That is correct. In some cases, the setup fees are just an option that lowers your monthly cost. For example, if you are renting a server for 2 years, it doesn't really make sense to pay $10/mo. ($240) for an 16GB RAM Upgrade. The memory stick could be worth $80, and you end up paying three times as much. So instead, we offer the option to pay only $80 one-time, and then you can save a considerable amount of money over the long term, especially if you keep the server even longer.
From our side, we leave potential revenue on the table, but we have the comfort of knowing the server is much more likely to be rented for a longer period of time which is a win for us.
Now of course there is an inherent cost to setting up a dedicated server. It's not like a VPS where a push of a button creates a virtual instance. Someone has to physically configure the server like you wanted it, an OS needs to be installed, hardware checked, licenses issued, etc. It takes time. So if a customer rents a server for just a month, especially in the low price arena, there's a good chance that most (if not all) of the first month's payment would have to go to cover that labor (on top of the inherent costs of putting a server online (HW price, power, space, bandwidth)). Some hosts prefer not bearing that risk and they charge a setup fee just to cover those costs. Otherwise they have to spread that risk over the sale price of all of the servers and have higher prices.
So the direct nature of setup fees varies from host to host, but the overall result is you have a lower cost over the long term.
