CloudCostCompareCloud migration cost estimate: what to count
Short answer: the monthly cloud bill is only one part of a migration. A good estimate has three parts: the move, the overlap while both systems run, and the new steady state. Teams that budget only the steady state are usually surprised by the other two.
Key points
- One-time cost of the move: planning, rework, testing and training.
- Overlap cost: old and new systems both running, longer than planned.
- Steady-state cost: the new monthly bill, estimated from the workload.
- Moving into the cloud is cheap. Moving out can be expensive.
- Lift and shift is fast and usually needs a right-sizing review.
1. What does the move cost?
- Planning and inventory. Listing systems, dependencies and data sizes.
- Data transfer. Moving data into the cloud is usually free or low cost, but your own network time and any transfer appliance or link are not.
- Rework. Changes to code, configuration, identity and monitoring.
- Testing. Performance, security and failover tests in the new place.
- Training. Time for the team to learn the new tools.
2. What does the overlap cost?
For a period you run both the old and the new systems. That means two sets of costs: the old hardware and licences, and the new cloud bill. Plan for this to last longer than you hope, since cutover dates slip.
3. What does the steady state cost?
This is the monthly bill after the move. Estimate it from the workload, not from the old hardware list. Use an estimator and include the extras: hidden costs, support and backups.
What does a worked example look like?
Made-up round numbers to show the method, not real prices. A company moves one application over six months.
| Item | Calculation | Cost |
|---|---|---|
| Planning, rework, testing | 3 people x 4 months x 6,000 | 72,000 |
| Training and tools | one-off | 8,000 |
| Overlap | 3 extra months x (old running cost 4,000 + new bill 3,000) | 21,000 |
| One-time total | 101,000 | |
| Old running cost saved | per month | 4,000 |
| New monthly bill | per month | 3,000 |
| Monthly saving | 4,000 - 3,000 | 1,000 |
| Payback | 101,000 / 1,000 | 101 months |
On these numbers the move does not pay for itself on cost alone: it takes more than eight years. A different case, where the old hardware needs a 60,000 replacement in year two, changes the answer. The lesson is to count the one-time cost and the avoided cost, and not to expect the monthly bill to carry the whole case. Other reasons, such as speed, resilience or reach, can justify the move, and the estimate shows how much they have to be worth.
Which ways of moving are there?
| Approach | Effect on cost |
|---|---|
| Lift and shift | Fast, but often leaves you over-sized and paying for always-on capacity |
| Move then right-size | Lower bill after a review of real use |
| Re-platform to managed services | Higher service fees, lower staff time. See managed vs self-hosted |
| Re-architect | Largest effort, often the best long-term fit |
Why plan the exit?
Plan how you would leave. Moving large data out of a cloud costs egress. See data transfer costs. Choosing open formats and standard engines keeps the exit cost down.
Which mistakes are common?
- Budgeting the steady state only.
- Sizing the cloud like the old hardware, peaks included.
- Forgetting the overlap.
- Assuming the cutover date will hold.
- Ignoring staff retraining.
Decision checklist
- Are the three parts (move, overlap, steady state) estimated?
- Is the steady state sized from real use?
- Is there a right-sizing review after cutover?
- Do we know the cost of leaving?
Next steps
Compare the steady-state bill with the old running cost using cloud vs on-premises, and keep a budget with alerts through the overlap.
Frequently asked questions
How much does a cloud migration cost?
It has three parts: the one-time move, a period of paying for both old and new systems, and the new monthly bill. Each depends on the size and complexity of the systems, so work out all three.
What is lift and shift?
Moving systems to the cloud with little change. It is fast, but often leaves you over-sized and paying for always-on capacity, so a right-sizing review afterwards usually lowers the bill.
Does it cost to move data into the cloud?
Inbound data transfer is generally free or low cost, but your own network time, transfer appliances and links are not. Moving data out later is billed as egress.
How long will I run both systems?
Longer than planned. Cutover dates slip, so budget for extra months of overlap.
How do I keep exit costs low?
Choose open formats and standard engines, avoid services with no equivalent elsewhere unless the benefit is clear, and know the egress cost of moving your data.