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When comparing AWS with on-premises Total Cost of Ownership (TCO), a comprehensive evaluation should include all relevant costs across both options. These can be broadly categorized into:

Capital Expenditures (CAPEX):

  • Hardware costs for servers, storage, networking equipment, etc.
  • Software licenses for operating systems, databases, applications, etc.
  • Facility costs for data center space, power, cooling, and physical security.
  • Installation and setup costs for deploying and configuring the infrastructure.

Operational Expenditures (OPEX):

  • IT Staff costs for managing and maintaining the infrastructure, including software updates, security patching, and troubleshooting.
  • Power and cooling costs to run the equipment.

  • Bandwidth costs for internet connectivity and data transfer.
  • Backup and disaster recovery costs for protecting data and ensuring business continuity.
  • Software maintenance costs for ongoing support and updates.
  • Licensing costs for ongoing software subscriptions.

Additional Considerations:

  • Scalability and agility: AWS offers the ability to easily scale resources up or down as needed, while on-premises infrastructure may require upfront investment for future capacity.
  • Flexibility: AWS offers a wide range of services that can be easily provisioned and deprovisioned as needed, while on-premises infrastructure may be less flexible.
  • Downtime and outages: AWS has a highly reliable infrastructure with multiple redundancies, while on-premises infrastructure may be more susceptible to downtime and outages.
  • Security: AWS provides a secure platform with a variety of security features, while on-premises infrastructure may require additional investment in security measures.

Here's a helpful table summarizing the cost components:

Cost Category AWS On-Premises



- Pay-as-you-go model for most services.
- No upfront hardware or software costs.
- Potential for lower costs if usage is predictable.

- High upfront costs for hardware, software, and facilities.
- Potential for lower long-term costs if usage is high and stable.


- Variable costs based on usage.
- No IT staff costs for managing infrastructure.
- Potential for lower costs if usage is unpredictable.

- Fixed costs for IT staff, power, cooling, and bandwidth.
- Potential for higher costs if usage is low or variable.

Additional Considerations

- Highly scalable and flexible.
- Secure and reliable infrastructure.

- May require additional investment for scalability, flexibility, and security.
- May be more susceptible to downtime and outages.



Ultimately, the best option for your organization will depend on your specific needs and requirements. A thorough TCO analysis that considers all of the relevant costs and factors can help you make an informed decision.


Here are some additional resources that you may find helpful:

Five things you should do to create an accurate on premises vs cloud comparison model: 

By Siju