Contabo VPS
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Always a good question. Let's run some numbers and see...
Entry level server (often the hardest to make money on) is $7.38/mo. They are using KVM so no surprises here. Let's look at a server with, say, 128GB of RAM which would probably be common. That will give us 21 VMs on it at 6GB each. RAM is the real bottleneck as it cannot be reasonable oversold like CPU or storage. Nor can it be deduped in a reliable way. So RAM is generally our capacity gauge on a VPS.
At 21 that is $155/mo in revenue for a single physical host. As Tier IV colocation can house a server like this for $50/mo that would give us $105/mo to cover the hardware and support. Realistically a VPS provider may not be in a Tier IV and certainly is not buying their space by the U but is buying it by the rack or larger or building out their own. So really, we'd expect the cost for this to be closer to $20 - $30/mo, so there is a lot of profit room in there, and I've seen places doing it for closer to $10, but none that we'd considered viable.
So even assuming $105/mo that is $1260/yr per host. A 128GB whitebox server for this workload might easily be under $3,000. Over five years, that would imply $3,300 for labour and any replacement parts needed for the unit. If the unit is stretched to six years (not very likely) the profits would likely increase significantly. Since the labour is nearly all in the racking and this is assumed to be done at volume, clearly this is not creating any millionaires overnight. But the cost is not impossible to see turning a profit.
If they can get the servers to higher densities, say 256GB of RAM for $4,000, which is very reasonable, you can extrapolate the vastly higher profit potential. Running that number again, that would be 42 VMs per server for $11,600 total revenue over five years with the same monthly costs and labor. Much easier to see that labour could be covered during that time.
In reality, a VPS provider is likely using boxes with 512GB or more. Even if the boxes are a little more costly, the labour reduction offset is likely well worth it.
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@scottalanmiller Do you know how well nested KVM works?
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@scottalanmiller Did you see this? https://contabo.com/?show=colocation
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@aaronstuder said in Contabo VPS:
@scottalanmiller Did you see this? https://contabo.com/?show=colocation
Nice, wish that I had a quick guide to how much power is needed for different scenarios.
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@aaronstuder said in Contabo VPS:
@scottalanmiller Do you know how well nested KVM works?
Have not tested it.
