It seems obvious (at least to me) that co-location should cost less than dedicated servers because with co-located boxes, you are only paying for the space, power, and bandwith (and maybe a few other addons/options). With dedicated servers, you are paying for the space, bandwith, the BOX, power, etc. However, (maybe it is just some sort of illusion) I have found that co-location sometimes costs more than a dedicated server. Have you guys/gals found this to be true too? Why is this the case? (If it isn't, just state so. )
There are a few companies that actually did build their price models based on cost. I think the colo cost is higher in some cases due to the extra effort involved with colo.... Plus colo usually is more stuff then dedicated.... At least that has been the case in the data centers I have worked in...
The only reason I have found colo to be higher in price is because you get people wanting to put up mid tower cases, which eats up a lot of rack space. The only other reason is secure, locked racks, which costs a heck of a lot more for the data center the just open two and four poster racks.
I know for myself when I offer people colo the bandwidth is a fixed price and what makes the difference is how much rackspace they will use. 100GB of bandwidth is $100 standard, and per U is $50. You get someone that wants to put in a mid tower case that, on it's side (you'd be supprised about the number of peolpe that bitch about that), takes up at least 4U of space and wonder why it costs them $300 a month. Because I use 1U servers for the dedicated boxes I sell them for $150 a month and it comes out even.
Anant Systems/i|o Servers
I'd also have to agree with ckpeter, but not only that, colocation cant be peddled "en - masse" like dedicated servers can, people who are going to send in $1000+ of equipment are really finnicky and waste a lot of your time asking zillions of questions typically, so unlike fully automated websites like rachskack where theres no human interaction setting up a server, with colocation, it just cant be done. You'd be better comparing dedicated pricing, and colocation pricing from the same company, not comparing like dedicated pricing at rackshack, to colocation pricing elsewhere, as that is where the real price difference is indicated.
The reason for the increase in price is because the facilities used to house the colocated servers are very expensive to purchase and run. They are locked in cabinets with several large fans - you have to charge more because if you stick a tower into one of these cabinets it takes up a ton of space. And the price for those cabinets is only made up after at least severak years of service, with a full cabinet. The other difference is you are responsible for that server that the customer has given to you, some DC's have a completely separate room with even more security features just for colo customers.
Dedicated servers are justifiable - they are equity. Rackspace however has no equity associated with it, its just space. And most of the cost goes towards bandwidth usage. When you lose a colocated customer you don't keep the box whereas if you are dedicated the box is reformated, and used again.