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When do buying a server makes more sense than renting one?
SodaWithoutSparkles
Member
in General
Renting a (dedicated) server could sometimes be more expensive then buying it outright. But what is the tipping point for you? 36x the monthly cost?
Ofc renting would free you from some of the hassles, and you still need to consider the other things such as electricity and networking.
Comments
electricty and networking is “rented” from the datacenter as part of the colocation costs/package. it really comes down to crunching numbers and what works best for your short/long term financial goals. If you have no customers, it makes sense to rent and build a steady income, and then reinvest in to the business, etc.
The breakeven point seems to be when the server hardware is about $2500 - $3000. But there are also extra costs to factor in such as shipping the hardware, racking or remote hands costs over time, and disposal expenses when you discontinue the colo or want to remove it from the colo. I just find buying it best when you are looking at long term solutions or something like a multi-node server.
If you have a planning horizon of 1-2 years, it makes sense to buy a server. Some remote locations (if you have special requirements) have really difficult shipping and customs, and initial installation could take more than 3 month. With renting you are avoiding a lot of possible problems.
Unless you have specific requirements it is usually cheaper to rent a Dedicated server.
As you don't have to invest upfront. Colocation / SLA also costs a lot unless you live around the corner and can go there anytime needed
I find most answers plain out wrong. As @Francisco helped me realize when I asked why people buy colocation when its so expensive compared to renting servers, it's only worth it (colocating) after you have a significant amount of equipment
I don't remember what he believed to be the "perfect" amount, but I'd say probably at least a full rack
I haven't seen any colocation offer for even close to what I pay for my Ryzen dedicated @ OVH when you take unmetered bandwidth and DDoS protection into account, not one
I'd probably look into buying a /24 and doing BYOIP to OVH before I'd look into colocating
Edit: And that's WITHOUT hardware..
Hey!
Just today I looked over the old colocation offer from a year ago that I had received from our old DC for a tower PC with Ryzen 7950x.
For 96 EUR/month I would have received 30TB/month at 1Gbps protected by Voxility and 200Wh consumption, after which I would have been charged 3 EUR/TB respectively 0.31EUR/KWh.
In my opinion from then and now, it is not worth paying such a high price, but having constant temperature and humidity in your own location, free remote-hands (self), DDoS protection, BGP sessions with multiple ISPs, it is fully worth this pass, but purely and simply at the moment I have other investments that are not related to HAZI.ro, but they are eating up all my savings.
So, in cases like mine where the only additional cost between remote rental (from OVH as we have it now) and equipment ownership is only reflected in energy consumption, it is worth all the money.
Cooling consumption is already at a level where we somehow lose money due to the fact that we have so little equipment in production
I remember you talking about Bitcoin
Theoretically, you'd have to buy hardware to scale. Just a thought.
Yeah, either that or if you need some super exotic configuration that wouldn't be available otherwise or has you paying through the nose because even if you can get it it's still basically a fully custom setup.
Basically, if your server costs $150/m to rent, and the rack is $1000/m for power/bandwidth/rack, then that means by the 7th node you're saving more than the cost of renting.
It's all about what you're renting and how much they are. Big EPYC's cost a fortune to rent. While you might only fit a dozen of them into a rack, it's still going to be half the price or less to colo.
Francisco
Buying a server makes more sense when the cost of renting a dedicated server is consistently higher than 36 times the monthly cost, taking into account ongoing expenses such as electricity and networking. Although, purchasing a server may be beneficial for long-term stability and control.
Generally speaking, and this is based off very average server builds and regionally dependent because power/bandwidth/etc fluctuate so much:
But it also depends on your use case. If your primary product isn't the servers, but some service you run and focus on which is just built on top of this type of infra then you likely don't care or want to deal with meddling around on servers to save $20/m per U in exchange for full responsibility and self-management.
I like to talk to our customers when they have unique requests and even bring up how much more affordable it might be to run some A6000's in their office or buy a pair and colocate them. The general tldr consensus is "not my concern, not my problem. it breaks? you're giving me another".
Re: OVH Ryzen what do those cost? I assume it was a special or something because I'm seeing $179/mo (+$179 setup) for a 5800X / 64GB / 2x 960GB NVMe / 250Mbps unmetered. I wouldn't call that a barn burner, and you'll easily find colo under half that per U. Hetzner has some insane deals on 5xxx Ryzen dedi's I see often, but have heard mixed reviews on how much of that CPU is actually usable (I wouldn't blame them if it's cTDP'd down and locked to stop crypto miners).
I’d also add depreciation of the server’s value to the calculation. As well as cost of spare parts, especially if we’re talking exotic configurations.
I think there is a decent amount of people who colocate too because they are into the hobby of servers and Linux. Just like how a lot of people here buy way more VPS products than they functionally need just to play around with them.
@crunchbits Yeah, special deal. I’d say about €67 for a 5600X I believe it is and 128 GB RAM. That includes some extra IPs as well. I believe they watercool all GAME servers as well, so that’s a bonus too.
However, OVH runs special deals about half of the time now it feels like, with these extra good ones about once a year on Black Friday.
If it makes sense for the business and their finances, they could stack up extra on Black Friday to try to cover servers for the year, or, simply buy servers whenever needed and each Black Friday or promo, replace non-promo with promo ones to decrease costs by 50 % or more.
Your numbers make a lot of sense though. They align with what I was thinking as well.
That makes sense, yeah that is more in-line with the Hetzner deals and is great deal.
Though for your average business who isn't in the industry directly, you're making a giant assumption on how much their time is worth to save a few bucks each month. There is no way it's worth the cost (employee/admin time, customer annoyances) to redo their servers every 6-12 months to stay aligned with the specials. There's also customers that do it because of regulatory reasons (HIPAA/medical is the main one we see). They need to rent a specific server and/or colocate because they are forced into running their own physical firewall and self-managed network. No questions.
Don't forget: depreciation is your friend when you're a business in the US (section 179).
@crunchbits I assume that’s for writing off? In here you can do that too, still, it’s a loss (even if that softens it quite a lot)
Also, I believe it depends on scale. For businesses that really rely on a big swarm of servers, I think my idea can work quite well. Especially if they use Assembly to quickly set up new infra. Ahrefs, for example, I believe servers are the biggest cost to them, point blank. They could certainly benefit from something like this if they were to rent (they now colo instead though)
Obviously the vast majority of companies wouldn’t, so you’re right, but the vast majority of companies don’t spend a lot on servers in terms of % of their overall spending anyway, as you said
Edit: Also not talking about staying aligned with promos, simply about switching non-deals to deals (could lower cost per server from about €200 to about €60, HUGE savings at scale)