Few months ago, we made a Linkedin post that became viral. We decided to update it as well as give a bit more context on the egress costs.
The cloud market is globally evolving positively for the users, more products, more features, attractive offers, new data centers. However, one topic remains surprisingly negative: the egress costs.
The bigger the provider is, the more expensive the egress fees are, in an attempt to retain customers and prevent them from going to competitors.
To keep it simple, data you send to the cloud is mostly free (ingress). Cloud providers are happy, you use their services more, all is good. If you decide to get your data back things start to be complicated. For each Gb of data that leaves their data centers a small fee will apply.
One could think that the small providers being smaller, they must share the network costs with the customer.
We did the math for you and the result is surprising.
The bigger the provider, the higher the egress fees. Challengers have low to non-existent egress fees.
Let’s take a simple example. You are a SaaS software editor, your infra is fully hosted on the cloud, you have many users creating accounts, using your software, generating lots of data… Your business is going well, that’s great for you.
On the downside, if a user requests to download its data locally or if you want to move to another provider, there will be a price for it.
Holori calculated what it would cost you to take 50TB of data out of your cloud provider from a European or US based datacenter to the internet:
For this calculation we took a simple use case of transferring 50TB of data out of the providers. We based our assumptions on the providers’ public prices.
Of course, prices can differ slightly if you consider specific data plans and one to one pricing agreements. However, the assumptions give a good overview of the trends. As you can see, the gap between the hyperscalers (AWS, GCP, Azure) and the others is impressive. It can go from several thousands of dollars to none.
Why do large providers have such high egress costs
Numerous studies have shown that companies often start using the cloud with one of the three leaders (AWS, GCP or Azure). They will then get used to it, increase their usage and only start to look at potential costs optimization once their cloud usage becomes significant.
This is where cloud providers understood that they should find a way to prevent the customers from running away.
From “friendly to scary”, this is how we could summarize customer journey from onboarding to egress fees:
1- Attract customers with good offerings, free tier and vouchers
2- Provide onboarding with cloud architects
3- Let the customers scale up
4- The cloud bill explodes, customers try to optimize it but they struggle
5- Customers find cheaper alternatives elsewhere
6- Too bad, egress fees lock them in 🙈
These elements also highlight how strategic the choice of your cloud providers is early in your cloud journey, not only technically for CTO and DevOps, but also for project managers, CEO & CFO.
At Holori we are of course pledging for more openness. The only thing that should be used to prevent customers from going to the competition are competitive prices, good performance and innovative services.
Egress costs is by nature forced to go down
Of course every Gb of data transferred out of a datacenter represents a small cost for the provider, but the margin hyperscalers are applying is really outrageous. In the long run, with more data being generated and transiting every day, it seems impossible that hyperscalers keep this level of egress fees rate. Especially that transit prices keep decreasing over the years at approximately 30%/year, customers should see it as well in their cloud bills !
The solution to not be surprised by cloud costs anymore
You must be aware that network costs are the hidden part of the iceberg. When considering an IT project, do not only look at the compute and storages prices but also take into account the overall cost such as network, serverless, databases services.
Holori has developed a cloud project calculator, a free tool to design your cloud infrastructure and estimate its costs before provisioning the resources. It’s very useful for Cloud Architects, Finops and Project managers to define budgets before launching new projects. The tool is compatible with AWS, Azure, GCP, Alibaba, Scaleway, Linode and OVH.
You can also import your existing cloud infrastructure from your cloud provider’s account. This way you are able to visualize your current infrastructure and perform adjustments or plan for future iteration. The cloud project calculator can help you benchmark your current infrastructure cost to what it would cost on other cloud providers. If you are satisfied with the recommendations, Holori can provision the infra for you through Terraform or direct provisioning.
Wanna give it a try? https://app.holori.com/register
One last hint, we estimated that up to 70% savings can be made by choosing the right provider upfront! Worth challenging them…
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