When it comes to cloud computing, one of the first questions companies ask is: What will it cost me? It's a fair question—and often the first hurdle in deciding whether a cloud strategy makes sense. At first glance, the answer seems refreshingly straightforward. But dig a little deeper, and it becomes clear that cost in the cloud is as much about understanding value as it is about counting euros.
The Three Core Components of Cloud Costs
If you’re using a public cloud from one of the major providers—Amazon Web Services, Microsoft Azure, or Google Cloud—your monthly bill typically comes down to three main ingredients:
- Performance: The compute power and configuration you choose
- Storage: The volume and type of data you store
- Network traffic: The data you send and receive
All three are charged according to actual usage. This “pay-per-use” model means you're only billed for what you consume during the billing period—no more, no less.
Traditional IT costs vs. cloud costs
Compare that to running your own on-premises data centre, and the difference becomes clear. Beyond the upfront investment in servers and infrastructure, you also have to factor in operating costs—electricity, cooling, insurance, even water.
And then there’s the human side: salaries for the people who manage the systems, time spent on maintenance, and ongoing training to keep skills sharp. Software licences and hardware refresh cycles add more layers to the total.
These are what we call direct costs—the visible, often predictable expenses.
But behind the scenes, other hidden costs pile up. Think backup and recovery systems that need their own upkeep. Think compliance audits or the time spent navigating evolving security policies. It all adds up—sometimes beneath the surface, where costs can be easily overlooked.
Is the Cloud More Cost-Effective?
To answer that, you need to look at the Total Cost of Ownership (TCO). This analysis goes beyond surface-level pricing to give you a true picture of how your current IT costs compare to a move to the cloud.
A proper TCO analysis involves:
- Assessing your current IT setup—partly automated, partly manual
- Calculating ongoing operational costs
- Mapping those needs against what your environment would look like in the cloud
With this data, you can estimate your future cloud costs and explore which workloads or use cases could be migrated efficiently. It’s a crucial step in building a clear business case for the cloud.
Taking a Holistic View of Cloud Spending
Cloud costs don’t start when your first invoice arrives. They begin the moment you plan your migration—from deciding which applications to move, to understanding dependencies, to managing change across your organisation.
That’s why we encourage companies to take a holistic view of cloud spending. It’s not just about cost-per-hour. It’s about the total value of flexibility, scalability, and innovation—and the long-term picture of how your cloud strategy supports business growth.
Download the Free White Paper: Cloud & Costs
To help you understand the full picture, we’ve created a free white paper: “Cloud & Costs.” Currently available in German, it offers practical guidance for anyone looking to get a clearer view of cloud spending—from first steps to long-term strategy.
Inside, you’ll find practical insights on:
- How cloud pricing really works
- How to spot and manage hidden costs
- Why TCO analysis matters—and how to do it right
It’s a quick read, and it’s yours with just two clicks.
