Understanding How Storage Costs Impact Cloud TCO

There is more that goes into your cloud bill than the base price. Take these steps to minimize your cloud storage costs.

Christopher Tozzi, Technology analyst

June 7, 2023

5 Min Read
Understanding How Storage Costs Impact Cloud TCO

One of the chief selling points of cloud storage is that it's cheap — at least on the surface. Cloud storage services like Amazon S3 have pricing tiers as low as $0.00099 per gigabyte per month. That translates to about $12 per year to host a thousand gigabytes of data.

That said, the per-gigabyte cost of cloud storage is only one of many variables that affects cloud TCO.

To learn the true cost of your cloud data, it's important to factor in all relevant data points.

Keep reading for an overview of how to determine how storage contributes to cloud TCO.

The Full Costs of Cloud Storage

The pricing schedules of cloud storage services vary from one cloud to the next. But in general, you can expect your total cloud bill to reflect the following:

Cloud storage base pricing

This is the per-gigabyte per-month cost that cloud providers charge to store your data. Base storage costs can vary widely depending on which cloud region you store data in and which "tier" of cloud storage service you choose. But in general, the more data you store, the lower your per-gigabyte costs will be. You can also choose special types of cloud services, such as those designed for archiving data that is rarely accessed, to get lower overall costs. 

Egress pricing

In most cases, cloud providers charge a fee when you move data out of their cloud storage service to another cloud region, another cloud, or an on-premises location. Egress fees are usually on the order of a few pennies per gigabyte of data transferred.

Related:Enterprise Guide to Hybrid Cloud Adoption and Management

That might not seem like much, but it can easily exceed your base storage costs if you move data frequently. For example, you might pay just $2 per month in base fees to store a 1-terabyte file in the cloud using Amazon S3's standard tier. But if a user downloads that data just one time to a remote location over the internet, it would add about $9 to your costs.  


Cloud providers charge a fee every time you perform actions like adding data to cloud storage, copying data, or even just listing the contents of your data storage. Thus, the more frequently you (or your applications) interact with data, the higher your cloud TCO is likely to be.

Monitoring and analytics fees

You may have to pay fees to monitor or scan your cloud storage resources. Cloud providers sometimes charge fees to monitor your storage using their own tools. Third-party monitoring tools may also impose fees.

Typically, monitoring and scanning fees are based on the volume of data you interact with, and they amount to a few pennies per gigabyte.

Related:6 Tips for Controlling Your Cloud Costs in a Recession

Early deletion fees

In certain cases — particularly if you use a cloud storage service designed for archiving data — you may face early deletion penalties if you choose to remove your data before a specified time period. To avoid these fees, you need to commit to a minimum period of data storage, which your cloud provider will communicate to you ahead of time.

For example, S3 Glacier, an archival data storage tier in the Amazon cloud, requires you to keep data on hand for at least 90 days in most cases to avoid early deletion fees.

Data mirroring costs

If you want to increase the availability of your data and provide a safeguard against the data becoming inaccessible in the event that one cloud region or data center goes down, you might choose to mirror the data across multiple data centers. This can dramatically increase your cloud TCO because each additional data center increases the base pricing of your data storage.

Backup costs

Even when you store data in the cloud, you should back it up. The data could fall victim to threats like ransomware or accidental deletion, requiring you to restore it from a backup. Or you might want to keep a backup on hand in case your cloud storage service temporarily goes down.

Minimizing the Cloud TCO Impact of Storage

To minimize the amount of money you pay for cloud storage — and, by extension, to reduce your cloud TCO — consider practices like the following:

  • Avoid unnecessary data transfers: Since egress fees can quickly exceed the base costs of cloud storage, minimizing unnecessary data transfers out of the cloud is critical for reducing overall costs. You can also use strategies like data caching and CDNs to reduce the amount of data that moves out of your cloud.

  • Know your data needs: To avoid early deletion fees and other unanticipated costs, you need to know what you'll actually do with your data in the cloud. Don't upload it without having a plan.

  • Know your availability needs: In a similar vein, know how much downtime of your cloud data you can tolerate and configure your storage accordingly. Everyone wants 100% uptime, but not everyone actually requires it. If you don't need mirroring or an expensive recovery plan, don't pay for it.

  • Compare cloud regions: Cloud storage pricing can vary significantly between regions, so compare pricing for different regions before committing. You might find that a region you hadn't considered offers the same storage service at a lower price.

  • Use archival storage — but only when it makes sense: Archival storage tiers are a great way to save money. But like reserved instances for VMs, archival storage only makes sense when you're sure you'll need to use the service for an extended period. Otherwise, early deletion fees can undercut the savings that the storage theoretically delivered.

The bottom line: Cloud storage can be much more costly than it first appears. The good news is that there are effective steps you can take to minimize cloud storage costs, once you understand all of the factors that impact storage's role in cloud TCO.

About the Author(s)

Christopher Tozzi

Technology analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

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