Colocation: Does it sell?

J

JordanF

New member
Hey all,

I am opening another hosting establishment which I want to have focus on Colocation services.

I am willing to do 1U Colocation promotions from $29.95 per 1U plans and still very competitive on normal rates but I need to know if Colocation is a big enough service to sell enough.

Opinions? :)

<MOD NOTE: Edited for self-promotional content.>

All the best,
Jordan F.
 
It of course sells, but a lot harder for people who are not running the datacenter, no one wants a middle man.

People like myself hate going through resellers and like to be direct, and a lot of professionals are like this.

But it depends how you market it, people like gamers, website owners and so on may go with it and generally will buy it, but to advertise to businesses you may struggle no matter if the price is cheaper.

Do you offer remote reboot with your own PDU's and true 24/7 support with it and remote hands on call ?
 
Colocation continues to sell well, but like dedideals said, it's really so much harder if you're the middle man. The data center won't respond to your clients, as that falls on you to provide support for them. I've seen some resellers buy office space in the data center so they could better manage and support their customers.
 
It all depends on your setup, experience and of course the amount of work you put into selling it.

Colocation does very well for us, obviously our focus is on Dedicated Servers but we have quite a few Colocation clients that have been with us for quite sometime. I like Colocation since often those customers are much more reliable (not all of the time but more often than your $49 Dedicated Server customer).

We sell mainly single server (up to 4U) slots or Quarter Cabs but we have 2 Full Cabinet customers and a few Half Cabs.

This is entirely my opinion and I know many don't agree but Colocation is a unique service, you should focus more on selling your customers on why they should choose you for Colocation rather then just utilizing the low price. Dedideals asks some good questions that are important to selling Colocation. Focus on delivering the quality service and people will pay more to house their equipment at your facility.

Hopefully that helps :)
 
JordanF said:
Hey all,

I am opening another hosting establishment which I want to have focus on Colocation services.

I am willing to do 1U Colocation promotions from $29.95 per 1U plans and still very competitive on normal rates but I need to know if Colocation is a big enough service to sell enough.

Opinions? :)

<MOD NOTE: Edited for self-promotional content.>

All the best,
Jordan F.
Click to expand...

Why should people want deal with you instead of directly from the datacenter you're hosting from? No offense to you, but unless you own the datacenter it just doesn't seem to make sense unless you already have clients that need management for the server they purchased.
 
anyNode said:
Why should people want deal with you instead of directly from the datacenter you're hosting from? No offense to you, but unless you own the datacenter it just doesn't seem to make sense unless you already have clients that need management for the server they purchased.
Click to expand...

Definitely will not argue this since obviously the datacenter owners get the better attention when selling Colocation since they own the facility, the equipment, etc. But I've seen a ton of web hosts over the years do very well off only reselling Colocation.

Now some of them did purchase various cabs at these datacenters so they were setup very well, but I've seen some very successful people resell it on a per server basis and not owning even a half cab at their partnered datacenter.

All depends how you sell it, maintain it and market it. My first hosting company didn't sell colocation at all unless it was one of our larger clients requiring colocation based services. Dedispec, my current hosting company, has done very well selling it, but it doesn't come at a cheap investment if you want to have your own space. We have had to purchase various cabinets, and then keep in mind the remote hands, spare equipment for failures, new equipment, etc.

The fun of colo...
 
It certainly sells, but it really depends on your market and how you market it. Now, I will say that single server colocation, such as you're suggesting, will almost certainly not sell as well as dedicated servers, especially on the low end. First, you need to gain enough trust from your customer that they're willing to send you their hardware. Then, you're marketing to a smaller group of people looking for colo that cheap, people that probably already have the hardware laying around, etc. Generally, in that price range you'll be getting people just starting or doing it as a hobby, and they'll normally go to VPS/Cloud or low end dedicated servers as it is less trouble/hassle. At the $29.95/mo price point you might scare away any real businesses, but if you charge more, you'll also need the facility to support that kind of pricing.
 
OffshoreGB said:
Why not!
But i don't think that you make too much money with that.
Better you just sell Dedicated Servers.
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I'll respectfully disagree with this :)

Yeah Dedicated Servers obviously can bring in strong revenue but Datacenters that have their act together can make quite a bit off of Colocation, if of course like I said they have their act together and know what they're doing.

But that's also why you see some of the top providers of colocation still providing Dedicated Servers too :)
 
Running colo through a reseller type agreement is very difficult as described in previous comments.

We've had colo resellers way oversell their resources and a) either drop their clients when that becomes a problem or b) have their clients contact us saying that our network is crap/etc. If this happens the reseller is breaking their reseller agreement and we are forced to tell their customers the real reasons for their problems. It doesn't end well for anyone.

Also, at $29.95 per 1u server, you are going to be hard pressed to make any $$$ considering power alone (utility + UPSs + generators + power for CRAC units + maintenance on all of the above) will end up eating almost all of your revenue... guess it depends on how you sell bandwidth, support, access, etc.

In general we've come to the conclusion that it's a general race to the bottom unless you are providing value add services on top of 'hosting'.
 
Some of our most successful partners are resellers. Many of the bigger providers do not want to offer perU colocation. Smaller resellers offer better pricing and service options.
 
quotecolo said:
Some of our most successful partners are resellers. Many of the bigger providers do not want to offer perU colocation. Smaller resellers offer better pricing and service options.
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Bob hit the nail on the head. The key, if you're reselling, is to do something that differentiates yourself from your upstream vendor. Many times upstream vendors are less nimble than their customers (such as yourself) and thus lose a lot of business.

Some upstream vendors, such as the biggest of the big, have sales reps that would be more than happy to toss you scraps. For some of the bigger guys, they get leads all the time that they simply can't fill due to size or corporate policy. You can live pretty well off the scraps until you get big!
 
Colocation sells, but being a Middle man is not so use for some cases. I mean Advanced professionals seek to take directly from the Data Centers.
 
quotecolo said:
Some of our most successful partners are resellers. Many of the bigger providers do not want to offer perU colocation. Smaller resellers offer better pricing and service options.
Click to expand...

Definitely agree with this as well. I can also confirm this on our end as well.

It depends big time how you can differentiate yourself from the upstream provider as noted above.
 
anyNode said:
Why should people want deal with you instead of directly from the datacenter you're hosting from? No offense to you, but unless you own the datacenter it just doesn't seem to make sense unless you already have clients that need management for the server they purchased.
Click to expand...

Because the guy will sell 1U colocation at $29.95 per month :) This is a price that does not pay the production cost of a quality Colocation service.
 
HostColor said:
Because the guy will sell 1U colocation at $29.95 per month :) This is a price that does not pay the production cost of a quality Colocation service.
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Consider power consumption as well. If the person colo'ing sends in an older Dual CPU unit made as little as 5 years ago it will use much more electricity than a newer E3/i3 machine. Make sure you charge for power accordingly.
 
One easier market to cater to is people who have their servers hosted at their offices.

A good selling point for prospective customers who have their servers hosted at their office is that they're probably spending a lot on power and network and may not realize how much is used by their servers. You can get a good idea of what they're spending on power from charts like this. When they realize that they save that on their power bill while adding power redundancy and an improved network, the choice to move out of office becomes easier - they may be saving enough that they don't look at your upstream.
 
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