How Much Does It Cost To Operate a Data Center?

A data center is the beating heart of your business’s IT operations. It’s where critical systems, storage, and applications live, powering everything from email servers to customer-facing platforms.

However, the costs associated with running a data center can be very high. If the business doesn't effectively manage these costs, it can lead to financial strain or even failure. How much it costs to run a data center will depend on the size of your operation and what your business needs in terms of performance, reliability, and security. 

DATA CENTER OPERATING COST BREAKDOWN

On average, businesses can expect to spend anywhere from a few hundred thousand to several million dollars per year to operate a data center, depending on the size. These expenses go far beyond just buying servers. They include infrastructure, staffing, software, and more. The cost of each of these factors can vary significantly, since no two data centers are exactly alike in size, setup, or operational needs.

Power and cooling

Electricity powers everything, from servers and networking gear to lighting and cooling systems. HVAC units and UPS backups are critical to maintaining optimal performance and preventing costly outages. Power and cooling can be one of the biggest data center expenses, often reaching hundreds of thousands or even millions per year, depending on energy rates, location, and system efficiency.

Hardware and equipment maintenance

Servers, storage systems, and networking hardware require routine maintenance and periodic upgrades. Planning for the equipment life cycle and tracking equipment depreciation helps manage replacement timelines and budgets. Unexpected hardware failures can lead to costly downtime and unplanned expenses.

Facility costs

Owning or leasing space for a data center includes expenses like rent or mortgage, utilities, physical security, and insurance. These costs can vary widely depending on location and the level of facility control required. Colocation and cloud-based alternatives may offer more flexibility for some businesses.

Staffing and personnel

Data centers rely on skilled IT professionals, from system admins to on-site engineers. Payroll costs can be substantial, especially when 24/7 monitoring or specialized certifications are required. Investing in experienced staff is key to ensuring uptime and system reliability.

Network and bandwidth

Fast and reliable internet is non-negotiable for modern data centers. Businesses often invest in redundant connections and premium peering to ensure uninterrupted service.

Software and licensing

Operating systems, virtualization software, monitoring tools, and security platforms all come with ongoing licensing fees. Costs will scale with the size of your infrastructure and the number of users or devices.

Backup and disaster recovery

A solid recovery plan includes backups, off-site replication, and cloud storage solutions. These systems help minimize the cost of downtime and protect against data loss or disruptions.

Miscellaneous and overhead

These are the behind-the-scenes costs that keep everything running—cleaning services, office supplies, staff training, and more. While small individually, they add up over time.

LESSEN COSTS BY OUTSOURCING YOUR DATA CENTER OPERATIONS

Outsourcing data center operations has become increasingly common in the past decade, especially for businesses without a large in-house IT team. The cost to outsource IT services is often lower than the full expense of managing infrastructure, staff, and compliance internally.

At TSP, we offer proactive infrastructure management that scales with your business. Explore our data center services to see how we can help you reduce operational costs for your data center.