Cloud hosting costs and cloud storage costs both hinge primarily on the volume of data being stored and transferred
As one of the great tech innovations of the 21st century, the cloud has triggered a paradigm shift in daily operations for businesses across the globe. From massive storage capacities at low cost to virtual machines plugging away at calculations, the cloud can cut down on expenses and offload work, making business more efficient from multiple angles. But migrating to the cloud requires careful planning, as cloud hosting costs can quickly add up. Knowing what affects the price of cloud computing and storage can help your business find the most efficient possible solution.
Private, Public, and Hybrid Clouds
There are three approaches businesses can use to incorporate the cloud into storage and hosting. The first is the creation of a private cloud owned and operated by the business itself. This solution can be very attractive to businesses that need particularly low latency responses, want to maintain dedicated infrastructure and avoid multitenancy issues, or care to keep the entire tech stack in-house for whatever reason.
Those are all legitimate reasons to operate a private cloud for your business, but they must be weighed against the costs of doing so. These clouds require heavy upfront investment in server infrastructure and the staff to service it. Once the cloud servers are live, your business is responsible for making sure they stay active and available as much as possible. If your servers contain client info such as payment or protected health information, they must also meet the strict security requirements set forth by the Payment Card Industry Security Standards Council and laid out in the Health Insurance Portability and Accountability Act (HIPAA) among other possible standards. An analysis by Sherweb found a small business would likely pay an average of $1,476.31 per month for an on-premises private cloud.
Public clouds are what most people think of when they consider the cloud: servers operated by Platform-as-a-Service (PaaS) companies such as Heroku and Google Cloud. With these cloud services, your business pays for the amount of cloud computing and storage it requires while passing the onus for availability, operation, maintenance, and security on to the provider. Cloud storage costs and cloud computing hosting costs can be significantly lower, especially in the short term, when using one of these services. On the other hand, if the cloud service goes down, your business may lose business and productivity while you wait for it to be restored. Sherweb’s analysis estimated a small business with the same configuration would pay $313.90 per month using a public cloud solution.
A hybrid cloud approach keeps some services and applications on private cloud servers and others on public ones. This approach allows businesses with sudden spikes in activity to scale up their public cloud use ad hoc while maintaining a private cloud as a baseline. For businesses looking to move functionality to the cloud, the hybrid approach allows them to control the pace of the shift. That’s critical, as migrating to the cloud requires rigorous preparation and lockstep cooperation across the company. We’ve created a free resource to provide a guiding framework that helps you make the transition as smoothly as possible. Download the Essential Cloud Migration Checklist for free to help ensure your team remains goal-oriented and aligned throughout the migration process:
Breaking Down Cloud Hosting Costs
Cloud hosting costs are typically charged by the hour or by the second, with rates set by the provider. Several factors can affect that rate. They typically include:
- The number of virtual CPUs used
- Total memory
- Network performance
- Region
- Host operating system
As an example cloud provider, let’s look at Amazon cloud storage costs. Using the AWS offering Elastic Compute Cloud (EC2), a cloud server using one vCPU with 2GB of memory and network performance of up to 10 GB, running on Linux and operating out of Ohio would cost $0.0255 per hour using on-demand pricing. On the other end of the spectrum, an instance running 128 vCPU with 4,096 GiB of memory running on Windows and operating out of Northern California would cost $40.568 per hour. Generally speaking, higher performance in more desirable regions costs more.
Pricing Models
Cloud hosting costs break down further according to the pricing model you select. Most businesses offer at least two pricing models for hosting: on-demand and reserved instances.
The on-demand model is the most flexible, allowing you to pay only for the hosting and computing you need when you need it. That flexibility tends to come at a greater cost, but it can be especially useful for test periods or applications with highly variable computing demands.
Reserved instances, on the other hand, represent dedicated hosting or computing capacity your business commits to using for a one- or three-year period. When deployed carefully, reserved instances can help lower the price per hour of your cloud usage. That makes them well-suited to applications that face stable demand. Providers are also typically happy to sell you additional on-demand capacity if demand spikes; however, failing to use all the computing you’ve paid for can result in inefficiencies.
Some providers, such as AWS, also offer a third model, which Amazon refers to as Spot Instances. These are EC2 instances that aren’t actively in use, but that don’t provide the same availability as standard, on-demand instances. As a result, they’re best suited to stateless, fault-tolerant, or flexible applications, and can be deployed to launch hyperscale workloads at affordable prices — up to 90%, per Amazon.
Breaking Down Cloud Storage Costs
The storage needs of a company are often quite different from those of the consumer. Amazon Cloud Drive costs $6.99 a month for 1TB of storage, but the amount of data a business handles often exceeds the capacity of end-user cloud storage solutions. With Amazon Simple Storage (S3), for instance, you’ll pay $0.023 per GB per month for the first 50TB you store. That price goes down as you scale your storage needs up to 500 TB, with the per GB rate dropping to $0.021. The average storage costs for cloud SaaS come to around $11.64 per employee.
What can drive your costs up, however, is how often you use the files you store in the cloud. Providers typically charge for each operation you perform on files you’ve stored, but those rates vary according to the type of storage you select. Hot storage costs more per GB, but charges less for each operation. Cold storage inverts that price relationship. Amazon doesn’t make this delineation, but with Microsoft Azure, hot storage begins at $0.018 per GB for the first TB, and archive storage can go as low as $0.00099 per GB. Reserved options can also be purchased for storage on one- or three-year terms, offering reduced rates.
Some providers charge a fee for removing more than a certain amount of data from storage, no matter the activity level. In Amazon’s case, taking more than 1GB of data out of S3 in a single month incurs a fee.
Power Efficient Cloud Computing with DuploCloud
No matter which mixture of cloud hosting and storage you choose, you can reduce your costs with the deployment optimization powers of DuploCloud. We designed our all-in-one DevOps Automation platform to automatically supply secure, compliant infrastructure. That helps accelerate deployment, cut down on human error, and ultimately reduce development costs by as much as 75%. Contact us today for a free demo.
