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On Premises vs Cloud TCO Calculator

Work out on premises vs cloud tco instantly with clear inputs, formula shown and shareable results.

About On Premises vs Cloud TCO Calculator

A fair comparison must include everything on the on-premises side: hardware, rack space, power, cooling, network, support contracts and the staff time to operate it. Cloud usually loses on steady-state cost at scale and wins on elasticity, speed and avoided capital risk — which is why the crossover year matters less than whether the workload's demand is actually flat.

Formula

TCO comparison

on-premises = capex + annual operating x years; cloud = monthly x 12 x years; crossover = capex / (annual cloud - annual on-premises operating)

Worked example

With the default values below, On Premises vs Cloud TCO Calculator returns Lower total cost of On-premises is cheaper over this horizon. Change any input above and every figure here is recalculated in your browser.

Inputs used

Hardware capital costminimum 0
400,000
Annual on-premises operating costminimum 0
120,000
Cloud monthly costminimum 0
22,000
Comparison horizonaccepts 1–15 years
5 years

Results

Lower total cost
On-premises is cheaper over this horizon
On-premises total cost of ownership
$1,000,000
Cloud total cost
$1,320,000
Years at which cloud spend passes the capital cost
2.8 years

Step by step

  1. 1Values used
  2. 2TCO comparison
  3. 3Lower total cost= On-premises is cheaper over this horizon
  4. 4On-premises total cost of ownership= 1,000,000
  5. 5Cloud total cost= 1,320,000
  6. 6Years at which cloud spend passes the capital cost= 2.8 years

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 1 decimal place, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What is usually missing from the on-premises figure?

Staff time, floor space, power and cooling, network equipment, spare inventory, and the refresh at end of life. Including only hardware makes on-premises look far cheaper than it is.

Does the comparison capture the real difference?

Not fully. Elasticity, time to provision and avoided capital commitment have real value that a straight cost comparison cannot express.

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