Colocation vs Dedicated Servers: Building the Cost Model Before You Commit

The colocation vs dedicated server decision is usually made on the monthly rate alone — the one number that does not actually decide it.

Colocation looks cheaper than renting. A rack unit in a European facility costs less per month than a dedicated server in the same building, and the arithmetic is easy to do in your head on the way to a decision.

It is also the wrong arithmetic, because it compares a rental price against a rental price while ignoring the fact that in one case you own a depreciating asset, hold spares for it, and are responsible for it at 3 a.m. This is how to build the comparison properly, with the published numbers filled in.

What each model actually includes

The whole comparison lives in the first four rows. Everything else is roughly equivalent between a good colocation contract and a good dedicated server contract.

The published numbers

NexonHost's server colocation pricing, which is public, gives us one side of the model:

Every tier includes redundant power, power usage, remote hands, DDoS protection, a 1 Gbps unmetered port, one public IP and one management IP. Full-rack pricing is quoted individually.

On the other side, an entry dedicated server — a dual Intel Xeon E5-2630 v3, 20 cores / 40 threads, 128 GB RAM, 240 GB SSD, 1 Gbps unmetered — is €129/month with automatic provisioning.

So the naive comparison is €70 against €129, and colocation "wins" by €59 a month. Now do it properly.

The model

Total monthly cost of colocation is not the rack fee. It is:

monthly cost = rack fee
             + (hardware capex ÷ refresh months)
             + (spares capex ÷ refresh months)
             + expected failure cost per month
             + your time, valued honestly

Take each term seriously.

Hardware capex ÷ refresh months. Whatever you pay for the server, divided across the life you actually plan to run it. Three years is 36 months; five years is 60 but the last two carry a rising failure rate. Source your own quote here — component pricing moves too fast for any article to be useful — but note that dividing by 36 is the honest denominator for a machine you intend to keep current.

Spares. One server in a rack with no spare drive is one drive failure away from a courier's delivery estimate. At minimum: spare drives matching the array, and a plan for PSU and RAM. This is real capex that never appears in a rack-fee comparison.

Expected failure cost. Not "will it fail" but "what does a failure cost me". Remote hands to swap a drive is cheap. An out-of-warranty motherboard failure on a machine you own is a procurement cycle, and the service is down for its duration.

Your time. Procurement, burn-in, shipping, racking, firmware, out-of-band setup, and the failure handling above. Put a number on it. If your engineers cost €60/hour and colocation costs you 4 hours a month of attention that a rented server would not, that is €240/month — larger than the entire price gap.

Where the break-even lands

Run the model and a pattern emerges. Colocation gets more attractive as three things increase:

1. Density. One machine in one RU rarely justifies it. A 20 RU deployment at €1,080/month amortises the operational overhead across far more compute, and the per-server rack cost collapses.
2. Hardware lifetime. A machine you genuinely run for five years halves the monthly capex line versus one you refresh at three.
3. Specificity. GPUs, unusual drive counts, specific NICs, hardware security modules, an appliance you are contractually required to run — if the provider's catalogue does not contain it, price is not the deciding factor.

And it gets less attractive as these increase:

1. Uncertainty about capacity. Rented capacity cancels. Owned capacity gets sold at a loss or sits idle.
2. Distance from the facility. Remote hands covers routine work; it does not cover a project.
3. Team size. A three-person team should not be running a procurement pipeline.
4. Growth rate. If you cannot forecast next year's capacity within 50%, do not buy hardware for it.

Rough guidance, and it is guidance rather than a rule: below roughly a half rack of steady-state, long-lived hardware, dedicated servers usually win on total cost once time is priced in. Above it, colocation starts to win, and by a full rack the gap is usually decisive.

The point people forget: location commitment

The colocation plans above are Romania-based, with the full-rack tier also offered in the Netherlands. That is worth noticing, because it is a structural difference between the two models.

Rented servers are portable in a way owned servers are not. If your traffic profile changes and you need capacity in Madrid, Warsaw or Ashburn, that is an order. Owned hardware in a Romanian rack is in a Romanian rack until you ship it somewhere else, which costs money, downtime, and — for anything with encrypted storage or compliance scope — paperwork.

If your location strategy is settled, this does not matter. If it is not, it matters more than the monthly delta.

A hybrid is usually the right answer

The most common good outcome is not one or the other:

• Colocate the steady-state. Predictable, long-lived, capacity-known workloads on owned hardware in a rack you already pay for.
• Rent the variable and the remote. Burst capacity, new regions, experiments, DR targets in other countries, and anything you might switch off in six months.

That gives you the cost floor of ownership where ownership is safe, and the optionality of rental everywhere else.

Questions to ask before signing either

For colocation: What is the power allocation per RU, and what happens if I exceed it? Is remote hands included or billed, and what is the response time? What are the cross-connect fees? What is the escalation path at 3 a.m.? What notice is required to exit, and what does the term commitment cost to break?

For dedicated: What is the hardware replacement SLA? Who owns the out-of-band access? Is the bandwidth genuinely unmetered on the port I am buying? What is the provisioning time on the specific configuration, not the fastest one?

Starting points

Server colocation covers 1 RU through full rack, with a quote path for custom rack sizes, power allocation or bandwidth profiles outside the published tiers. The dedicated server range covers the rental side in twelve cities, and infrastructure management is the option worth pricing if the honest blocker is that nobody on the team wants to own the operational side of either model.

Related reading: VPS vs dedicated server, and how to choose a dedicated server in Europe for high-traffic workloads.

Prices quoted are those published on nexonhost.com as of 20 August 2026 and are subject to change; check the product pages for current figures.