How much does a Server Cost for Small Business

June 12, 2022
06 mins 52 seconds

Author: Haziqa Sajid

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Server costs can be complicated to understand. Especially if you’re a small business, the decision is more critical as you’re on a budget and want to avoid overspending. This is why making sure that the server meets your internal needs (such as data and network needs) is important.

If you’re here reading this, the chances are you need a server because:

  • Your business is ready to scale
  • You require remote data access
  • You’re looking to increase connectivity between in-house staff and clients/customers
  • You’re looking to increase uptime
  • You want to backup your data/create a Disaster Recovery Plan (DAP)

It’s safe to say that the list goes on. However, deciding on getting a server is just the first step. The most critical step is analyzing your internal requirements and estimating your cost.

This is why we’ve listed all of the factors you should keep in mind and given some estimated costs that you will likely pay. Let’s break things down and see what figures we come up with.

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1- Two Routes to Take: Renting vs. Owning a Server

Renting a Server

Benefits

  • Low-upfront costs
  • Easier to switch/upgrade if the current plan is not meeting the requirements
  • Server maintenance is the responsibility of the service provider. This reduces the time, resources, and costs you’d be spending on server maintenance if you owned it
  • More reliable as any issues that arise is the responsibility of the service provider to resolve.

Drawbacks

  • In the long run, renting a server costs more than owning a server.
  • In case most data is stored on the server, issues can arise if you wish to discontinue your current service provider.

Owning a Server

Benefits

  • While upfront costs are high, you save more in the long run.
  • Greater control
  • More privacy

Drawbacks

  • Additional server maintenece costs and hardware acquisition costs.
  • Hardware replacement costs are higher
  • Responsibility for data protection falls entirely on you

What Route makes more sense for a small business?

If we compare renting vs. owning a server, it’s pretty clear that renting a server is the more viable option. Small businesses can start without investing a lot of capital and avoid the hassle of server maintenance and security.

Of course, there is always room for exceptions. Some small businesses might have specific requirements that make it essential to own a server altogether.

2- Keeping in Mind the Difference between On-Premises Servers and Virtual Servers

On-Premises Servers

On-Premises Servers (also referred to as Physical Servers) have on-site hardware infrastructure. They can be thought of the same way as your usual desktop computer but running on a larger scale to meet greater computational requirements.

Like typical computers, they are also made up of the same components such as a CPU, SSD/HDD, RAM, etc. Additionally, it’s important to note that an on-premises server can only run one OS. If the user wants to use an additional OS instance, a separate server must be purchased.

Virtual Servers

In comparison, virtual servers use software to represent the hardware components (such as a CPU, SSD, RAM, etc.). While hardware runs the virtual server, the software-based architecture allows multiple OS instances to run on a single virtual server.

Virtual Machines (VMs). It’s easier to scale with a virtual server, as it can have multiple OS instances in parallel.

Which is better for Small Businesses?

On-Premises/Physical Servers Virtual Servers/Virtual Machines
Require a high initial investment Requires a low initial investment
Take up a lot of physical space, as each OS requires a separate server Takes up little physical space, as one virtual server can run multiple Virtual Machines (VMs)
Have a shorter life cycle due to compatibility issues Virtualization allows greater back-end compatibility and support for legacy applications
Carry additional costs when hardware needs to be upgraded Virtualization allows the user to change the hardware easily
Have scalability issues Easier to scale
Require hardware maintenance Because most hardware is virtualized and represented through software, there is little requirement for hardware maintenance

The above comparison was made keeping small businesses in mind. Which is why the comparison is more positively tilted towards virtual servers. There’s a reason why small businesses are choosing services that offer virtualization solutions such as V2 cloud.

Again, there is always room for exceptions if a small business has very specific requirements and why they might be inclined to go for physical servers. You can always book a 1:1 session with an expert to further understand whether your business needs a virtual or a physical server..

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3- No. of People Using the Server

As the number of people increases, server usage increases as well. In our case, we’re considering prices for a small business with around 20-30 people who will be using the server regularly. Of course, even with small businesses, the numbers can vary as some small businesses might even have 100 people employed using the server. While giving cost estimates due to these can be a jarring task, we’ll keep our estimates to costs that the average small business is likely to incur.

4- Considering Specs and How They Affect Pricing

It’s easy to get bogged down when considering very specific questions such as “What bandwidth would be enough?”, “Is 256GB RAM too much?”, “Would I be overspending if I get 1TB of storage space?” etc.

If you’re a small business, it’s understandable you fear overspending when choosing specs. So, let’s break down some viable options if you’re a small business.

I- Bandwidth

  • 10 TB Bandwidth
  • 1 GBPS Network connection

II- Operating System (OS)

  • Windows and Linux are the two main choices for server OS. Other choices such as Ubuntu, VMware, and XenServer are also used in specific cases.
  • Windows server can also be used, but you should keep in mind the licensing costs with Windows might result in added costs.

III- Storage Space

  • 2 x 500GB SSD (if you’re renting)
  • Around 35 TB HDD (if you’re purchasing)

IV- RAM

  • 64 GB (if you’re renting)
  • 16 GB (if you’re purchasing)

V- CPU

  • A 2.7 GHz processor with 12 cores and 30M cache would be more than enough for a small business.

Disclaimer: It’s important to understand that these specs, while generalzied, might still not be relevant to many small businesses. In some cases, the number of employees and app usage might be considerably less, resulting in a lesser RAM requirement. Some businesses might not require 10 TB of bandwidth, given limited usage requirements.

Since a number of other factors are also entangled with the specs you’ll be getting, you can consult one of our experts to better help you understand what specifications would make more sense in your case.

After Purchase Considerations: Keeping in Mind Maintenance

Costs

After you’ve estimated the cost, purchased a server, and successfully deployed it, you still need to consider server maintenance costs. If you’ve rented a server, this might not be required as the service provider will be responsible for server maintenance.

But, if you’ve chosen to purchase a server, the responsibility will fall on you for regular maintenance. It’s also important to keep in mind that a server’s life hashas around five years. After that, you’ll need to replace the server altogether.

Given All of This, What Costs Should a Small Business Keep In Mind?

The following price range is according to the number of people using the server and the amount of usage involved for a small business.

Of course, some business requirements might vary. This can cause costs to exceed the budget.

Renting a Server Owning a Server
On-Premises Server $150-$300 per month (Costs of renting a dedicated server) $1500-3000
Virtual Servers $40-80 per month $500-1000

If you’re still unsure after reading the costs above, you can reach out to us for a free consultation to further help you understand server costs specific to your business.

Book a 1:1 Session: How V2 Cloud can Help

Despite getting these cost estimates, you might still have doubts. Each business has its own specific requirements. After understanding how pricing for servers works, the fear of overspending can be minimized.

V2 Cloud can help you understand what route matches best with your internal requirements, and help you migrate your IT infrastructure to the cloud. For small businesses, choosing services such as the V2 cloud is more worthwhile, as we can help you scale as your requirements grow later on. Because we help you deploy a virtual server, the fear of overspending or underspending also goes away. You can reach out to us and we’ll be happy to help you get your server up and running in no time.

Written By: Haziqa Sajid

Freelance tech writer and content marketer for tech, SaaS, and AI companies | Helped 50+ tech businesses with engagement-driven content.