Keith D. Taylor
Chief Financial Officer at Equinix
Yes. Well, there's a lot in there. I think one of the things I said on a prior call this morning, I think one of the advantages that we have is that we are a destination, we are a platform, we have an ecosystem and with that has come higher pricing. So when you look at our price points, remember I -- I -- we share with you every quarter what our prior average comps of prices, it's a composite, things are going to move around a little bit depends on timing of installations and all of that and as we get bigger and bigger, then there'll be less volatility in that number.
But you can see the bias has always been up into the right and we talk about firm pricing. And so, as the U.S. dollar number and as you increase your pricing on cross connects, so if you sell more incremental services, that price point moves up on an ARPU basis. But I think the more fundamental question is, what is the spot price and I would say that we -- we get a price point that very few get. We look for 20% to 30% return on our money before you put debt on the business.
We've been enjoying that for a period of time. We've got the lowest cost of capital on the business. And see -- so even on the margin, again markets will be different. Tokyo is going to be a different returning market than say a Singapore. But when you look at our cost of capital, we don't arb over cost to capital. We expect to return on the -- when that team looks for -- for us to make an investment decision, we're going to measure them against everybody else, and say, well I can get 20% over here or 30% over here, why would I do something at 15% or 11%.
And so, we're very disciplined number one at that, so getting the right return profile. But it's because we also know what the empirical data is, what is the price point in the marketplace, what is the fuel rates, what are we assuming for large footprint and it's all of that that comes together allows us to enjoy what I think is the pricing environment for us, that -- that is much more predictable. And we enjoy that because we live in an ecosystem, we have an asset I think is -- we have assets they look good, feel good, that are in the right markets, they are high -- we operate with high reliability, but they also sit on top of our bedrock, our networks, our cloud and IT services company, so pricing overall, I feel very, very good, good about.
And you've seen us in select cases move pricing up, cross connects in Europe. We knew that where we want it to be as a company and the value we're bringing to the table, we felt that it wasn't reflected in the price points and that was because of market conditions and how the market evolves in Europe relative to the other regions of the world. So feel good about that.
I think about churn, churn is largely because of Verizon, less big deals in our system today. Churns feels good, it feels it's going to be in the lower end of the range as we said. And that feels good, and we have churn because we have a ecosystem in a thriving market, customers can come and go, and the customer typically doesn't leave, but they -- their deployments change and evolve and so we always measure gross activity. Yes, we report to you net activity, because ultimately that's over represent itself in our financial results. But the health of the system is based on the amount of gross activity because we want customers to come in and try and buy and change and move to different markets and all that.
And so, the -- I mean the last part, which is really about inflation. So what's the environment like today. I think you're hearing from many a company, there is an upward bias on price, because we are in a period that I think requires a price adjustment, is reflective -- should be reflective of market conditions and yes, we still get -- we're still going to get nice returns in our business. But I also think that you've got a higher utility costs, higher labor costs, higher material costs and at some point you've got to get a return on that investment. And the market expects it.
It's like, you know you're going to pay more for your milk, it is, if you're a consumer. You know you're going to pay more for your fuel, and you just go to the gas pumps today and you feel it. Well, I mentioned that translates into what happens in the commercial world and -- and if you will, in the corporate world and so people who will have to pay more for their services over time because their costs are going up and we can't eat them all, some we eat and some we don't eat. So I think the industry as a whole will have to adjust accordingly.
If I -- again, I mentioned on one of the earlier calls today, I said one, if you think about the floor, I think the hyperscalers are a perfect example. They say look, I know what you -- I know what it's going to cost me to build. I'm going to let you build that for me, I'll sign long-term contract and so you price to return. So they said, I know what you corresponding that, we'll disaggregate it, we'll put it back to you and so this is what your return and we've always said 8% to 12%. Our cost of capital is the lowest in the industry. And we've been driving our cost of capital. We don't arb over our cost of funds as you know, as I said.
And so, if that's the floor, even if we just played in the xScale game which would be highly consumptive of our balance sheet, it's still going to get a -- it's a good returning business relative to your cost. That's not what we want to play. We want to play in the stuff that's the high value stuff and that returns of 20% to 30% that I referred to allows us to make the investments we need to scale the business to where we want it to be.
And as a company, I think we're just being very disciplined about investing today for tomorrow's opportunity, because we can't -- you can't get there without investing today. Because you can't wait to be a $10 billion company to invest in $10 billion infrastructure. You'll crush under the weight as I said. So that -- so hopefully, that gives you a sort of a broad set of just the things that we're thinking about and the escalators are everyone's negotiated differently. It depends on the customer and the contract, but overall, we're looking at 3% to 5% is typical, sometimes it's 2%. It just depends on who the customer is and what they negotiated and the point that they started from.
And again, it's not a loss to new signing that we always talk about net pricing actions and if it's net positive, that tells you and the bias has always been net positive probably for the last 10 years -- 10 or 15 years and you can tell that where the price decreases are being absorbed by the price increases and then we get more and that's always very accretive to our MRR per cabinet metric and reflective to the overall value of the business.