Because you have bought the server connectivity, you are not paying to rent the equipment; you are only paying the hosting to physically housing your server. Your are initially investment will obviously be higher but if you buy a quality server, the costs will be lower when averaged over a long period of time.
The Colocation cost will depend on how much space your server’s takes up. Datacenter normally housing the servers in racks, which are then housed in cabinets.
The most common sizes for servers are 1U, 2U and 4U, so your costs will depend on how many units your server’s using. The other factor in how much colocated hosting will cost is the bandwidth you use. Because your server is connecting to the internet via the datacenter connectivity, your cost will depend on how much of data is transferred, and how much of their connection is afforded to your server management.
The colocation, you are in charge of the H/W which in turn means you are responsible for maintain, it in case of problems. If a hard drive crashes or a CPU malfunctions, you will need to arrange for it to be replaced. The dedicated host is the webhosting company responsible for these things so they will take care of any problems that arise
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