You may have been able to answer every single question and convince your organization to move to the cloud, but now everyone wants to know how much it’s going to cost. Is it more cost-effective to go with a service provider as opposed to building your own platform?

But before you ask an Infrastructure as a Service (IaaS) provider for a quote, it’s important for you to understand exactly how they price their services. The three largest cost centers when it comes to the cloud environment are compute, storage, and network. Now, let’s take a look at these factors which are considered by IaaS providers while preparing quotes in detail:

Compute: Virtual RAM’s Cost per GB

Every organization has a different set of needs including when it comes to using the CPU. Most IaaS providers calculate this cost of the CPY by looking at the respective organization’s cost per GB for virtual RAM. This includes:

Hardware operation

They look at the maximum amount of RAM that is deployed in their clouds and divide that with the total number of units you require. The costs may also include usage-based costs for subscriptions and license costs, based on the virtual operating system.

Hardware acquisition

This tells your provider the amount they have to pay to acquire the hardware for every additional GB of virtual RAM that is being used by you. These costs are also depreciated over the lifecycle of the hardware.

Storage: Virtual Disks Cost per GB

The costs for storage are very similar to the costs for computing. The service provider will look into the amount it costs them to operate all of your storage hardware, and will also help them acquire new hardware which may be required for any of your storage needs.

Network: Cost per Unit

When setting a price, providers will try to determine how much it costs to maintain a network. They begin by calculating the costs of network infrastructure maintenance, network hardware, and labor. The expenses are clubbed together and then divided by the number of units your business requires. Some of the things that need to be taken into account while determining this cost include:

Network hardware costs

Every virtual server needs the provider to invest in some type of network hardware or the other. This hardware is then purchased, and the value is depreciated over the lifecycle of every device.

Network infrastructure maintenance

The costs include the cost of security tools like firewalls, patch panels, routing, uplinks, load balancers, LAN switching, and so on. Basically, all the infrastructure needed to keep a network running smoothly.

Labor

The cost of hiring staff to manage, monitor, maintain, and troubleshoot the cloud computing infrastructure. The staff also needs to be available 24×7 in order to ensure availability and uptime of the cloud.

Shared Costs

The individual costs for cloud computing is not the only thing which goes into a price quote. Like IaaS users, the quote will also include a part of the cost for cooling and powering the infrastructure for the platform and data center. The price quote might even include charges that are related to hosting, software licenses, support, and so forth. Sharing these costs with others is how IaaS can manage to be so cost effective.