Thread: Dedicated vs Colocation for a tiny web host

Hey everyone,

First post - woo!

Before I post something similar in the "Request for products or services" forum, I'd be extremely grateful for any advise anyone can provide. You've probably been over this kind of thing a few times already (this thread was quite useful for me), but this is my situation...

We are a small, primarily web development, company that provides a relatively varied range of services. One of these services is indeed web hosting, but it is currently only provided on a very, very small scale (to friends). We operate a single 512MB RAM/40GB HDD/cPanel VDS, on which we host all of our own projects, as well as a few shared hosting customers.

We are just about to take on some high-spec shared/VDS hosting clients, and possibly some who require dedicated machines. We also want to start to automate the web hosting sales process as much as possible (WHMCS - best bet?) - currently, bar setting up some standard shared packages with WHM, the ordering/provisioning process is not at all automated. We are confident of attracting more of our existing clients to our web hosting packages once that is sorted out.

So, to start off with, we anticipate getting a dedicated machine (Quad Xeon, 8GB RAM, etc.), and splitting it into numerous VDS'. One for our own projects, one or however many we want for the shared hosting clients, and then one for each VDS client (obviously).

In terms of cost, initially co-location seems like the obvious choice. To rent an appropriate dedicated server for the above requirements looks like it will cost around £2k per year, whereas co-location costs seem to be around a quarter of that. If I were to buy a PowerEdge straight from Dell and pay for it's first year of colocation, it would roughly equal the cost for one year of the dedicated server. So I guess my question is really, is there any point in paying all of this extra money?

The clear advantage of renting a dedicated server over colocation seems to be that the host remains responsible for keeping it running. But is it worth paying all that extra just in case a hard drive (or something else) fails? Wouldn't that money be more appropriately spent on creating data redundancy in another data centre or something?

We would prefer to spend some of that extra money on a "managed" colocation service - where the host can replace hardware for you, advise you with hardware & software, and even provide you with the server in the first place.

It's not an immensely important point now, but what happens when we want to upgrade again and get more machines? Just 3 servers in and we'll be paying more than £4k a year on what is effectively insurance. Or have I missed something?

Our only definite requirements at this stage are:

London DC
Friendly 24/7 support

So what do you think? Any assistance will be greatly appreciated. Thanks, Tom.

Hey everyone,

First off, thank you so much for all the replies - every response is much appreciated. I'm sorry it's taken me so long to return to this thread.

Originally Posted by PeteK

Initial thought is are you prepared to get out of bed at 3am and have a spare power supply to hand to drive into London to swap a PSU / motherboard / other critical component when it fails? Ultimately its a level of insurance and support you are paying for and you will need to check what the access terms are, and the responsiveness of your host to middle of the night emergency access requests.

I will be in London but no, I'm not prepared to go and change hardware in the middle of the night. Though wouldn't I be able to find a nice host who already have people looking after their own machines 24/7, and that offers some kind of managed co-location service, who would be willing to do this? Especially if they provided the server themselves in the first place...

Originally Posted by PeteK

I am slightly devils advocate here I guess as you've stated London DC so its no loss to us!

We've actually been based in Leeds for the past 2 years or so. Myself and the guy I started this with are both Leeds Uni grads, moving into offices in Burley when we were finished. We have a couple of clients in Leeds but we're moving to London and probably should be close to our main DC. If we manage to secure the perfect managed package, we're more concerned with speed and security than location though.

Originally Posted by freethought

The other benefit of renting a dedicated server vs co-locating you own is that usually your host will allow you to upgrade you server after a certain amount of time (e.g 12 months) to the latest and greatest hardware that they are offering for the same price.
That way you don't have to worry about buying new hardware for upgrades as well as disposing of the old hardware in a environmentally friendly and secure manner.

Sure, upgrade/disposal costs may well turn out to be an issue. How often should I be expecting to upgrade the machines for dedicated server / VPS clients?

Originally Posted by othellotech

Subject to your transfer requirement and any extras you need (remote reboot capability, KVMoIP, backups, firewall, software licences etc, your dedicated price is about right, and your colo price is way off - you wont get that server colo'd in a london datacnter for sub £100/month - so the reality is that the
server+colo vs dedicated in terms of pricing - tends to come in at *around* 18-24months

True, especially if I want some kind of a managed co-location package. Plus cPanel costs, etc...

I am thinking long term though, we've had a VPS with our current host for about 3 years already but many of our clients want a VPS or dedicated machine of their own. We want to be able to accommodate all of our clients' web hosting needs quickly and relatively easily, and from that point of view co-location seems to be the only be way to go - if someone wants their own dedicated machine I can just add a unit to my package. The alternative is just to work within another host's affiliate scheme - which seems like a waste, especially if we're the first point of call for support.

Originally Posted by TDMWeb

And if you plan on offering hosting services, please please make sure you have the ability and staffing to support it. Most of us hosts on here will have had a number of clients who are refugees from hosting provided by web design/development companies who are great are the design/development but don't have the time or knowledge to look after hosting issues.

That's the thing. We have the time (we already work 24/7) and the knowledge to look after VPS' but not something like Xen HVM. So from that point of view the dedicated package our host offers (where they look after the machine and we just manage the VPS') seems like the best approach. But we would still rather go with co-location for the reasons I've outlined above. Really then I suppose we just want a company to manage our co-located machines - hardware (which is why it would be best done by someone who is on-site) and software, 24/7. We could hire staff with the appropriate skills, but I'd rather outsource at this early stage. We'll only be offering web hosting packages to development clients of ours to start off with, so things shouldn't move too fast and we can see how it goes for a bit before deciding how we want to proceed.

Originally Posted by vpsville

If you only want a single server, I think a leased server is the way to go. If things go well, revisit this problem.

If I didn't think that I'd want to get at least one or two more this year, then this is what I would do. Although maybe we should do this anyway - try to capture our clients who want VPS/shared hosting, and then leave the ones who want dedicated machines until next year...

So, I think we now have 2 options:

• Start looking for / making requests for a company that can provide the sort of managed co-location package we're after.
• ... or: get a dedicated machine, split it into VPS' and hold off for a year before trying to capture any dedicated clients.

Any further thoughts anyone?

Once again, thanks for the input - Tom.

Originally Posted by e107xs

Isn't managed co-location just renting a server? you want to buy a server off a host then have them maintain it?

While you may find a DC/Host doing this, it seems counter intutitive, why not rent a server and leave everything up to them without the upfront costs?

The logic of it all does seem slightly counter-intuitive, at least from the host's point of view. I do just want the same deal as if we were renting a server, but where we own it - really just for the advantage of being able to rent out our own dedicated machines.

We don't have to buy the server off the host, it would just be easier that way (in terms of getting it to the DC and future maintenance). We can purchase the servers ourselves, direct from Dell or wherever, and then courier/bring them to the DC - that's not a problem.

The only reason I mentioned buying the server off the host in the first place was because I saw that host-it.co.uk offer such a service.

Originally Posted by JamieBeeston

You're not likely to find many hosts, especially not the larger ones, who will sell you a server, and then sell you a colocation contract.. Most hosts these days will be able to offer you a rented server which they look after and maintain on a hardware level, with differing levels of SLA (I've seen from 1Hour 24/7 SLA to next business day)

Rental means you have no Cap-Ex, nothing to spend except the first months rental and setup (and some hosts offer no setup deals too!) so you can start from relativly no budget, as opposed to spending hundreds / thousands on Colo and machine purchase + shipping + installation + warranties + support contracts.

I was hoping to find a slightly smaller, friendly host with their own datacentre who could do something like what we're looking for. Initial budget isn't really an issue, but we obviously don't want to waste money.

Originally Posted by JamieBeeston

Personally, I think Colo is dead for all but bespoke kit for the most part, simply as rented servers are so cheap now.

J

That's an interesting statement. With colo costs adding up, perhaps it would be better to go with a rented machine. What do we do when someone wants their own dedicated machine though? We have to refer them away. Looking at it that way we'd have larger revenue stream from this if we were a Heart/FastHosts/GoDaddy reseller - which we don't really want to be, though it would be a super-easy solution.

We've also been looking at Tagadab's reseller control panel recently, which could possibly provide a third way.

Originally Posted by burble

What's the problem with renting a dedicated at £xx/month and reselling it to your client at £yy markup?

Is this common practice? It just strikes me as a little dishonest - renting at one price and and then renting out at a higher price for the same service.

We already add our monthly fee on to hosting costs (to pay for looking after their web applications, setting up email accounts, etc.) - but that is because our service adds value. Should we just be raising this fee to incorporate any extra revenue we wish to make from hosting?

Originally Posted by starsocks

Is this common practice? It just strikes me as a little dishonest - renting at one price and and then renting out at a higher price for the same service.

Like Jamie says, that's down to your business practices.

I think I'd misunderstood - I assumed that this was part of your web development business, ie you'd be adding on-going value to the service; creating a site for them, setting it up on a rented dedicated server which you then manage for them and offer support for. That wouldn't seem at all dishonest.

However, re-reading your posts it seems you're planning to get into dedicated hosting, and will literally just be handing out the keys to a server? In that case, I guess it would depend on how you plan to offer support; if you plan to sort problems out yourself, then it's absolutely acceptable for you to charge a monthly premium to manage it, or to resell a rented machine at cost and charge for hourly support.

I may be wrong, but it seems to me that the margins involved in hosting these days are so tight that unless your business model will make a good profit reselling someone else's rented server, it's not going to be worth the effort of renting out your own dedicated co-located machines either.