Kharmela Mindanao

By: Kharmela Mindanao on October 28th, 2021

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How Much Does a Server Cost? [All Factors Explained]


Are you wondering how much a server costs? A quick answer would be $5000 and above, but that might not be the case for your company. Learn about the factors that go into a server to prepare yourself for this investment.

Server Cost

Have you ever gotten sticker shock from a server 

We get it. At ITS, we've set up servers for our clients. Clients being surprised at the price of BDR servers to storage servers is nothing new, and you're not alone. Here's an article answering the common questions we get about a server's price. 

  • What determines the cost of a server? 
  • What are the components of a server? 
  • What kind of servers are there? 
  • What factors determine future expenses?  

By the end of this article, you'll be able to understand why servers cost as much as they currently do and if it's a good idea for your company to invest in one.  

What Determines the Cost of a Server?  

When clients ask us to give them a quote for a server, the answer is always tailored towards the company's needs.  

It's hard to provide an exact estimate of a server's price because it's an adjustable cost. Three factors typically determine a server's price: 

  • What will you use the server for? 
  • How many people will be accessing and using the server? 
  • And what specific components will you need based on your use case?  

These factors will cause the price of the server to go up or down. In 2021, we've also had to consider the global chip shortage, as this has caused baseline prices to go up. 

However, a reasonable minimum amount to prepare is $5000. Prepare to go higher if you have large data storage needs.  

What Are the Components of a Server?  

$5000 is a lot of cash, especially if you're starting out. Let's take a look at precisely what you're paying for when you shell out that kind of money.  

There are five main components of a server. 

Form factor or the case  

  • Processor  
  • RAM  
  • Storage or hard drive  
  • Power supplies  

Form Factor 

The first component is the form factor or what case you'll need it in. This is determined by the space you have. Also, consider how many servers you'll have.  

Server Form Factors


The second component is the processor, and it determines how many things you can process simultaneously.   

You will already have a processor in the digital device you're using. There are specifically made processors for a server, designed to make them work with other servers. 

Ask yourself the following questions before choosing a processor:  

  • Do you need a single or double processor?   
  • How many cores do you need per processor?   

Your answer will depend on what you'll use the server for. The choice between a single or double processor is a huge factor in determining cost.  

Server Processors - Intel Xeon

RAM (Random Access Memory) 

The third component is RAM (Random Access Memory). RAM allows multiple virtual servers to run or more people to use the same server simultaneously.   

Server RAM


The fourth component of your server is your storage. When deciding what kind of storage device you'll place in your server, you need to take note of how much storage space you need and what kind of drive you need.  

Are you okay with the slower, more cost-effective traditional spinning disk? Or do you need the faster and modern SSDs, which also come at a higher cost?   

HDD vs SSD for Servers

Power Supply 

The fifth and last component is your power supply. For servers, we recommend dual power supplies, which offer you a backup in case one fails.  

BONUS: Warranty 

Technically, a warranty is not an essential part of a server. But it will be nice to have. Although it costs more, we recommend getting a five-year warranty from your vendor.  

A warranty will save you headaches down the road if anything goes wrong with your components.  

What Kind of Servers are There? 

A Technician maintaining a server

Servers are labeled according to their use, and there are different uses for servers. Some of the common uses are: 

  1. For storage 
  2. For virtual machines
  3. For remote desktops
  4. For specialized task

For Storage 

The first common use of servers is for storage.   

You may need a server to hold your files. For small business owners who have around 20 people, this may cost you around $5,000 to $10,000 max.

For businesses that require a lot of hard drive space for archival, video editing, and 3D design, servers can become much more expensive. Your server can cost up to $20,000.  

For Virtual Machines 

Virtual Machine

The second use is for setting up multiple virtual machines.   

Multiple virtual machines allow you to have one server running different business applications like active directory and email.   

The cost depends on how many virtual servers you need to run, and it's hard to give a range.  

The more virtual servers you need to run, the more expensive it will be.  

However, be careful not to over-engineer your server. It's good to have enough, but we want to ensure we don't get more performance than we'll need. It's like buying a gaming PC when you only need a computer for web browsing and email. 

It’s essential for you to consolidate your servers properly to avoid over-engineering.  

For Remote Desktops 

The third use is for remote desktops, and this is like having your own private cloud that you can remote into.   

Servers for remote desktops often cost much more than your typical server, and it allows multiple people to run their own instance of Windows.   

For a server that will be used by 20-25 people, it will cost around $15-$20,000 per server. 

For Specialized Tasks 

In some cases, businesses might consider purchasing a server for a specific use case like a particular business application.   

An example of this would be a server dedicated to accounting tasks.   

The cost of these kinds of servers will depend on the requirements of the services you'll run on these servers.  

What Factors Determine Future Expenses? 

For future repairs, the most crucial factor to consider is the length of time you've had a server. Purchasing a server is like buying a car. It will run great the first few years, but after some time, you'll need to do some repairs.   

Eventually, you'll need to get your server replaced 

Some servers last up to ten years, while others last only three or even two years. But it's best practice to replace your server about every five years. 

Want to Reduce Server Costs? 

Savings on Server

To sum everything up:

  1. The cost of a server is determined by what you will use the server for, how many people will use it, and the hardware your tasks require. 
  2. A server has five main components: Case, Processor, RAM, Hard Drive or Storage, and Power supply. The warranty also factors in when discussing cost. 
  3. Some of the more common servers are storage servers, virtual machines, and remote desktop servers. 
  4. The cost of servers can range from as low as $5,000 to over $20,000. It all depends on your needs. 
  5. A server needs constant maintenance and should be replaced after five years.  

It's also worth noting that the global chip shortage brought about by the COVID-19 pandemic has caused baseline server prices to go up. It has affected everyone's ability to get computer parts and cars, as the supply had gone down when demand skyrocketed.  

Therefore, companies need to ensure the equipment they have is adequately maintained to prevent more future expenses. Read "Server Maintenance: Where to Keep Your Server" to help lower your server maintenance costs.  

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