Embedded Datacenter Cost — Full Document

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title: "Build vs. Buy: Datacenter Cost Analysis"
date: 2026-03-18
author: Larky
description: >
  Should you build a small dedicated datacenter or rent space in
  someone else's? This document models the full lifecycle cost using
  CalcMark's embedded mode.

Build vs. Buy: Datacenter Cost Analysis #

Should you build a small dedicated datacenter or rent space in someone else’s? This analysis models the full lifecycle cost — capital expenditure, operating expenses, depreciation, and a head-to-head comparison with colocation.

All costs are in USD. The facility is 1,000 square feet, a typical size for a small private datacenter.

Facility Construction #

Construction costs for dedicated datacenters typically range from $625 to $1,135 per gross square foot. We use a midpoint estimate:

sqft = 1000
cost_sqft = $875
capex = sqft * cost_sqft

The budget is heavily weighted toward electrical and mechanical systems, not the building shell:

capex = $875000

elec = 42.5% of capex
hvac = 17.5% of capex
fitout = 22.5% of capex
shell = 17.5% of capex

Power Infrastructure #

Datacenter construction is often quoted per megawatt (MW) of commissioned IT load. Standard facilities run $7M–$12M per MW. Our facility has a modest 200 kW load:

it_load = 200 kilowatts
load_frac = 1/5
mw_cost = $9.5M
power_capex = load_frac * mw_cost

International Equipment Pricing #

Specialized cooling equipment from a European vendor, quoted in euros:

---
exchange:
  EUR_USD: 1.09
---
eu_cooling = €45000
cooling_usd = eu_cooling in USD

Operating Expenses #

Ongoing costs for a small datacenter typically fall between $50,000 and $100,000 annually, dominated by maintenance (40%), electricity, and labor:

opex = $75000
maintenance = 40% of opex

Operating costs don’t stay flat. Assuming 4% annual inflation, here’s where opex lands after 5 and 10 years:

opex_5yr = compound $75000 by 4% over 5
opex_10yr = compound $75000 by 4% over 10

Equipment Depreciation #

Servers lose value quickly. Declining-balance depreciation at 20%/year over a 5-year refresh cycle:

servers = depreciate $200000 by 20% over 5

Cooling systems last longer — a $45,000 unit at 15%/year with a $5,000 salvage floor:

cooling = depreciate $45000 by 15% over 10 to $5000

Colocation Alternative #

Colocation means renting space in a third-party facility. A typical 10-cabinet setup runs about £2,200/month:

---
exchange:
  GBP_USD: 1.27
---
colo_monthly_gbp = £2200
colo_monthly_usd = colo_monthly_gbp in USD
colo_3yr = $2794/month over 3 years

Build vs. Buy Comparison #

Compare 3-year total cost of ownership:

capex = $875000
opex = $75000

build_tco = capex + (opex * 3)
colo_3yr = $2794/month over 3 years
savings = colo_3yr - build_tco
build_is_cheaper = build_tco < colo_3yr

Modular Alternative #

Modular (prefab) datacenters offer a pay-as-you-grow model. Starting with one module and adding one per year:

grow $150000 by $150000 over 4

Modular builds typically save 20–30% on upfront capital:

capex = $875000
modular_savings = 25% of capex

At Scale #

What if you’re planning a fleet of 1,000 identical facilities?

---
scale:
  factor: 1000
  unit_categories: [Currency]
---
capex = $875000
opex = $75000
build_tco = capex + (opex * 3)

Methodology #

• CapEx benchmarks sourced from Uptime Institute and Turner & Townsend datacenter cost surveys (2024–2025).
• OpEx ranges based on industry averages for Tier II facilities under 5,000 sq ft¹.
• Depreciation uses declining-balance method per IRS Publication 946, Modified Accelerated Cost Recovery System (MACRS).
• Colo pricing reflects UK market rates for managed colocation with 2N power redundancy².