Digital Realty runs data centers all over the world. You can rent one cabinet or a whole floor. The price works differently at each size. So does the contract.
Most buyers get quoted for a tier that does not fit them. They pay retail rates for wholesale needs. Or they sign a wholesale lease when a few cabinets would do. Here is how each tier prices, and what to read twice before you sign.
The three tiers
Digital Realty sells space three ways.
Retail colocation is by the cabinet. You take one rack or a handful. You share the room with other tenants. This is the entry point.
Then there is the caged suite. You get a locked cage inside a shared hall. Usually 5 to 20 cabinets. More control, more cost.
Wholesale is the top tier. You lease a private room or a full floor. This is priced by the megawatt, not the cabinet. Big buyers only.
How retail prices
Retail colocation charges you two ways. There is the space, and there is the power.
Space is billed per cabinet, per month. Power is billed per circuit. A single cabinet with a 20 amp circuit runs a certain monthly rate. Add more power draw and the bill climbs fast.
Watch the power billing model. Some contracts bill you for the circuit you provision, not the power you use. So a 5 kW cabinet costs the same whether you pull 5 kW or 2 kW. If you are light on draw, you are paying for air.
Cross connects are the other line to watch. Each cable to another tenant or carrier carries a monthly fee. A retail cabinet with several cross connects can add real money. We have seen cross connect fees run $250 to $500 a month per connection in major markets.
How wholesale prices
Wholesale flips the model. You are not buying cabinets. You are buying power capacity, measured in kilowatts or megawatts.
The lease reads more like commercial real estate than a telecom bill. You get a base rent, a power rate, and a term. Terms run long. Five to ten years is normal.
The upside is the unit price drops hard at scale. Wholesale power per kW is a fraction of retail. The downside is you commit for years and you fit out the space yourself.
What to read twice in the contract
A few clauses cost people money after they sign.
Power redundancy tiers. N, N+1, and 2N are not the same price. A 2N room costs more than an N+1 room because it has full backup. Make sure you are paying for the redundancy you actually need. Many buyers buy 2N and run N+1 workloads.
Escalators. Most Digital Realty leases raise your rate every year. The escalator is often 2 to 3 percent annually. Over a seven year term, that adds up. Read the number and do the math before you sign.
Renewal windows. The lease sets a date by which you must give notice. Miss it and you roll into another term, sometimes at a higher rate. Carriers and landlords both write contracts this way. Put the renewal date in your calendar the day you sign. Most people do not.
Cross connect and remote hands fees. These are not in the headline rate. Remote hands (a tech doing physical work for you) bills by the hour. Ask for the rate card up front.
The move most buyers miss
Get quotes at two tiers, not one. If you need 8 cabinets, price it as retail and as a small caged suite. The suite often costs less per cabinet at that size.
And bring a competing quote. Digital Realty has room to move on price, especially on power and cross connects. One client running a caged suite cut their monthly colocation cost by $3,100 by moving from retail cabinets to a suite and dropping unused cross connects.
The point is simple. The tier you buy should match the space and power you use. Not the tier the sales rep quotes first.