Top tips for doing a cloud storage cost analysis

cloud storage comes with the promise of dramatically reducing the costs of deploying, operating and scaling storage for users and applications. But while the monthly price per gigabyte (GB) for storage published by public providers nearly always looks attractive, experienced users have learned that most providers charge for a number of services in addition to storage, and those costs can add up quickly for a rapidly expanding business.

Sometimes these are referred to as "hidden" costs of cloud storage, but legitimate vendors do, of course, provide you all the necessary information in a cloud storage contract. These costs are not so much hidden as they are a surprise to users who don't do a cloud storage cost analysis or calculate up front the potential cost of specific transactions.

Don't be surprised if a few more radical -- but compelling -- cloud storage scaling approaches and pricing models spring up over the next couple of years.

In this SearchCloudStorage tip, we'll examine the different categories of costs that you can expect to incur as a customer of cloud storage services.

The first category is monthly storage pricing, which is generally quoted as a price per GB. With some providers, the price per GB drops as you increase your storage usage. Amazon, for instance, currently charges 9.5 cents per GB per month for the first terabyte of standard storage, and 8 cents per GB each month for the next 49 TB. Microsoft Windows Azure uses a similar type of sliding scale. Most major providers also charge more for highly redundant storage than they do for less redundant storage, and some are now introducing even lower-cost archival storage options.

The second category covers charges for storage requests or transactions performed each month. The requests are REST-based operations -- also known as HTTP methods (or "verbs") -- that specify an action to be taken on a storage object or resource. Common operations include GET, PUT, POST, LIST and DELETE.

While both Amazon S3 and Microsoft Azure charge for such requests/transactions, other services such as Rackspace Cloud Files (based on OpenStack Object Storage) and Nirvanix do not. We're not talking huge numbers; the highest charges tend to be in the range of $0.01 to $0.05 per 1,000 transactions, depending on the provider and specific operations. These can add up quickly, however, when a customer is using the cloud for primary storage or for storing any particularly active data set.

The third and final category is the cost of bandwidth to transfer data into and out of the cloud. Today, providers charge nothing for data transferred in, though you may need to pay a little extra if you're moving large amounts of data into the cloud via a data shuttle service or dedicated network connection. On the other hand, providers almost uniformly charge for data sent out of the cloud.

In the case of Amazon S3, those charges start at 12 cents per GB (with the first GB per month free) and go down incrementally for progressively larger data outflows per month. The costs are reasonable if you're transferring out no more than a few hundred gigabytes per month, but they do provide a disincentive to move large data sets over to another cloud storage provider. By far the largest monthly cloud storage costs for a typical customer will fall into the first category. For example, if you're using 500 GB of standard, redundant Amazon S3 storage in the U.S. Western region, with an average of 100 GB transferred out and 50,000 monthly storage requests, you'll pay on the order of $170 per month. If you're using ten times that amount of storage (5 TB) -- and your transfers and requests remain static -- your monthly costs will increase to just over $580.

Though it can be a bit of a challenge to estimate your monthly cloud storage bill, the good news is that cloud provider costs have been dropping steadily, as competition heats up and the number of subscribers continues to grow. For instance, both Microsoft Azure and Amazon S3 recently announced storage price per GB reductions in the range of 25%. The other piece of good news is that a number of providers, including Amazon S3, Microsoft Azure and Rackspace Cloud Files, now offer easy-to-use calculators on their sites to help customers estimate their costs under different scenarios.

Keep in mind there may be other costs you'll incur as well. For example, if you're using a cloud gateway to access your storage, you'll have to bear the costs of equipment (e.g., gateway appliances) at your site and the associated support and maintenance fees. You'll also need to account for the costs of any IT labor required to get your storage into the cloud and manage it once it's there.

One more trend you should be aware of is that some small but innovative providers are taking a whole new approach to pricing cloud storage. Take Symform Inc., for example. Instead of charging solely based on cost per GB, Symform enables a customer to contribute excess local drive space to the Symform storage pool, thereby reducing or even eliminating cost per GB charges, depending on the amount of storage contributed. The cloud storage pool scales with the growth in new users, and those users benefit by paying sharply reduced costs per GB. Don't be surprised if a few more radical -- but compelling -- cloud storage scaling approaches and pricing models spring up over the next couple of years.

All in all, it's clear that competition and innovation will continue to lead to simpler and more functional cloud storage offerings at lower prices. The key to knowing your costs is to know your needs for storage and transfers and to keep an eye on changes in those costs.

Arun Taneja is a regular SearchCloudStorage.com contributor and the founder and president of the Taneja Group, an analyst and consulting group focused on storage and storage-centric server technologies.