Should you build and host your own server using a co-location?

Is it time to dump leased server hosting?

If you’re leasing server equipment in a hosting provider’s data center, you’re likely paying through the nose for antiquated technology. There is peace of mind that comes with that service in the form of care free hardware maintenance, but is that really enough to keep you paying for that same 4GB of RAM every month for life?

This is certainly not a problem for everyone. If you’re running a single dedicated server somewhere and paying a few hundred dollars, you’re not going to save money by co-locating. On the other hand, if you’re leasing several dedicated boxes and you find the right deal, you could save yourself a bundle.

This post is focused on the latter scenario, in which case I say yes, you should look into co-location. The strength of that yes depends on the number of servers you’re currently managing, the cost to lease them, and the technical ability of the team that would handle the new hardware / co-locating.

The tipping point for our small company was 5 dedicated servers that we had been leasing for several years. As nearly all of them began to exceed their capacity, the rising cost of adding RAM, disk space, or CPU power became too much to justify. In particular, paying $10 per GB of RAM per month really rubbed us the wrong way. $480/year for 4GB of RAM? Please.

Aside from the cost savings there are other major benefits to co-location:

  • Server consolidation

  • Significantly greater performance

  • Cheap and easy upgrades / expansion

  • Full control

  • Physical Access

These points were just as important as the cost to us, which is saying something. I think we would have been OK with paying up to 20% more just to gain the above bullet points, but as it turned out we pay 40% less and get all that. Which brings me to my first bit of advice...

Shop around

When you begin your search for a colo facility (we got a bunch by using, you’re going to get some wild quotes. It took us a few weeks to gather every quote we could in our area and the monthly range for similar specs went from a low of around $475 to a high of around $3,000. That’s a variance of 630%.

You also need to be prepared to negotiate. The facilities will try and get you at the highest price possible, but the truth is they need to fill out their datacenter with paying customers and their retail pricing has insane margins in the hopes that someone bites on it.

For context, the important specs that quotes are based on are:

  • Rack Space

  • Power Requirements

  • Bandwidth Requirements

In our case we were looking for ⅓ of a cabinet (12 U), 10A single phase power, and 20Mbps/20Mbps bandwidth burstable to 100 Mbps. The price goes up as you add to these requirements or add new requirements such as SAN services or managed firewall.

Another consideration we had was that we wanted to have physical access to our hardware so that meant tracking down a local co-location datacenter. This may not be a possibility for you depending on where you live, but there are many facilities that welcome you to mail your hardware to them and they will install it in a rack for you.

Plan your server(s)

This is the fun part. For reference, I’d recommend getting some prices for pre-built hardware so you can compare the components and cost to a server you hand craft yourself. If you’ve got the nerve for it, building your own equipment can save you a lot of money and be a source of pride for you and your team. It can also be an unnecessary stress if things go wrong and you don’t have the expertise to correct it.

In our case, we took the leap into building our own equipment. I’m pleased to report that everything went swimmingly and we’re now the proud owners of a powerful 2U server.

The Result

What we ended up with is a 2U server with dual Six-Core Xenon E5645 processors, 96GB of RAM, a 500GB RAID 10 array of SSD’s, a 3TB RAID 1 of SATA drives, a chassis, motherboard, RAID controller, and network security appliance for around $5,000 via NewEgg.

Virtualizing this one machine allows us to eliminate all 5 of our dedicated leased servers at a cost of about $1,000/month and also gain 4x performance in one shot. With our 40% cost savings by moving to a co-location facility, we’re able to recoup the cost of the hardware in 12 months. We’re confident that this hardware will last us a minimum of 2 years, at which point it will have paid for itself twice over.

Choosing this path of building your own server and co-locating it is not for the feint for heart. There is a lot to be gained both technically and financially, but be sure your team is up for it before you dive in. There is a reason the big iron guys (Dell, HP, etc.) can demand so much for their products. Configuring a server is not easy, it takes a lot of research and planning, which they have done for you. They also generally include support which can be invaluable for mission critical servers. You might also consider a smaller server builder who simply sources the proper components and assembles them for a fee.

How we built our server

In a follow up post I will detail the exact build of the system because we sure had a lot of trouble finding information about building a server from scratch.

How to build a rack mounted server from scratch

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