What is a dedicated server?
A "dedicated server" is a server that you hire from your hosting company. The hardware remains property of the hosting company.
The advantage is that you are never charged for purchases or replacement of the hardware, and that no large investments are needed. Furthermore, you have all the benefits of an owned server: A lot of CPU power, disk space, lots of RAM and no other clients on the server.
You pay a fixed amount per hired dedicated server. This rate is based on the purchase price, power consumption, and the facilities offered by the server.
You pay for data traffic in Mbps (Mbits per second). You pay 95% of the highest values measured traffic. It is possible to buy traffic starting at 0.5 Mbit/s. Your traffic is not limited to the number of Mbits that you buy. The traffic is billed each month based on the actual use.