective than building your own colocation center. According to Forrester, the average cost is around $200 per square foot to build a colocation center.

Further, the fiber installed on site can cost more than $10,000 per mile to reach the site.

There will also be a need for staff, maintenance, cooling, and 24/7 monitoring, all of which will add to the expenses. As a result, building a data center is only suitable for larger corporations that have the financial muscle to handle such an endeavor.

The major benefit of owning your own data center is total control over security, operations, data, and the environment. This provides an additional perception of security and is the main driver for building an in-house data center.

Data center installation pricing is relative; on average, you can expect rack space to cost anywhere from $100 to $300 per month per unit. This price usually includes IP addresses and a preset allotment of bandwidth.

Further, server monitoring will be a separate service and cost you anywhere from $75 to $400 per server per month.

Finally, depending on the number of servers that need to be migrated, there will also be an initial setup cost that can run anywhere from $500 to $3,000 for engineering labor.

How well do you understand installation costs for a data center? What’s the biggest mistake that novice buyers make? Share your thoughts in the comments below.

Subscribe to the Data Center Sales and Marketing Newsletter (DCSMI)

Submit a comment