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Cloud vs on-prem TCO

Compare the total cost of running on your own hardware against the cloud over several years, and see when one overtakes the other.

On-premises

$

Refresh cycle

years
$/server/mo
% of hw/yr
FTE

Cloud

At list price

$

Reserved / savings plans

%
FTE
$

Assumptions

$/yr
years

Over 5 years

Cloud is $454,000 cheaper

That's 26% less. It is ahead from the first month.

On-premises
$1,764,000
Cloud
$1,310,000
$0$441K$882K$1.3M$1.8MStartY1Y2Y3Y4Y5

Where the money goes

CostOn-premCloud
Hardware$240,000–
Power, cooling, space$180,000–
Support & licences$144,000–
Cloud bill–$630,000
Migration–$80,000
Operations staff$1,200,000$600,000
Total$1,764,000$1,310,000
5-year totalCloud saves $454K

How this is calculated

Costs are added up month by month. On-prem buys all hardware up front and again at the end of each refresh cycle, then pays monthly for power, cooling and space, a yearly support contract as a percentage of the hardware price, and the people who run it. Cloud pays a one-off migration cost, then the monthly bill minus any commitment discount, plus its own operations staff.

What it leaves out

  • Data egress, which can be a large part of a cloud bill for data-heavy workloads.
  • Resale value of old hardware, and the cost of capital tied up in it.
  • Idle capacity: on-prem must be sized for peak load, the cloud can scale down.
  • Opportunity cost: what your team could build instead of running infrastructure.

Treat the result as a starting point for a conversation, not a final answer. The point is to make the assumptions visible so you can argue about the right things.