A complete, plain-English guide to how colocation works, what's included, what it costs, and when it makes more sense than cloud hosting.
Colocation (commonly abbreviated as "colo") is a service in which a business or individual places their own server hardware inside a professionally operated data center facility. The customer owns the servers. The data center provides the physical space (rack space), power, cooling, and network connectivity. The customer pays a monthly fee for these facility services — not for the hardware itself.
The simplest analogy: think of it like renting a parking space for your car, except the parking garage also provides electricity, a mechanic on-site, and a connection to the highway. Your car, their garage.
Colocation is distinct from cloud hosting (where you rent virtual machines from a provider and pay variable costs), dedicated server rental (where you rent physical hardware owned by the provider), and managed hosting (where someone else administers your server for you). In colocation, you own the hardware and you control what runs on it.
The process of colocating a server is straightforward:
Standard colocation includes these core services. What's included varies by provider — always confirm before signing up.
Rack space is measured in "U" — rack units of 1.75 inches each. A 1U server is a thin, single-height server. A 2U server is twice the height. Standard data center racks are 42U tall. Common colocation tiers are 1U, 2U, 4U, a quarter rack (10–11U), a half rack (20–22U), and a full rack (42U).
Power is included up to a rated wattage per plan. Standard 1U servers typically draw 100–300W. High-density configurations (multiple GPUs, large storage arrays) may require negotiated higher-power allocations. Power is included in most colocation contracts — it's not billed as a separate line item unless you exceed your rated draw.
A shared uplink to the internet — typically a 1Gbps shared port with a stated throughput cap (e.g., 100Mbps sustained) or unmetered bandwidth to a fair-use limit. ISP-operated facilities like Columbia Colocation often provide unmetered bandwidth on the ISP's own fiber network. You receive at least one static public IPv4 address.
The facility controls physical access to your hardware. This means locked rack cabinets, access control to the facility, and typically camera surveillance.
Remote hands refers to a technician physically performing actions on your hardware — rebooting a hung server, swapping a drive, checking cable connections. Some providers include basic remote hands in the monthly fee; others bill hourly ($50–$150+/hr). At small, ISP-operated facilities like Columbia Colocation, remote hands are typically included at no extra charge because the same staff managing the facility handles these requests directly.
Colocation pricing varies significantly by location, facility tier, and provider type. Here are realistic ranges as of 2026:
| Space | Seattle / Tier 3 Metro | Regional / Secondary Market | Columbia Colocation (Quincy, WA) |
|---|---|---|---|
| 1U | $150–$350/mo | $100–$175/mo | $85/mo (founder) |
| 2U | $250–$600/mo | $175–$300/mo | $150/mo (founder) |
| 4U | $400–$900/mo | $300–$500/mo | $260/mo (founder) |
| Half Rack | $1,500–$3,500/mo | $800–$1,500/mo | $900–$1,100/mo |
| Full Rack | $2,500–$6,000/mo | $1,500–$2,500/mo | $1,600–$2,000/mo |
Key cost factors that vary by provider:
This is the most common comparison buyers make. The short answer: colocation is cheaper and more controlled for stable, predictable workloads. Cloud is more flexible for variable or bursty workloads.
| Factor | Colocation | Cloud (AWS/Azure/GCP) |
|---|---|---|
| Hardware ownership | You own it | Provider owns it |
| Billing model | Flat monthly rate | Variable — usage-based |
| Egress fees | $0 (ISP-operated) | $0.09/GB+ |
| CPU performance | Dedicated — no sharing | Shared hypervisor |
| Scalability | Manual (add hardware) | Instant elasticity |
| Upfront cost | Server hardware needed | No hardware purchase |
| Best for | Stable, predictable loads | Variable / bursty loads |
The economic crossover point is typically around 6–12 months of cloud spend. Once you've spent what it would cost to buy equivalent hardware outright, colocation is almost always cheaper going forward — especially when egress fees are factored in.
Columbia Colocation in Quincy, WA: bare metal from $99/mo, rack space from $85/mo. No egress fees.
Colocation is used by a wide range of customers — from solo developers with a single server to enterprises with full rack deployments.
The key questions to ask any colocation provider before signing up:
The Pacific Northwest has two distinct colocation markets: the Seattle/Bellevue metro, which operates at premium pricing because of real estate costs and labor, and Central Washington — primarily Quincy and the Columbia Basin — which operates at significantly lower cost due to cheap hydroelectric power from Grant County PUD.
Seattle colocation typically costs $150–$350/mo for 1U. Quincy colocation — including Columbia Colocation — starts at $85/mo for 1U. The latency difference between Seattle and Quincy is 10–20ms, which is functionally imperceptible for 99% of workloads. For businesses in Central Washington, Quincy is actually closer — sub-5ms locally vs. the 10–20ms round-trip to Seattle facilities.
Rack space on Grant County PUD fiber. No egress fees. No contracts. Founder pricing locks your rate for 24 months.