Cloud Computing Costs: Service Breakdown of 2024

Though most enterprises are using cloud services for innovation, business expansion, and dynamic scalability, it’s not always clear what cloud services cost. Vendors offer a multitude of payment models and there are many additional factors that affect pricing. In this guide, we’ll explore the complexities surrounding cloud computing costs, clarify the key elements influencing them, and compare the top cloud services to provide a practical guide to pricing.

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Cloud Service Cost Overview

Though many factors can affect the cost of cloud services, and costs can vary widely between vendors, the following table gives an overview of the most significant factors. We’ll look more closely at them in the next section.

What Do Cloud Services Cost?

Determining the cost of cloud services can be a tricky proposition. While most cloud service vendors offer a pricing calculator that lets you choose services and products and enter usage requirements to generate an estimate, it’s not always obvious what your needs will be or how the charges will add up. Here’s a look at the most common ways vendors approach cloud computing costs.

Pricing Factors

Several factors come into play when providers set the pricing for cloud computing, including the types and quantity of services and computing resources required, data transfer rates, and storage needs.

• Networking: Cloud computing services require a robust network infrastructure for interconnectivity, and networking costs are based on bandwidth usage and data transferred in or out of the cloud infrastructure.
• Storage: Cloud vendors also charge for storage used, typically on the type of storage (files, block, elastic, etc…), performance, features, and accessibility.
• Hardware and Maintenance: Providers need to invest in hardware (drives, memory, processors, servers, routers, firewalls, etc…), continuous updates, and maintenance.

Hidden Charges

Providers sometimes charge hidden expenses that can drive up costs. Some of the most common to watch out for include the following:

• Data Overages: Cloud vendors generally offer fixed data limits and storage in their pricing plans, and exceeding limits incurs additional costs.
• Exit Fees: Some vendors charge them to retrieve your data if you discontinue your cloud computing services.
• Region and Availability Zones: Most vendors charge different rates for services across different regions and availability zones; check pricing based on your region.
• Support Costs: Vendors may charge additional for tracking support issues.

Pricing Models

Different providers also offer different pricing models—here are the most commonly used:

• On-Demand: This is a pay-as-you-go plan billed on a per-second or per-hour basis, depending on usage; this model is all about flexibility, scalable with no upfront commitments.
• Instance-Based: In this model, costs correlate with the cloud instances or virtual servers being used; the bill reflects the number of dedicated servers and hosts allocated to you.
• Tiered: Much like a restaurant menu, tier-based pricing presents a variety of “plans” or “bundles” from basic plans with essential features to premium offerings packed with advanced functionalities; select the level of service that aligns with your requirements and budget.
• Subscription: This model turns cloud computing services into a recurring expense; you can opt for monthly, quarterly, half-yearly, or annual plans, allowing for predictable budgeting.

Navigating Cloud Computing Costs

Because cloud computing costs can be a complicated field to navigate, it’s important to know your specific needs before you commit. Understanding your infrastructural needs and your expected usage can help you compare services from vendors to get the best cost for your particular needs.

Assess Infrastructure Needs

Shifting to the cloud entails investing in robust IT infrastructure. If you’re already using cloud services and are considering a change in providers, the investment might not be as substantial. Vendor terms can vary—discuss infrastructure requirements with your prospective provider first.

Estimate Your Usage

Identifying your specific needs can help you make informed decisions. Analyze your server, network, storage, bandwidth, and deployment model requirements. With a clear view of your data management and usage needs, you can choose the most suitable pricing model, be it pay-as-you-go, free-usage, or subscription-based plans.

Compare Cloud Services

Evaluate different cloud computing services, their features, free usage limits, and pricing strategies. Request detailed, customized quotes from providers to understand what they offer in relation to your needs.

3 Types Of Cloud Computing Services

There are a wide range of cloud computing services available to individuals and enterprise users. To understand pricing and make more clear comparisons, it’s important to first understand the most commonly used models: IaaS, PaaS, and SaaS.

Infrastructure-as-a-Service (IaaS)

IaaS is like a digital toolbox, offering scalable virtual resources that cater to enterprise storage, networking, and computing needs. Rather than purchasing, configuring, and maintaining servers, businesses lease those computing services from a provider. The infrastructure they are leasing is all the memory, storage, and networking they need in a virtual operating environment that is scalable and flexible.

Moving infrastructure to the cloud can help businesses curb the hefty costs of developing and maintaining physical infrastructure. What makes IaaS unique is its flexible pricing structure. Like a utility bill, costs are tied to actual usage–vendors offer a spectrum of pricing options, including long-term subscription contracts, monthly billing, or even a per-server or hourly rate.

Platform-as-a-Service (PaaS)

PaaS provides businesses with a comprehensive platform to manage their development needs without the headache of buying and maintaining each component separately. Like having an outsourced IT department, Paas is a full-suite cloud environment that includes hardware resources, databases, servers, storage, networks, operating systems, and software.

It moves more of the IT management responsibilities to the vendor than IaaS, and is often used to streamline the application development process by bundling the tools needed to create certain kinds of apps. It can be more cost-effective for many businesses than developing and supporting equal resources in-house. The pricing is typically determined by the specific service features and usage. Some providers also offer limited-time free trials or options to upgrade to subscription plans.

Software-as-a-Service (SaaS)

SaaS offers ready-to-use software applications delivered straight from the cloud. The vendor manages the entire IT stack. Enterprise users access it through a browser. The burden of updates, security patches, and feature fixes rests with the service provider, allowing businesses to focus on using the software rather than building it.

Pricing for SaaS is diverse, with vendors offering free trials, monthly or annual subscription plans, or even tiered pricing to accommodate a variety of functional needs.

Cloud Providers Pricing Comparison 

Now that you’ve learned how pricing works, here’s a look at how the cloud computing costs of the major providers compare to one another. Though many cloud services providers offer a wide range of cloud computing services, for the purposes of this guide we’ve focused on the five most widely used by enterprise clients: Amazon Web Services (AWS) Lambda, IBM Cloud Code Engine, Azure Cloud Services, Google Cloud Platform, and Oracle Cloud.

AWS Lambda

Amazon offers a wide range of products for cloud computing, but its AWS Lambda is a top serverless computing service that allows businesses to run code, automate administration and management, and package, deploy, and orchestrate multiple functions.

AWS Lambda offers one million free requests per month as a part of the AWS Free Tier plan. It has a flexible pricing model with its Compute Savings Plan, measured in dollars-per-hour. Users can save up to 17 percent with this plan in exchange for a commitment to a fixed usage amount.

In response to an event notification trigger, Lambda generates a request and charges for the functions used. The cloud service cost is calculated by duration-in-milliseconds for the time your code executes and the memory allocated to your functions and processor architecture.

View the AWS Lambda pricing page.

IBM Cloud Code Engine

IBM Cloud platform is a robust ecosystem and computing solution based on a serverless architecture. It offers a single runtime environment with automatic scaling and secure networking. IBM Cloud Code Engine is priced by resources used, and is based on HTTP requests, memory, and vCPU consumed by your workloads.

View the IBM Cloud Code Engine pricing page.

Azure Cloud Services

Microsoft’s Azure Cloud Services is a PaaS model that offers a deployment environment for cloud applications and services with high availability and flexible scalability.

It includes free trial services for a limited period—some Azure products remain free for a fixed number of requests, instances, memory used, or hours used, while others are free for a fixed 12 month period. Popular free services include Azure Virtual Machines Windows and Linux versions, Azure Functions, and Azure App Service.

The pricing plans follow a pay-as-you-go model that considers such different factors as instances, cores, RAM, and storage. There are various virtual machine series for different needs. For example, the A series is ideal for entry-level dev/testing, the B series is for moderate workloads, and the D series is for production workloads.

View the Azure pricing page.

Google Cloud Platform

Google offers enterprise-ready cloud services through the Google Cloud Platform. It includes a suite of computing products like the App Engine, Compute Engine, VMWare Engine, Spot VMs, Cloud GPUs, and more, as well as an integrated storage solution.

Google follows the pay-as-you-go pricing model with additional discounts for prepaid resources. It also has free-tier products with a specified free usage limit—new customers get $300 free credits. The Compute Engine usage is measured in gibibytes (GiB). It is calculated based on disk size, network, and memory usage.

Each Google product has different pricing, which can be estimated using the pricing calculator or by contacting the sales team for more details.

View the Google Cloud Platform pricing page.

Oracle Cloud

Oracle provides cloud computing services through its Oracle Cloud Infrastructure, a fast, flexible, and affordable solution. This multi-cloud architectural framework can be used for virtual machines, enterprise workloads, serverless functions, containers and Kubernetes, and graphics processor units (GPU) and high performance computing HPC instances.

The Oracle Free Tier includes more than 20 cloud services which are always free with no time limits. It follows a competitive pricing policy that offers the same price regardless of region.

View the full Oracle Cloud Infrastructure pricing page.

Other Cloud Services

In addition to the top five, other cloud service vendors provide computing services at varying costs. The following chart offers a quick comparison of their pricing structures.

Bottom Line: Understanding What Cloud Services Cost

As businesses increasingly embrace digital technology, the cloud continues to evolve, offering more powerful tools and services. The immediate positive impact of cloud technology is undeniable—more than 90 percent of enterprises use cloud services, and 80 percent of them see significant improvements in their operations within months of implementation. Investing in cloud computing sooner rather than later can yield substantial benefits and keep your business competitive in the global market.

But cloud computing is not a one-size-fits all service, and not all vendors offer the same pricing structures. Understanding how the market works, the factors that affect cloud service cost, and what your specific needs are can give your organization a leg up on finding the right service provider and the right cloud services to meet them.

Read our guide and recommendations on top cloud service providers and get to know the key players in the industry today.