I always wonder how the guys selling dedicated servers and bandwidth make money.

The price of a rack mount server cost $1500, let's say bandwidth cost $2/GB/month, they sell it at $100 per month. How are they gonna recoup the cost for the server and make decent profit? By the time they recoup the cost, the server is already at the end of life span .....

Its a number game, all of the low end bottom of the barrel priced hosts pray to god all their customers dont use all their bandwidth assigned to them, its really simply bad business.

I understand the praying part on bandwidth, I do that every day and I believe many others too :) . The thing that puzzles me is the cost of the server. Am I to write off the server after 2 yrs? If thats the case, what profit margin r we looking at?? WOn't it be better off selling part of their space?

Servers are a tax write off in addition they can be sold for a nominal amount after their life over wish while they are worth less than 50% of their value their still worth something.

Of course we would rather sell colo space all day, but people need dedicated servers and thats just the fact.

Thanks for providing me with an insight. Because from where I'm from in SIngapore, servers are not tax write offs. And the NOCs here required us to coloc only rack mount servers which cost me almost twice what I could build with OEM parts (I built servers for my own intranet use on a P4 for less than US$1000).

Thank you for sharing your knowledge with me.

I personally think that selling at $100/month means no future for your business. Nobody can pay for support or after-selling services.
Yes there are servers who cost about $ 800 and it's easy to get back their cost...... well panel has its importance too on calculating final cost.
We co-lo at $25/month and i can tell you this is just a price for an "entry level". As a matter of fact most companies sell at $200/400 a month, you see this could be a good earning.
Think about what cbaker17 said: it's a number game.

thank you

It is about volume, you make very little money (if any) with a few clients and then as your customer base grows so will the revenue. It can be done but you better have some money to carry your for along time, untill things start to come together (if they do). :smokin:

Absolutely correct!

Servers are a tax write off in addition they can be sold for a nominal amount after their life over wish while they are worth less than 50% of their value their still worth something. Servers are not just straight tax write offs, they must be depreciated (if I am not mistaken). I don't think they are worth 50%, but more like 25-35%.

My 2 pesos!