I'm trying to determine if I can use a single firewall for my entire network, including customer servers, or if each customer should have their own firewall. I've found that many hosting companies require each client with a cluster of servers to have their own firewall. If you need a web node and a database node, you also have to get a firewall, and pay another monthly fee for it.

I have colo space with several KVM virtualization servers hosting VPS services to many different customers. Each KVM host is running a software iptables firewall that only allows specific ports to be accessed on each VPS. I can control which ports any given VPS has open, allowing a web VPS to be accessed from anywhere on ports 80 and 443, but blocking a database VPS completely to the outside and only allowing a certain other VPS to access it. The configuration works well for my current needs.

Note that there is not a hardware firewall protecting the virtualization hosts in place at this time. However, the KVM hosts only have port 22 open, are running nothing except KVM and SSH, and even port 22 cannot be accessed except for inside the netblock.

I'm looking at possibly rethinking my network now that I have a client who needs to transition from a single VPS onto two dedicated servers (one web and one DB). A different customer already has a single dedicated server that is not behind any firewall except iptables running on the system.

Should I require that each dedicated server customer have their own dedicated firewall? Or can I utilize a single network-wide firewall for multiple customer clusters?

I'm familiar with iptables, and am currently thinking I'll use it for any firewalls/routers that I need. But I don't necessarily want to use up 1U of space in my rack for each firewall, nor the power consumption each firewall server will take. So I'm considering a hardware firewall. Any suggestions on what is a good approach?