On-premise servers in a dark room

IaaS vs. On-Premise Server Cost Comparison

Server technology is advancing at a steady rate each year. The components used in servers are becoming more powerful and efficient than ever.

But with advancements in IaaS (infrastructure-as-a-service) or cloud technology, utilizing the cloud may be a better option than purchasing servers for your office.

You may think purchasing a web server is cheaper. It's a one time fee and you can use the server for years. However, there is more to the story. 


In this post and video, we will discuss the cost considerations between cloud and servers hosted in your office so you can make an informed decision. 

Onsite Server Costs

When owning a web server in your office, you have three main types of costs: direct, indirect, and hidden. Here's a general explanation of each:

Direct Cost - Attributed directly to the web server. This includes the cost of the server as well as repairs.

Indirect Cost - These costs are related to the server. This includes power, networking, and cooling costs. 

Hidden Cost - These costs are associated with the server but vary depending on usage. This includes bandwidth costs incurred during a DDoS attack, or infrastructure improvements. 

Since each project has unique web server requirements, the server cost could vary from an affordable price tag to tens of thousands of dollars. 

Contributing Factors to On-Premise Server Costs

On-premise servers are still widely used, despite it being a bit outdated. But there are multiple factors associated with keeping up the cost of onsite web servers.

Here are some examples:

  • Server hardware costs
  • Backup and backup server management
  • Software licensing (often more expensive for small businesses compared to wholesale pricing at ServerMania)
  • Hardware upgrade and replacement
  • Heating and cooling costs
  • Network setup and maintenance
  • Fire suppression
  • Power setup and redundancy management
  • Server management and staffing costs

Cloud Server Costs

When calculating the amount you'll pay for IaaS, factor in as many aspects of your usage requirements as possible.

Storage and processing power is a good start. You'll have to consider what applications will be used on the cloud server, such as website applications or Content Management Systems.

There are also additional costs you need to consider, such as how much bandwidth and RAM your applications will consume.

The cost of IaaS will vary between projects. Simply identify the average usage requirements of your cloud server, and compare that to the laundry list of expenses needed to manage an onsite server. You will quickly see how much cheaper a cloud server can be.

Contributing Factors of Cloud Servers

Rather than paying for a physical product, the cloud is a service. This means you can save a lot of money since you're not dealing with maintenance and repairs.

IaaS is also reliable, able to withstand high workloads. This is why many businesses are switching over to a cloud server.

Five-Year Costs

Before we get to the five-year cost, let's determine the on-premise and cloud costs each month. Take into consideration, these numbers are based on general costs and don't include repairs or add-ons.

  • Cloud Server: $299/month with full server management
  • On-Premise: $1,477 + staffing costs to manage the server 24x7

For most, switching to the cloud could save over a grand a month.

There are multiple reasons why the on-premise servers are more expensive. Beyond the long list of on-premise costs listed previously, you also require buying new servers once every few years. Your monthly figure is close to $1,500 but after five years this figure could easily rise.

Let's say instead of $300/month your cost of the cloud is $400/month. You're still saving well over a $1,000 each month, and you don't have to handle repairs or new server fees.

Because of this, professionals save 74% by switching to the cloud.

Now it's time to break down a five-year savings plan.

  • Price of On-Premise Server (including replacements): $96,824
  • Price of Cloud Server: $18,835

These are the factors that determine the on-premise server price:

  • Installation
  • Configuration
  • Maintenance
  • Support

With a cloud server, you don't deal with these excess costs. Cloud is a service, so no need to purchase a physical server and install it. Maintenance and configuration are also included in your monthly cost.

For companies who need scalability, network availability, and bandwidth, the cloud is the most effective and cost-effective solution.

Save Big with The Cloud

The cloud offers a solution to your company's web requirements. You'll receive all of the benefits that you get with an on-premise server, and you'll be spending less.

The cloud offers a convenient platform for usage and storage, making it an excellent investment.

If you're looking for cloud hosting, contact us today and we'll find the perfect server rental for you. 

Share this article
Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn