Why Is Colo More Expensive Than Dedicated Hosting

For the last few weeks I have been looking around at various colo and dedi offers here and there because I was thinking of saving some money by colocating a server and I noticed that everyone who offers both colo and dedi have things fixed so that the colo is much more expensive than renting a dedi from the same people in the exact same datacenters!

You would think that since a brand new server costs between $500 and $2500 to build or buy that amortizing of the cost of the hardware would make the dedis more expensive but in fact the opposite is true 90% of the time and only rarely does a host offer a colo plan that even matches their dedi plans. There are exceptions, like FDC for example but most of the time when you sit down and look at the price per mbps and the price per amp the colocation for a standard 8GB/quadcore/500GB server doing 2 TB of bandwidth is more just in monthly rental than if you rented a dedi(that the company owns).

So, in other words if I am renting a dedi with 8GB RAM, Quadcore CPU, 500GB hard drive with 5000 GB bandwidth quota on a 100mbps uplink for $125 to $150 a month and I wanted to save money by swapping it out with my own dedi of the same specs I would right away lose the cost of the dedi and then each month lose even more just in the colo fees along.

So what exactly is going on here? Are hosts overselling their dedis and making losses on a few but profits on most? And then on top of that artificially bloating their colo prices to encourage people to rent dedis instead? Or...do they just bloat colo prices out of fear and expectation that anyone who colos will be blasting their servers to the max and sucking up the mostest amps while using all the bandwidth that they buy?