How to Understand What Colocation Pricing Includes and Choose the Right Provider

According to the latest IDC forecasts, colocation services are set to surpass $150 billion in global revenue by 2026, driven by the exploding demands of AI workloads, remote-first infrastructures, and hybrid cloud adoption. As businesses across industries offload the hassle of maintaining on-premise data centers, colocation has emerged as the practical middle ground between full-blown cloud and expensive in-house setups.

However, there's one challenge that many CIOs, IT managers, and even startups face when evaluating colocation: understanding what the pricing actually includes. Unlike cloud platforms that offer transparent pay-as-you-go rates, colocation pricing is nuanced, layered, and sometimes intentionally vague—making it difficult to compare providers and confidently choose the right one.

In this blog, we’ll walk you through exactly what goes into colocation pricing, the factors that can dramatically affect your monthly bill, and how to pick the provider that delivers the most value for your needs. If you're considering Cyfuture Cloud or any other data center partner, this is the roadmap you’ll want to follow.

What Is Colocation and Why Is It Popular in 2025?

Simply put, colocation (or colo) is a service where businesses rent physical space in a third-party data center to house their servers and IT equipment. While the hardware belongs to you, the environment—power, cooling, internet, security, and physical infrastructure—is provided by the colocation provider.

So, why is colocation getting a second wind in 2025?

AI and high-performance computing (HPC) workloads are skyrocketing. Enterprises want power-dense environments without building them from scratch.

Hybrid cloud models are dominating, blending cloud scalability with colocation control.

Colocation is cost-effective for businesses that already own hardware but need reliability, uptime, and security.

Companies like Cyfuture Cloud are stepping up with next-gen data centers across India, offering colocation hosting with Tier III+ infrastructure, native cloud integration, and enterprise-grade support.

What Does Colocation Pricing Really Include? A Breakdown

The cost of colocation can vary from ₹8,000/month for a single server to ₹1 lakh+ for full racks in high-demand markets. But what’s behind those numbers?

1. Rack Space

This is the physical space you rent. Pricing can be:

Per U (rack unit) for individual servers

Quarter, half, or full racks depending on your setup

For example, a quarter rack might cost ₹25,000/month, while a full rack could range between ₹85,000 and ₹1,25,000/month based on location and power.

2. Power

Charged based on how much electricity your equipment consumes, typically measured in kilowatts (kW). High-performance servers (think NVIDIA H100 GPUs) draw significant power, so you might pay extra for higher power density racks.

Metered power: You pay for exactly what you use

Flat-rate power: A set price based on estimated draw

Some facilities also offer redundant power paths (A+B feeds), which increase reliability—but also price.

3. Cooling and Environment

This is bundled into the basic pricing but becomes a major factor with AI or HPC setups that generate extreme heat. High-density racks (10kW+) might require liquid cooling or hot aisle containment, both of which increase costs.

4. Connectivity and Bandwidth

This includes:

Internet bandwidth: Typically sold in Mbps or TB per month

Cross-connects: Fiber or copper lines that connect your servers to networks, clouds, or carriers

IP addresses: Often limited and charged if you need extras

If you're hosting cloud-connected workloads, Cyfuture Cloud offers direct cloud on-ramps, reducing latency and bandwidth costs between your colo rack and cloud infrastructure.

5. Security and Compliance

Colocation includes:

Biometric access control

CCTV surveillance

Physical security protocols

Fire suppression systems

Facilities that support compliance needs (HIPAA, PCI-DSS, ISO 27001) may cost more, but are non-negotiable for businesses in finance, healthcare, or e-commerce.

6. Remote Hands & Support Services

If your tech team isn’t on-site 24/7, you’ll need help with:

Rebooting servers

Swapping drives

Cable management

These services are either billed per hour or bundled into your contract. Cyfuture Cloud offers flexible Remote Hands plans, including scheduled maintenance and emergency support.

What Drives Colocation Prices Up (or Down)?

Now that we know what's typically included, let’s talk about the variables that swing the needle.

Location

A data center in Mumbai or Delhi NCR will cost more than one in Jaipur or Lucknow. Why? Power costs, real estate, connectivity infrastructure, and demand.

Cyfuture Cloud offers strategic facilities in both Tier 1 and Tier 2 cities—helping businesses find the sweet spot between price and latency.

Power Requirements

Modern AI setups—especially those using the NVIDIA H100 GPU—can draw 3x the power of standard workloads. The more power you need, the higher your colocation pricing.

If you’re planning for AI, cloud-native, or high-density workloads, look for providers with scalable power capacity, like Cyfuture Cloud.

Scalability Options

Some colocation plans allow modular upgrades—scaling from a quarter rack to full rack without migrating hardware. This can save you money long-term if you're growing fast.

Service Level Agreements (SLAs)

Higher uptime SLAs (99.99% and above) often come at a premium. However, they’re worth it if downtime could cost you more in lost revenue or compliance penalties.

Choosing the Right Colocation Provider: Beyond Just Price

Don’t just chase the cheapest number. The right colocation hosting partner should offer value, not just real estate. Here’s a 2025-ready checklist:

Why Cyfuture Cloud Makes Sense in 2025

With over 20 years in cloud and IT infrastructure, Cyfuture Cloud has built a reputation for affordable, scalable, and secure colocation services across India.

Here’s what sets them apart:

Multiple Tier III+ certified data centers

AI-ready infrastructure (supports NVIDIA H100 and GPU workloads)

Low-latency cloud integration for hybrid setups

Power and bandwidth optimization

Full compliance with ISO 27001, SOC 2, PCI DSS, and other standards

Competitive colocation pricing with modular expansion options

Whether you’re a startup looking to colocate a single server or an enterprise migrating from a legacy setup, Cyfuture’s solutions are tailored to meet both budget and business goals.