Estimating Your Cloud Hosting Costs

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Estimating Cloud CostsAlthough there’s a good chance cloud hosting will save you a great deal of money, you could still lose money if you don’t properly budget for it. Cloud infrastructure may be a somewhat nebulous thing, but the expenses associated with it most definitely are not. The cost of hosting something on the cloud – be it a database, application infrastructure, or remote server –  may not always be clear from the outset.  Although many cloud vendors provide applications to help you work out the expenses on your own, there’s still a certain element of legwork – and guesswork – involved.

That said, if it’s properly managed, the cloud most definitely will save you both time and money. So…how does one go about estimating hosting costs?

Figure Out What You’re Using It For

First and foremost, how you use the cloud will greatly influence how much it costs you. If you’re using a cloud platform for simple data storage, it’s going to naturally cost less than if you’re operating a digital storefront with thousands of monthly customers. Different use cases will require different hosting models, and as a result, they’ll have different price points.

Lay Down Your Metrics – What’s Being Billed?

The next thing you’ll need to work out is what you’re being billed for – what comprises your cloud hosting solution? Generally, you’ll be taking a number of the following metrics into account, depending on what you’re using the cloud for. Note that factors such as uptime and traffic will have a significant impact on most of the items listed here.

  • Cost Of Ownership(Physical Infrastructure): If you’re operating your own hardware, you’ll need to figure out how much it costs on a weekly, monthly, and annual basis. You’ll need to consider factors like maintenance costs, electricity, cooling, floor space, building maintenance…you get the idea. Truthfully, you should probably take this into account with whatever devices you’re using to access the cloud.
  • Network Costs: One thing a lot of businesses seem to forget is that the use of cloud hosting often tends to lead to increased network cost and load.  If you don’t anticipate the increased network load (and cost), you could end up either breaking the bank or bottlenecking your network.
  • Platform Costs:  This will be the easiest metric to keep track of, since any vendor worth using will make its prices readily available for potential customers. So long as you can estimate your usage, you can predict how much it’ll cost you.
  • Disaster Recovery/Crisis Management Costs: Eventually, something’s going to go wrong – you need to make sure you’ve set aside the funds you’ll need to set it right.
  • Operational/Personnel Costs: Even if you’re using a cloud platform, you’re still going to have employees operating it. That isn’t likely to change anytime soon. You’re going to need to give them a salary and provide them with both a work space and supplies.

Know The Averages

Once you know what metrics you’re keeping track of, it might help to take a look at the average values within organizations of similar size. Although this won’t let you directly determine how much you’re going to be paying, it’ll at least help you establish a baseline from which you can work.  Check around with a few vendors, or ask a few businesses of similar size to your own how much they’re paying (that last one might be a bit difficult to swing).

Estimate Your Traffic And Workload

The next – and some might say most important – step is to figure out your estimated traffic and workload and go from there. For instance, let’s say you’re hosting a collaboration platform on the cloud, and you expect only around four or five employees to have access to it. They’ll maybe share a few gigabytes of data per month.  Since this is a relatively low volume of traffic (with very little scaling required) an on-demand model probably isn’t necessary, nor will you be spending a great deal striving for 100% uptime.

Stress Test Your Applications

Once you’ve worked out how much traffic you’re likely to get, you need to make sure the applications you’re running are capable of handling them. As a general rule, you’re first going to want to find out how much traffic you can handle before your system starts to buckle. Keep in mind that during peak hours, you might need to pay a little extra to keep your infrastructure from collapsing in on itself – plan and budget accordingly.

Image: Flickr/SixRevisions

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