When planning server upgrades and features, cost is always high on my personal consideration list. This isn’t just an upfront cost or a monthly cost but what gets called the total cost of ownership. What you pay over the life of the box.
If you look at buying servers the prospect of up to a few thousand pounds upfront can seem a lot. However think about how long the hardware may run for. It may not be as bad then, rented servers are nice when you need something quick or plan to upgrade often but as soon as you start to look at keeping them for longer periods of time then you can pay way over the odds for them.
In this case, recently I have just bought myself a cheap HP server to host my personal websites on (this blog, www.ontvnow.co.uk and a couple of other sites), for £500 I can get a Quad Xeon server, 8GB RAM and Dual 1TB (RAID 1) hard drives. This gives a nice light weight server to handle simple web serving and doesn’t cost the world.
I will probably keep this machine running for 3 years, so add in colocation costs for a single U of about £70 / month for 36 months that equates to about £3000 over the ‘life’.
As soon as you look at servers elsewhere of a similar spec, you are talking at rents of £250+ a month for a similar spec machine, giving over the same 3 years a cost of £9000. Potentially three times the cost for the same hardware, but at the end of that, you don’t own anything.
If you have the ability to run it, suddenly it becomes quite cost effective to colocate a server. Maybe more so than quite a few realise.