I've been working with moodle for about two years now. A couple of months ago I started a small company dedicated to hosting applications for schools. I try to keep the costs as low as possible. One server will serve 1 to 10 schools; depending on the amount of users. You can take a look at my website for the prices (I'm working on an english translation at the moment; sorry for that..) Hosting for a school with 500 - 750 users will cost 1025 a year (7500Mb diskspace, 45Gb bandwith).