The premise of cloud cost calculators is enticing: By telling you exactly what your cloud workloads will cost, the calculators allow you to make informed decisions about whether to migrate to the cloud in the first place and how to reduce cloud spending once you're there.
The reality of cloud cost calculators, however, is more complicated. Although the pricing calculations they offer are typically reliable and accurate, they rarely represent the full picture of cloud spending.
That's why it's important to have a full understanding of the benefits and limitations of cloud cost calculators before putting too much stock in the numbers they churn out.
What Are Cloud Cost Calculators?
A cloud cost calculator is a tool designed to predict the cost of running workloads in the cloud. All of the major public cloud providers offer calculators, such as AWS Calculator and Azure's pricing calculator.
Cloud calculators work in a straightforward fashion: You input details about which cloud services you'll use to host your workloads and how you'll configure the services. Then, the calculators predict your total costs. They usually account not just for the direct costs of cloud services, like the total uptime of a virtual machine instance, but also the ancillary costs, such as how many egress charges your workloads will incur.
The Benefits of Cloud Cost Calculators
Cloud cost calculators offer some obvious benefits. The biggest is that they provide a relatively simple and automated way to estimate total cloud spending.
You could predict cloud spending without using a calculator. You could manually look up the costs of the cloud services you intend to use, then add up all the numbers to arrive at a total estimated bill. But that would be a time-consuming and tedious process, especially given that there are so many variables that factor into cloud pricing — such as which cloud regions you use and whether you take advantage of discounted pricing offerings.
By extension, cloud cost calculators offer the benefit of helping businesses determine whether the cloud will reduce their cost of hosting workloads. You can also use calculators to compare the cost of your current configuration to an alternative to assess how much you could potentially save by making changes.
The Limitations of Cloud Cost Calculators
Cloud cost calculators are indeed a good way to gain a basic sense of how much you'll spend on cloud workload hosting. However, it's important to keep in mind that they come with limitations.
Inability to calculate indirect costs
Cloud calculators can estimate the total direct cost of using cloud infrastructure. But they can't assess indirect costs, like how much time your engineers will end up spending on cloud administration.
This means you should think of the numbers that cloud cost calculators spit out as only a partial representation of your total cloud spending.
Lack of understanding of on-prem costs
Along similar lines, cloud calculators have no way of knowing what you're currently spending on-premises and whether you can save more in the cloud.
Indeed, you yourself may not know how much you spend on-prem and whether it's less than you'd pay if you migrated to the cloud, given that cost models for on-prem infrastructure are quite different from those in the cloud. You have to factor in costs like hardware acquisition and maintenance, which don't apply to the cloud.
The point here is that, while cloud cost calculators can estimate how much you'll pay to host a given workload in the cloud, they have no good way of telling you whether the cloud will save you money. You have to figure that out yourself.
Assumptions about usage patterns
A third limitation of cloud cost calculators is that they have no means of knowing exactly how you'll use cloud services or how many resources you'll actually consume. You can put in numbers that reflect what you think you'll end up consuming, such as how long each VM instance will run or how much data you'll transfer out over the internet. But those estimates may turn out to be inaccurate, leading to inaccurate cost estimates.
To put this another way, cloud cost calculators are only as accurate as the data you put into them, and your data could be quite wrong if you don't have a strong sense of your actual cloud usage patterns.
Changing cloud pricing
Cloud prices are never set in stone. Providers can and do change them frequently, which means that the estimates you receive from a cloud cost calculator may not turn out to represent your actual costs over the long term.
The good news in this regard is that cloud providers don't always raise prices. Historically, they have had a tendency to reduce their charges — although that practice is less common than it was in the days when cloud providers were vying to underprice each other in order to solidify their market share.
But even if your cloud costs end up being less than what a calculator predicts, the inaccuracy isn't necessarily a good thing because you'll be making decisions about cloud strategy based on inaccurate numbers.
Conclusion
Cloud cost calculators are valuable tools that you should certainly use if you want to estimate or find ways to reduce your total cloud costs. But in most cases, you should treat the estimates as ballpark figures at best because they rarely come close to matching actual spending.
You should also remember that cloud infrastructure costs — which are the only thing cloud cost calculators can predict — constitute only one portion of your total cloud spending. Other costs, like those associated with cloud administration, should factor into your cloud cost estimates as well.
About the author
Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.
