Colocation Pricing Guide: How Quotes Are Built
Colocation pricing is not a single number. Commercial quotes combine space, power, cross-connects, remote hands, and one-time fees, then apply escalators and renewal mechanics over the contract term. This guide explains each component so you can normalize total cost of ownership across providers and avoid signing on a single unnormalized MRC.
The components of a colocation bill
| Component | How it is priced | What to verify |
|---|---|---|
| Space | Per cabinet, per U, or per square foot (cage/suite) | Is the quoted space usable IT footprint or includes non-IT areas? |
| Power | Per kW reserved or metered usage | Is quoted kW usable IT load? Is it reserved or burstable? |
| Cross-connects | Per connection (MRC + NRC) | How many included? What is the per-connection cost? Lead time? |
| Remote hands | Included block or hourly rate | What is included vs billable? After-hours rates? |
| NRC / cage build | One-time at install | What is itemized? Can you negotiate waiving or capping? |
| Escalator | Annual % increase on MRC | What is the floor/cap? Is it CPI-linked or fixed? |
Power pricing: reserved vs metered
Reserved power means you pay for a committed kW allocation regardless of actual draw—predictable but potentially wasteful if your load is below commitment. Metered power means you pay for actual usage—cost-effective for variable loads but less predictable.
The method matters because it changes your effective cost per usable kW. Reserved power bills the full commitment even when your actual draw is lower, but it guarantees the capacity is there when you need it. Metered power tracks actual draw more closely, but capacity may be subject to availability. Ask each provider to price both models against your expected draw.
Cross-connects: the hidden cost driver
Each connection between your cabinet and a carrier or cloud on-ramp is a cross-connect. Providers charge MRC (monthly recurring) and NRC (one-time install) per connection. In carrier-dense deployments with many connections, cross-connect charges can become a significant share of the monthly bill, so ask each provider for the per-connection MRC, NRC and lead time.
Always ask: how many cross-connects are included, what is the per-connection MRC/NRC, and what are typical lead times. A lower space fee loses quickly if cross-connects are expensive or slow.
NRC and cage build: one-time costs
Non-recurring charges (NRC) include installation, cage build, cabling, and initial cross-connect terminations. They vary widely with scope, so ask each provider for an itemized NRC schedule. Some providers waive or cap NRC for longer-term contracts—negotiate this before signing.
Escalators and renewal: long-term cost impact
Most contracts include an annual escalator on the MRC, and because it compounds, even a modest annual rate adds up over a multi-year term. Check whether the escalator is fixed, CPI-linked, or capped. Also verify the renewal pricing mechanic—some providers revert to list pricing at renewal, which can be significantly higher than your initial rate.
Before the term ends, benchmark your colocation renewal against competing quotes.
How to normalize TCO across providers
This method reveals the true cost difference between a low-MRC/high-NRC proposal and a higher-MRC/included-NRC proposal.
For a step-by-step method, see how to compare colocation quotes side by side.
If cloud is also on the table, compare colocation and cloud costs for a few racks on the same basis.
- List all components: space, power, cross-connects, remote hands, NRC, escalator
- Project each component over the full contract term (not just year 1)
- Apply the escalator to MRC components for each year
- Add NRC and one-time costs as a lump sum
- Divide total term cost by total usable kW-months to get cost per usable kW per month
- Compare this normalized number across all providers
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