AWS – Estimating costs with the Total Cost of Ownership Calculator

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The AWS Total Cost of Ownership or TCO Calculator is designed to provide you with a ballpark view of how much it will cost you to run an equivalent infrastructure on AWS in comparison to your co-located or on-premises data center.

The calculator has been audited by an independent third party, but you should, of course, check its output against your own calculations before you make any purchasing decisions.

Getting ready

In this example, we’re going to describe a typical three-tier rails image processing application that is running with a modest amount of hardware. You can use our example configuration, or follow along with your own hardware requirements.

How to do it…

  1. Navigate to
  2. Choose your currency, location, AWS region, and workload type. In our case we’re going to choose the following:
    • Australian dollar
    • Colocation
    • Asia Pacific (Sydney)
    • General

TCO calculatorworkload
  1. Now we need to describe our server requirements. We’re going to specify that our app is running on physical servers with tiers that look like this:
    • An nginx application with two servers, two processors and two cores per processor, and 16 GB RAM.
    • A rails application with four servers, two processors and four cores per server, and 32 GB RAM.
    • A MySQL database with two servers, two processors and eight cores per server, and 64 GB RAM.

TCO calculator—Servers
  1. Lastly, we need to input our storage requirements. For our example, the rails application, we need the following:
    • Storage Type:  Object
    • Raw Storage Capacity: 2
    • % Accessed Infrequently: 90
TCO calculator—Storage
    1. Go ahead and click  Calculate TCO.
    2. The 3 year cost breakdown graphs provide a high-level view of your potential cost savings. You can see that, in our example, AWS estimates that we’ll save 68% on our infrastructure costs over the next 3 years. That’s pretty impressive!

    TCO Calculatorsummary
    1. Scroll further through the report to see cost breakdowns categorized by resource type:

    TCO Calculatorgraphs

    The TCO calculator can be an invaluable tool when convincing executive decision-makers of the long-term value of cloud migration.

    How it works…

    The calculator will take your server requirements and map them to EC2 instances of an appropriate size. Since we’ve been specific that we need an object store for our storage, it will calculate our storage costs based on the price for S3 storage in our region.

    There’s more…

    Let’s take a look under the hood and see how we’re able to save so much money on AWS:

    • The prices for our EC2 instances are based on a 3 year reserved instance price with a partial upfront payment. Is this a fair comparison? Yes and no. You would probably be locked in to a fixed hardware contract with your on-premises or co-located solution, so it makes sense to apply similar contract terms to your AWS pricing model. In reality, you’d probably want to think about purchasing reserved instances after you’ve moved to AWS and performed some fine-tuning around which instance types to use. On the flip side, the AWS costs could be reduced even further if your servers ran under  All Upfront instance reservations.
    • The comparison of object storage systems may or may not be fair, depending on the feature set of your on-premises or co-located solution. For example, S3 has the ability to apply an infrequently accessed storage class on stored objects, which reduces their cost if they are not frequently accessed. You’d probably not have this feature in your on-premises or co-located storage.
    • The 3 year cost for storage in our on-premises/co-located facility is AU $69,660, of which a whopping 97% is the monthly cost to operate a rack. This includes rental of space, cooling, power, and so on.
    • While the cost calculator is taking a pure infrastructure view, it also does factor in support costs. If you are new to AWS, you will probably be leaning on AWS support a little bit to get up and running.
    • You’ll also want to factor in some costs around training and potentially hiring staff who are skilled in deploying and migrating systems to AWS. Your developers are also going to start thinking differently about how to build and deploy their applications. Make sure to factor this in, too.
    • If you aren’t totally happy with the on-premises or co-location estimates, you can go ahead and change the figures used in the calculation. Scroll to the top of the page and click  Modify Assumptions to input your own hardware prices:

    TCO Calculator—Modify Assumptions

    See also

    • The Reducing costs by purchasing reserved instances recipe

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