Data Center Billing: Everything You Wanted to Know (But Thought It Cost Too Much to Ask)

Buying data-center capacity isn't straightforward. Here's how to get the most bang for your buck.

January 11, 2018

3 Min Read
Billing
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Aaron Loehr

By Aaron Loehr, Founder and CEO, StrataCore

Comparing data-center pricing from multiple vendors can be a daunting task. Each colocation provider uses its own pricing methodology and billing models. Clients and agents are frequently forced to compare apples to oranges, as cost is based on complex definitions and data models. Simplifying the process and clearly defining key data-center terminology is essential to finding the right solution and getting the best price for customers. The first step? Normalize the unit price across different models. Otherwise, a quote for $270/kW could actually be less expensive than a facility that quotes a price of $200/kW.

Power is one of the most important components when comparing data center facilities. You must understand the many ways power is calculated and sold to truly compare on an apples-to-apples basis. There are at least a dozen different ways in which data-center providers define watts per square foot, or how they bill for kilowatts. Unfortunately, some of these definitions are designed to mislead the agent and favor the provider. It is crucial to establish clarity on key terms and pricing models to get the most for your client’s money.

Below is an example of four common definitions of data center billing models:

  1. kW billed at 100 percent of the max breaker capacity for both A and B circuits (this is the most misleading and favors the provider).

  2. kW billed at 100 percent of the max breaker capacity for just the A circuits (this is misleading and favors the provider).

  3. kW billed at 80 percent of max breaker capacity for just the A circuits (more reasonable and realistic but still favors the provider).

  4. kW billed at the actual consumed power, not dependent on breaker capacity. The client can overbuild circuits and is billed on a true metered/variable power basis (this favors the client).

Here are a few additional tips when working on data center projects for clients:

  • Have the provider guarantee the availability of an additional 25-50 percent capacity on the UPSes and generators above the committed metered usage.

  • For clients consuming over 100kW, never accept a billing model that charges per square foot, per circuit or per rack. An all-in consumed kW is simplest and best.

  • Never let your clients buy more power than they’re actually consuming.

  • Don’t let watts per square foot confuse the deal.

  • Understand the fiber provider landscape at the data center; just because a provider is “on-net” doesn’t tell the whole story. There’s a big difference between a provider being on-net, vs. a pop, vs. a core pop. The goal is to understand the differences and avoid excessive loop fees.

  • Have the ability, mid-contract, to transfer client data center MRR to managed cloud MRR without penalty.

Finally, for agents, once sold, data-center deals are much harder to move than telecom circuits. As a result, it’s substantially more critical to have rock-solid, evergreen and non-circumvent terms in your agency agreements.

Aaron Loehr is president and chief executive officer of StrataCore. He is a 20-year veteran of the internet infrastructure, data center, technology and telecommunications industries, with a track record of successfully guiding major expansions, strategic partnerships and leading complex technical transformations at both public and private companies. Prior to founding StrataCore, Aaron served in senior roles at ColoCenters, Sprint Business and Savvis.

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