Are you/BCD over specifying hardware or is it possible your competitor is underspecifying? It may be worth a look into what they are providing versus what you are providing. There is usually a "tax" that is added to the processor load just by being virtualized. I would think dedicated hardware would win out in terms of price. If your competitor is winning a feature-based comparison between their virtualizing and your dedicated hardware it is possible that the only viable course is to adapt.
Rolling up your own server is not too difficult though I would advise investigating the real long term cost. I used to build servers using iStar chassis and the higher end Intel motherboards. The biggest challenge is there are few resources available for support under this model. My lesson learned is that if I built my own I have to support my own. This can be a drain on resources particularly if there is a bad batch of components.
White label servers from companies such as SuperMicro are one option that is available to all, just get an Ingram Micro account. If you have the volume perhaps you could buy custom servers from ODMs like Foxconn, Pegatron, or Quanta.
I was always pretty pleased with BCDVideo. If you do not/will not acquire the necessary personnel to support any of the above options then I strongly recommend sticking with BCD.
Seneca Data is another option/competitor to BCD. I have found their equipment options rely too heavily on consumer motherboards/processors for my taste. The units that make use of consumer chipsets are likely to be more cost competitive though.
YMMV