How Much Does A Data Center Cost

Data Center Cost refers to the cost of ownership in running a private data center or colocation facility — including the property, building, servers, networking equipment, power, cooling, and other infrastructure needs.

The cost of data center construction has risen in recent years as a result of a number of factors. On the one hand, a skilled labor shortage has resulted in higher wages. According to McKinsey, 90 percent of major construction projects face scheduling delays and cost overruns, which adds more and more expenses to each project.

Have you been wondering how much a data center costs and what it would take you? This article is a full guide on how to get a data center and how much it costs.

What Is A Data Center?

A data center, in its most basic form, is a physical facility that organizations use to house their critical applications and data. The design of a data center is based on a network of computing and storage resources that allow for the delivery of shared applications and data. Routers, switches, firewalls, storage systems, servers, and application-delivery controllers are key components of a data center design.

The cost of running a private data center or colocation facility, including the property, building, servers, networking equipment, power, cooling, and other infrastructure requirements, is referred to as data center cost. While a variety of factors influence annual costs, the majority of a provider’s data center costs are determined by three factors: the building’s footprint, the facility’s location, and the center’s function.

READ ALSO: 15 Best Data Tracking Software in 2022 | Full Details

Why Are Data Centers Important to Business?

Data centers in enterprise IT are designed to support business applications and activities such as:

  • Email communication and file sharing
  • Applications for Productivity
  • Relationship management with customers (CRM)
  • Databases and enterprise resource planning (ERP)
  • Big data, artificial intelligence, and machine learning are all buzzwords these days.
  • Services for communications and collaboration, as well as virtual desktops

Why Would You Want To Build A Data Center?

There are a number of reasons why building a data center is most important, especially for businesses. Some of these reasons are:

  • Your data is too sensitive to be stored in a data center built or managed by someone else.
  • You already own a significant portion of the data center, making completion of the project economically feasible in comparison to other options.
  • Other options, such as data center leasing or colocation, are unknown to you.
  • You’d like to be the one who provides leasing or colocation services.
  • You are fearless and have a lot of money.
  • Size is important, and rightsizing is even more so. 

Naturally, there is a relationship between size and the funds required to build a data center, though ballpark figures are frequently all over the place due to various variables.

Let’s say you want to start with $1,000 per square foot. On that basis, a 1,000-square-foot data center would cost $1 million. A data center the size of which Facebook or Google might make use would cost between $250 million and $500 million.

Building a data center requires both money and expertise. If, on the other hand, you are determined to build your own facility, here are some pointers to help you in your discussions with your finance director.

Related Post: What is The Cost of Opening a Hair Salon Business?

1. A structure for a data center

Costs and suitability will differ depending on location. If you want to use a building you already own, make sure it is in the proper location (access, power, network connections, and so on.) Otherwise, find another one.

RELATED:  Wyze Home Security System Review in 2022

2. Servers and storage devices for your data center

If you already have them, remember to factor in the cost of moving and installing them in the new location.

3. Licenses for software

You will require them, whether you already have them or purchase them.

4. Power

Costs per megawatt could reach $100,000. It is conditional. Remember to include backup power sources as well (industrial-strength battery backup and diesel generator, for instance.) Connection to the network. One mile of fiber optic cable could cost up to $250,000.

5. Cooling

You’ll need the equipment to remove the heat, as well as the power to power that equipment. This will all depend on the type of servers you want to run, among other things.

When budgets are in the millions of dollars, rightsizing is unquestionably important. The total cost of your data center will vary depending on the level of reliability and availability you require (Tier 1, 2, 3, or 4.) Making everything Tier 4 when it could be Tier 1 or Tier 2 could be regarded by some as a waste of money. If you have calculated and still insist you want Tier 4, be ready to dig your pockets for it.

READ ALSO: 15 Best Investment Advice Websites with Realtime Data in 2022

How Much Does It Cost To Build A Data Center?

The average data center costs $215.5 million to build and has 165,141 net rentable square feet, according to the US Chamber of Commerce. The following is a breakdown of the costs:

  • IT equipment – $157.1 million
  • Land acquisition – $13.4 million
  • Construction – $45 million

As the demand for data centers grows, organizations are looking for more cost-effective construction methods. But, before we get into how they’re doing it, let’s take a step back and look at how data center costs are broken down in greater detail.

IT equipment

Your data center will require a significant amount of IT equipment, such as racks, servers, switches, and routers. These devices will need to be linked via cabling, which means you’ll also need to invest in network infrastructure, software, and computing components.

Though you may be able to get a discount if you buy in bulk, the amount you spend on IT equipment will be determined by the size of your data center, your company’s needs, and your company’s preferences. While one organization may require only the best equipment, others may prefer a more cost-effective approach to computing resources.

Take a look at the 10 Most Expensive Houses In The US in 2022

Land acquisition

In an ideal world, your organization would already own the land on which you intend to build a data center, and you would have purchased it years ago at what is now considered a steal. However, not every business is so fortunate.

When it comes to deciding where to build your data center, rural areas are generally preferable to urban areas. In fact, CBRE estimated that the cost of constructing a data center in expensive areas such as Boston and Silicon Valley could be 45 percent higher than in less expensive areas such as Tulsa and Charlotte. Furthermore, if your data center is large enough, you may be eligible for tax breaks for bringing jobs to the area.

When building a data center, keeping your initial costs low should not be your only consideration. You must plan how you will keep your data center operational after construction is completed. Rural areas frequently lack the robust infrastructure that urban areas do, such as access to reliable electricity or internet access. This could result in higher costs over time.

RELATED:  How To Write A Check: Step-By-Step Guide


According to Microsoft and Forrester Research, the cost of building the shell of a data center is around $200 per square foot. However, there are numerous other factors that will increase these costs, such as taxes and building permits. This adds an additional $70 per square foot to the cost.

The actual construction of a new data center is often the most time-consuming step in the process, and how quickly it can be completed is determined by a number of factors, including your ability to source labor, weather delays, change orders, and unforeseen circumstances, such as the COVID-19 pandemic. Unfortunately, the longer you delay your construction schedule, the more expensive your data center project will become.

READ ALSO: The World’s Most Expensive Toilet Paper 

Is There an Extra Cost Accompanied With A Data Center Cost?

Building your own data center costs around $1000 per square foot. That doesn’t take into account the fact that it can often cost more than $10,000 per mile to have fiber installed to reach your location. As a result, even small data centers are prohibitively expensive to own and operate. Those expenses could quickly add up.

Here’s a more detailed explanation of why your TCO (total cost of ownership) of a data center may cost way more-

  • Cooling and power aren’t free, and you have to pay for them on a monthly basis. To function properly, your equipment requires two things: a cool environment (to prevent overheating) and power. While they are related, they serve different purposes. Having said that, many people see this as a one-time expense. While purchasing the equipment required to cool and power your servers is expensive, it is the recurring costs that really add up. As previously stated, cooling equipment accounts for 30% of a data center’s energy consumption.
  • For single-tenant data centers, networking costs can be prohibitively expensive. Another recurring cost is networking costs, which are determined by network provider rates. Those are frequently much higher for companies that have built their own data center because providers are incentivized to offer discounts to single-occupant data centers. What they pay at one multi-tenant facility isn’t always indicative of the deal you’ll find for your own networking requirements.
  • Total cost of ownership includes staff costs as well. Sure, you have the equipment, but you also need talent. This includes facility technicians and security personnel. This is not only to avoid critical breakdowns, but it is also frequently required to meet any compliance requirements. Furthermore, a data center must be cleaned at least once a year to ensure that your equipment is in good working order. This will typically cost between $6,000 and $7,000 per year.

Owning Vs Leasing: Which Decision Is Best For Data Center Cost?

It’s easy to see why so many companies have shifted to colocation data centers. Colocation data centers have grown faster than enterprise data centers since 2015. Businesses have recognized the value of leasing space in a well-constructed facility rather than attempting to navigate that space on their own. We have been operating and providing colocation services to a wide range of small and large businesses for over 25 years.


You may want to see: How Much Does An Air Ambulance Flight Cost?

Cost Examples Of Building A Data Center In-House

Building data centers can be costly, according to the Uptime Institute benchmark costs. For instance-

  • Mid-sized Enterprise Data Center (5,000 square feet) Tier II level facility with 160 racks at 5.0 kW/rack (800 kW of UPS-protected power) @ 5.0kW/rack. (5,000 sq. ft. X $300/sq. ft.) + (800 kW x $12,500/kW) = $11.5 million Tier III level facility, with 160 racks at 10.0 kW/rack (1,600 kW of UPS-protected power) @ 10.0 (1,000 square feet)
  • Tier II facility with 32 racks at 5.0 kW per rack (160 kW of UPS-protected power) @ 5.0 kW per rack. (1,000 square feet x $300 per square foot) + (160 kW x $12,500 per kW) = $2.3 million
  • Tier III level facility with 32 racks at 10.0 kW/rack (320 kW of UPS-protected power) @ 10.0 kW/rack = $7.7 million (1,000 sq. ft. X $300/sq. ft.) + (320 kW x $23,000/kW)
  • Tier II level facility with a large “Telco Room” (500 square feet) with 16 racks at 5.0 kW/rack (80 kW of UPS-protected power) @ 5.0kW/rack. (500 square feet x $300 per square foot) + (80 kW x $12,500 per kW) = $1.2 million
  • Tier III facility with 16 racks at 10.0 kW/rack (160 kW of UPS-protected power) @ 10.0 kW/rack (500 sq. ft. X $300/sq. ft.) + (160 kW x $23,000/kW) = $3.8 million

Frequently Asked Questions

What exactly is a data center, and how does it function?

Data centers contain physical or virtual servers that are linked internally and externally via networking and communication equipment. Each server is equipped with a processor, storage space, and memory, similar to a personal computer but with greater power.

What is the purpose of a data center?

A data center is a facility that centralizes an organization’s shared information technology operations and equipment for the purposes of storing, processing, and disseminating data and applications.

How do data centers generate revenue?

Operators of data centers make money by leasing or licensing power and space.

What is the difference between a data center and a server?

The main difference between a data center and a server is that a server runs on a single node with internalized data stores while a data center can run on multiple nodes with externalized data stores.


As businesses expand, so does the demand for dependable and scalable data center space to house IT infrastructure. Any data center or power outage can be crippling to a business, resulting in decreased productivity, customer churn, and lost revenues. Successful businesses frequently outgrow their own in-house computer and telecommunications room. They also need appropriate environments to support software development, testing, quality assurance, and production applications. Furthermore, as companies target enterprise customers, the demand for industry compliance and security grows.

Before expanding your data center, it is critical to conduct a thorough analysis of the costs, risks, and opportunities of building an in-house data center versus purchasing colocation services.


We Also Recommend

Leave a Reply
You May Also Like