The global cloud computing market in 2020 is evaluated at an astonishing US$ 330 billion, according to a report in the Hosting Tribunal. The report states that the main reason for businesses to migrate to cloud computing from conventional on-site server technology is its ease of access. Last year, around 90% of the registered companies were on the cloud platform while 60% of the workload was run by cloud computing technology. Small and large businesses are rushing to move their enterprise applications to cloud servers, where Amazon Web Services (AWS) is the top choice with a 32% market share in the cloud computing and storage service sector.

See also AWS cost optimization

These stats clearly show there is a remarkable trend of migrating business applications from on-premise servers to the cloud platform worldwide. Cloud platforms offer impressive flexibility and scalability. They also help to enhance productivity and make business operations more cost-efficient. There are numerous aspects of cloud computing, as compared to conventional server technology, which results in numerous benefits for any business.

In this article, we have outlined ways to calculate and estimate the average cost of cloud computing for your business.

What is the cost of cloud computing services?

Every cloud service provider has different prices for cloud computing. The price for the services is usually determined by the capacity of data computing and storage needs of customers. However, as compared to traditional on-site servers, the cloud server technology is remarkably inexpensive and shows a positive worth in just a short period of time.

How to calculate the cost of cloud computing services for your business?

Business owners who have shifted their database and applications to cloud servers are not just motivated by the inexpensive cost of migration but also by the cost-efficiency of long-term operations on the cloud servers. As mentioned earlier, different service providers charge at different prices for cloud computing services. There is a 3-stage process that will help you to calculate an accurate average cost of cloud computing for your business.

First, you will need to evaluate your existing infrastructure costs and then calculate the cost of ownership for moving to the cloud platform. In addition, there are several other costs you need to include in your estimation too.

Here’s how to find out the different types of costs and then calculate the average cost of cloud computing services for your enterprise:

STAGE 1 – Audit your Existing IT Infrastructure

An in-depth audit of your existing IT infrastructure has three benefits. First, the audit will help to determine the total cost of maintaining and using your conventional, current IT infrastructure. Second, it will help to find areas where you can save money. Third, it helps to picture an accurate description of the way your IT infrastructure will look once it has been moved to the cloud platform.

Audit your Existing IT Infrastructure

Audit your Existing IT Infrastructure

The audit of your IT infrastructure should include direct and indirect costs too.

  • Direct costs – The cost of hardware and software systems usually comprise the direct cost of IT infrastructure. Along with these, the cost of maintenance contracts and software licenses is also included indirect costs. While evaluating your IT infrastructure, you can also find out more details about it, such as data storage requirements, server computing capacity, bandwidth, etc. as these will be needed while calculating the Total Cost of Ownership.
  • Indirect costs – Operational costs are classified under indirect costs. Although some operational costs remain the same for on-site and cloud servers, there are other operational costs, such as cost of housing, cooling and operating physical servers, which need to be identified and included in indirect costs.

STAGE 2 – Calculate Total Cost of Ownership

The Total Cost of Ownership calculator is the best way to find out the complete cost of shifting, using and maintaining your application database on a cloud platform. There are several Cost Calculators provided by leading service providers, such as:

  • Azure Total Cost of Ownership Calculator
  • AWS Total Cost of Ownership Calculator
  • Google Total Cost of Ownership Calculator

These online calculators are extremely easy to use. You only need to enter the amount, types and configuration of servers along with the storage capacity required by you. Make sure to find out the average frequency of accessing data for your operations so that you can have the additional benefits of discounted pricing.

STAGE 3 – Include Additional Costs

The cost of the migration process is another significant cost to consider when calculating the average cost of cloud computing services. This cost fluctuates often as it is usually dependent on the type of infrastructure you have currently and your level of preparedness.

For instance, when you are moving large volumes of data to the cloud, the cost of migration increases as the charges for synchronizing your data and ensuring its integrity are added. In case your enterprise applications are not optimized for cloud platforms, or your existing IT architecture uses legacy systems that are incompatible with the cloud resources, then you will incur additional charges for modifying, testing and integrating the apps too.

Wrapping it up

Once you calculate the average cost of cloud computing you will definitely realize the vast potential of cost-saving it provides when it comes to cutting down on database storage, computing and your operational costs.

forrester cloud app migration cost model

calculate cost of cloud migration


Steve is a product-marketer and Engineer at Cloudysave who works with Cloud Management and Adoption team. Over the past years, he has collaborated with multiple teams to provide a robust and cost-effective architecture patterns to influence business and engineering decisions. His key areas of interests include Cloud Costs Management, Security and DevOps Best-Practices.