It’s a common occurrence for companies to spend more than necessary on cloud computing. In fact, according to CloudZero, many businesses are unaware of the savings they could be making. Fortunately, there are ways to calculate and optimize your cloud costs. Let’s explore how.
How Much Does Cloud Computing Cost?
The cost of cloud computing varies depending on your specific needs. On average, enterprises spend over $1 million a year, while small and medium-sized businesses spend between $600,000 and $1.2 million annually. However, these figures do not include other costs like cloud migration and refactoring.
To calculate your cloud costs, you can use the following formula: Total Cloud Cost (TC) = Service You Select (S) x Unit Price You Pay (P) x Volume You Use (V). Keep in mind that each organization’s costs will differ, even within the same industry.
How Much Do Companies Spend on Cloud Computing Today?
According to Gartner, public cloud end-user spending is projected to reach $600 billion in 2023, with Infrastructure-as-a-Service (IaaS), Desktop-as-a-Service (DaaS), and Platform-as-a-Service (PaaS) experiencing the highest growth. Despite these numbers, a staggering 70% of organizations have limited visibility into their cloud spend.
This lack of insight leads to unnecessary expenses. In fact, companies lose approximately 28% to 32% of their cloud budget to avoidable wasteful spending. It’s crucial to gain a clear understanding of where your cloud spend is going to optimize your costs effectively.
How Much Does Cloud Computing Save?
While cloud computing offers potential savings, it’s important to note that these savings aren’t automatic or immediate. Companies must adjust their workloads and processes to take full advantage of cloud benefits. According to Clay Magouyrk, Senior Vice President of Engineering at Oracle Cloud, customers can save 30% to 50% by moving to the cloud compared to on-premises operations.
Although these figures are promising, cost management challenges often hinder migration efforts. Understanding the potential benefits and calculating the cost differences between on-premises and cloud-based deployments can help you maximize your savings.
What Factors Determine Cloud Costs?
Cloud computing costs are determined by three main factors:
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Compute: This includes the processing power, memory, and temporary storage required for your workloads.
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Network connectivity: The volume of data transferred into and out of your cloud services affects costs.
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Storage capacity: Different types of storage options such as file, block, and object storage come at varying costs.
It’s also important to consider hidden costs like data transfer fees, data retrievals, region and availability zones, and support plans. These additional expenses can significantly impact your cloud budget.
How Much Do Cloud Service Providers Charge?
The major cloud providers—Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP)—offer various pricing structures.
AWS offers pay-as-you-go pricing with options for commitment-based discount programs, such as AWS Savings Plans and Reserved Instances (RIs).
Azure follows a similar model, providing a free tier for experimentation and commitment-based discounts with Azure Reservations and Savings Plans.
GCP offers pay-as-you-go pricing and discounts through committed use discounts (CUDs) and Sustained Use Discounts (SUDs).
Understanding the pricing models and options offered by each provider will help you make informed decisions about your cloud costs.
How to Determine Your Cloud Infrastructure Costs
To estimate your cloud usage costs, you’ll need to measure your current on-premises expenses and calculate your Total Cost of Ownership (TCO). This includes direct costs like operations and indirect costs such as administration.
Using tools like CloudZero’s Advisor or your cloud provider’s Total Cost of Ownership calculator can help you determine the resources you require and estimate your costs.
When migrating to the cloud, it’s essential to consider ongoing cloud migration costs. Additionally, utilizing a cloud cost platform like CloudZero can help you monitor and optimize your costs while minimizing surprises.
How to Forecast, Budget, and Allocate Cloud Costs with CloudZero
CloudZero offers an all-in-one platform that empowers you to budget, forecast, and allocate your cloud costs effectively. With features like cost anomaly alerts and optimization tools, CloudZero can help you make the most of your cloud budget.
By understanding the true cost of cloud computing and utilizing tools like CloudZero, you can optimize your cloud spend and make informed decisions for your organization.
To learn more about CloudZero and experience their comprehensive cloud cost solutions, visit News Explorer Today.