A well-negotiated colocation contract can save your organization hundreds of thousands of dollars over its term. Here are our top 10 tips for securing the best possible deal.
1. Know the Market
Before entering negotiations, understand current market rates for your target market and deployment size. Stacked AI’s pricing benchmarks cover 50+ markets and give you the leverage of data-backed comparisons.
2. Compete the Deal
Never negotiate with a single provider. Even if you have a preferred facility, soliciting competing quotes gives you leverage and ensures you’re getting market-rate pricing.
3. Negotiate Power Pricing Separately
Power is typically the largest cost component. Negotiate $/kW rates independently from space and services to ensure transparency and competitiveness.
4. Push for Flexible Terms
Standard contracts are 3–5 years. Negotiate for: – Growth provisions: Rights to expand at predetermined rates – Contraction rights: Ability to reduce footprint with reasonable notice – Technology refresh clauses: Options to adjust power density without renegotiation
5. Cap Annual Escalations
Many contracts include annual price increases. Negotiate caps (e.g., CPI with a maximum of 3%) rather than accepting open-ended escalation clauses.
6. Define SLAs Clearly
Ensure SLAs cover: – Uptime guarantees: 99.99% or higher with meaningful penalties – Response times: For support tickets and on-site technicians – Maintenance windows: Scheduled vs. emergency maintenance protocols
7. Negotiate NRC Waivers
Non-recurring charges (installation, setup) are often negotiable, especially for larger deployments or longer contract terms.
8. Include Right of First Refusal
Secure rights to adjacent space or additional capacity before it’s offered to other customers.
9. Address Exit Terms
Understand early termination fees and negotiate reasonable exit provisions. Life circumstances change — mergers, technology shifts, or business pivots may require flexibility.
10. Get Expert Help
Colocation contracts are complex documents with significant financial implications. Working with an advisor like Stacked AI ensures you don’t leave value on the table and that contract terms protect your interests.