If you've decided that a dedicated server is the best choice for your website - you can set it up however you want and you aren't sharing it with anyone else - the next question you need to answer is whether you're going to rent it or buy it.

Dedicated hosting means you're renting a server from a web hosting company. Your other choice is to buy your own server and pay the host to house it on their premises and connect it to the internet. This is what is known as colocated hosting.

Colocated hosting offers all the same advantages as dedicated hosting - you have ultimate control over your server. The extra benefit you get with colocated hosting is a lower monthly cost.

Because you've bought the server, you aren't paying to rent the equipment, you're only paying the host to physically house your server.

Your initial investment will obviously be higher but if you buy a quality server, the costs will be lower when averaged over a long period of time.

How Much Does Colocation Cost?

The cost will depend on how much space your server takes up. Data centers normally house the servers in racks, which are then housed in cabinets.

A cabinet is normally 40 rack units high - each rack unit being 1.75'. Rack mounted servers are measured in rack units - 1U being 1.75'. The most common sizes for servers are 1U, 2U and 4U, so your costs will depend on how many units your server uses.

The other factor in how much colocated hosting will cost is the bandwidth you use. Because your server is connected to the internet via the data center's connection, your cost will depend on how much of data is being transferred, and how much of their connection is afforded to your server.

Colocation vs. Dedicated Hosting

With colocation, you're in charge of the hardware which in turn means you're responsible for maintaining it in case of problems. If a hard drive crashes or a CPU malfunctions, you will need to arrange for it to be replaced.

With dedicated hosting, the web hosting company is responsible for these things so they'll take care of any problems that arise.

With colocated servers you're also responsible for any software licensing costs, such as the operating system and any server-based software you need. Dedicated hosts usually include the necessary software for you to run your server.

In the end, you need to decide whether the additional cost of dedicated hosting is worth the time and up-front investment saved compared to colocated hosting.

If you have the resources to maintain a colocated server, and your resource requirements are high, colocation may be your best choice.