You've got a migration cost estimate. Now answer the real question: when does it pay off?
Break-even timeline · Net savings · Payback period
One-time project cost — use our calculator on the homepage for this number
Hardware, hosting, power, maintenance, IT staff time for infra
Compute, storage, support plan — after right-sizing (not day-1 cost)
Monthly Net Savings
+$9K
Cloud saves money vs on-premise
ROI Analysis
Break-Even Point
45 mo
from go-live
3-Year ROI
-19%
return on investment
3-Year Net Savings
$-76,000
after migration cost
5-Year Net Savings
+$140K
after migration cost
36-Month Cumulative Net Savings
Estimates for guidance only. Actual savings depend on workload efficiency, cloud pricing changes, and hidden cost management.
Savings Sources
Hardware Refresh Avoidance
$3,000–$10,000 per serverOn-premise servers require hardware refresh every 5–7 years. Cloud eliminates this capital expenditure entirely.
Data Centre Costs
$1,000–$3,000/month per rackColocation, power, cooling, physical security. Cloud shifts this to OpEx and eliminates most of it.
Staff Time Reallocation
15–30% of IT team timeInfrastructure maintenance frees engineering time for product development. Quantify this as salary × time savings.
Elastic Scaling
15–40% compute savingOn-premise requires provisioning for peak. Cloud scales down at off-peak. For variable workloads, this is substantial.
Disaster Recovery Simplification
$20,000–$100,000/yearCloud provides built-in geo-redundancy. Replaces dedicated DR site, DR licences, and DR testing costs.
Licensing Optimisation
Varies widelyMoving from Oracle/SQL Server to cloud-managed alternatives (RDS, Cloud SQL) can reduce database licensing costs by 30–80%.
Honest Assessment
We believe in honest numbers. Cloud migration isn't always the right answer. Here are the scenarios where staying on-premise is financially better.
If your servers are 3+ years old and fully depreciated, and workloads are stable and predictable, the monthly cloud cost may exceed what you're currently paying.
Some data sovereignty and regulatory regimes require data to remain in specific physical locations without cloud infrastructure. Migration is either not possible or requires expensive dedicated cloud infrastructure.
If your workload involves serving large files to external users, cloud egress fees ($0.05–$0.09/GB) can exceed compute savings. High-bandwidth content delivery is often cheaper on CDN + on-premise than cloud.
Cloud's elastic scaling benefit is greatest when peak demand is 2–5× average. If your workload is nearly constant, you'll pay on-demand prices without benefiting from elastic savings.
Industry Research
155% ROI over 3 years
Forrester Research
Composite organisation study across 5 enterprise customers. Included reduced infrastructure costs, IT staff reallocation, and business agility gains.
Enterprise-scale study. SMB results vary.
30–40% cost reduction (median)
McKinsey Global Institute
Median cloud cost reduction vs on-premise for well-executed migrations. Based on 250+ migration programs tracked globally.
Median masks wide distribution. Poor migrations show negative ROI.
192% 5-year ROI
IDC (Azure-Commissioned)
Commissioned by Microsoft. 5-year ROI for Azure migrations including direct and indirect benefits.
Vendor-commissioned — treat as upper bound, not typical expectation.
These benchmarks represent median outcomes for well-planned migrations. Actual ROI depends heavily on your starting point, migration strategy, and how well hidden costs are managed.
FAQ