If you're thinking about trying something new in the world of cloud, you're probably wondering how much it will cost. But the price isn't just about the cloud service itself – it also includes extra software, professional help and the work your team puts in.
In this article, we'll break down the main things that affect the cost of your cloud project. We will explain what to expect from different pricing plans and share tips to help you save money by using your resources wisely.
We have been delivering cloud projects for 30+ years across multiple project types, technologies, industries and geographies. It means we’ve seen a lot of scenarios, allowing us to discuss the work cost, cloud resource cost and all other elements that add up to a typical cloud project cost.
Still, it is based on our particular experience, and so these estimates might vary to some extent. Why? Because the prices here are based on averages, and there are many variables. The final price always depends on multiple factors and business needs. Still, we will try to cover and explain it in this guide, so you can have an idea of what the estimate or order of magnitude may look like in your case.
The components of cloud project cost
Your project will have two major cost variables:
Let’s discuss professional services first.
A typical organisation starts its cloud project with partner selection. It allows you to move faster and leverage the experience of someone who has done it before. In some cases, partner support might be also included with your cloud vendor package – either attached to the cloud purchase you’ve made or in subsidised project support.
Professional services for the cloud are delivered in two main models:
Here’s a summary of features that shows the differences.
| Fixed fee | Time & materials | |
|---|---|---|
| Flexibility | Low (fixed outcome, time, cost) | High (subject to change) |
| Client risk | Low (goals predetermined) | High (requires clarity on goals) |
| Supplier risk | High (may be subject to unexpected changes) | Low (gives space for adaptation) |
It will vary across geographies, as in some countries T&M is a standard way to work on a cloud project. However, there are some general guidelines.
Fixed fee engagement may be better for deploying specific products or services in the cloud (e.g. Microsoft 365 services). It also works for projects with quantifiable goals (e.g. migrating 300 virtual machines with fixed cost per migrated resources). If your supplier has reusable IP that forms the base of your engagement, this is also a good scenario for a fixed fee agreement.
On the other hand, you may do better with a time and materials project when the scope is not completely decided or may change during the course of the engagement. The same goes for using a supplier for operational or deployment support, as here the range or timing of services may also change. Finally, you may use a T&M engagement for onboarding brand new services, for example preview features released by your cloud vendor.
That’s a good question. Hourly rates might vary greatly depending on the industry, geography and current demand on the market.
Typically, you can expect the hourly rates in the range between $60/hr and $180/hr but it depends on many factors. What influences these rates?
For cloud areas that are still complex or in great demand, you can expect a higher range of rates.
It always changes but at the time of writing, here are the most frequent roles:
Typically, you will experience a blended labour rate, dependent on the assigned team structure, with an average between $90-120/hr. You can also typically expect higher rates than those discussed here if you engage with big brands, e.g. Microsoft Consulting Services or the Big 5 in consulting.
Fixed-fee project cost is defined within two areas:
The size and price of these projects will vary across providers. Here are some examples of a typical project delivered across many organisations, where we have averaged the prices of services on the market.
Projects in this area vary based on the scope and size of the organisation. Typical project cost is between $20,000 (initial services deployment, advisory) and $200,000 (full-service deployment of all M365 services, enterprise-scale customer 10k+ employees).
A typical project in cloud governance and landing zone deployment area is conducted by larger-scale customers with more than one cloud subscription.
Its size varies depending on the scale and needs of the organisation. It can range between $45,000 (mid-size enterprise with few resources deployed in the cloud and simpler on-premises environment) and $150,000 (enterprise-grade environment, complex security and compliance requirements, complex network environment).
It is hard to speak of a typical DevOps engagement, but usually, we see two types of projects:
The cost of those projects will vary between $20,000 (entry-level project, mid-size organisation) and $100,000 (full DevOps deployment, enterprise organisation with 10k+ employees).
In short, you can expect three sizes of projects related to cloud deployment:
Disclaimer: as noted earlier, these are the averages we see across the industry and geographies. Your actual cost of a project will land somewhere on this scale, depending on your organisation size, type of project, area and overall complexity.
Now we have professional services covered, let’s look at the cloud service cost profile.
Your cloud project cloud resources project cost will vary depends on the following factors:
Your cloud bill depends on what you consume in your project. That’s a given. (Almost) every resource in the cloud will increase your costs.
Here are some factors that also influence your cloud bill:
The good news is, the expense can be predicted up-front, at least to some degree. You can estimate your expenses with tools provided by your cloud vendor. For Azure, you can use Azure Pricing Calculator to estimate your cloud bill based on your planned resources. AWS offers a similar tool, AWS Pricing Calculator, and GCP has Google Cloud Pricing Calculator.
The cost of your cloud resources might depend on the method you purchased it from your vendor. Here are the typical options to purchase Azure cloud.
You attach your credit card to the subscription(s) and pay for resources as you consume them. Most convenient and easy to use, but in most cases not the best from a financial point of view.
It’s good for a start and the initial phase of using cloud resources, or if you don’t want to engage in any other kind of relationship. You process all payments and invoicing directly with your cloud vendor.
Purchase of cloud through a dedicated partner of your cloud vendor. For Microsoft Azure, this option is called Cloud Service Provider (CSP).
You settle your payments and cloud purchases with a local partner, not the cloud provider directly (might be easier from a legal and taxes point of view)
Cloud resources prices are discounted compared to the PAYG model and you can negotiate those discounts directly with your partner based on how much you are using.
You sign a cloud agreement directly with a cloud vendor. This option is used typically by larger organisations and requires some up-front commitment or pre-purchase of the volume of cloud credits towards your usage. With Microsoft, this option is available through Enterprise Agreement (EA) or Microsoft Customer Agreement (MCA) options.
In direct comparison, Pay-as-You-Go is typically the most expensive option with CSP being optimal for many customers and EA providing some negotiation options with a vendor but requires up-front commitment and is reserved for the largest accounts.
Your final cost will depend on the last but crucial factor – cloud optimisation methods you use in your environment.
Every cloud vendor provides multiple ways to optimise the cost of resources in the cloud. Cloud providers have different ways to deploy these services and names for them. We will cover here the most typical methods for Microsoft Azure but if you use other vendors, they will have similar options available.
Reserved resources or usage of resources can cut your bills up to 40%. Basically, you commit to using those resources for a longer time and you pay this cost up-front or in specific instalments for a discount.
It is a great way to cut the cost of resources like Virtual Machines or Storage accounts. If you finish using those resources earlier – no problem. There is a model to re-calculate the costs and settle them with the vendor.
Cloud vendors typically provide subscriptions for development and test purposes. The limitation might be in the legal agreement or SLA on these subscriptions, which makes it less suitable for production workloads, but for dev/test purposes it provides a great reduction in cost.
For many resources (VMs, appliances, SQL databases) you can bring your licenses if you have them and apply them to the cloud resources. It can cut the cost of the services up to 40-50%, depending on the type of resource.
Those optimisation models can be combined with the way you purchase your service. For example, you can get your purchase through a CSP provider and get a volume discount, and on top of that apply those optimisations to reduce the total cost further under your discount.
As you can see, cloud project costs differ significantly based on the project's nature and your organization's scale. How you buy and make the most of cloud resources also plays a crucial role, particularly when it comes to managing your cloud bill's size.
We hope this guide gives you an idea of what the cost of your project might be. It should also equip you with insights into key areas where you can focus on optimising cloud expenses. If you’re considering a cloud project of your own, don’t hesitate to reach out to us.
Without visibility, it’s difficult to right-size and right-cost. Get in touch with our CCO and FinOps experts to gain the visibility and expertise you need.
Without visibility, it’s difficult to right-size and right-cost. Get in touch with our CCO and FinOps experts to gain the visibility and expertise you need.
