A $50/month cloud server sounds cheap. A $2000 hardware server sounds expensive. But over 3 years, the math changes drastically. Total Cost of Ownership (TCO) looks at the complete financial picture.
Public Cloud (AWS/Azure)
- Costs: Compute (hourly), Storage (GB/mo), Bandwidth (GB out), Load Balancers, Static IPs.
- Hidden Costs: Bandwidth is the killer. AWS charges ~$0.09/GB. If you push 10TB a month, that's $900 just for traffic.
- Verdict: Best for startups, fluctuating workloads, and rapid prototyping. High OpEx, Zero CapEx.
Dedicated Servers (Hetzner/OVH)
- Costs: Fixed monthly fee (e.g., $60/mo for a powerful Ryzen server). Usually includes substantial bandwidth (20TB+).
- Verdict: The sweet spot for established businesses with predictable traffic. You get raw power for a fraction of the cloud cost. (A customized AWS instance matching a $60 Hetzner server would cost ~$400/mo).
Co-location (Your Hardware in a Datacenter)
- Costs: Buy hardware ($2000-$5000 CapEx). Monthly rack fee + Power + Internet ($150-$300/mo).
- Verdict: For massive scale or specialized hardware needs. You own the assets. After 1 year, your only cost is power/cooling. The cheapest option long-term for high-performance needs, but high responsibility. You fix your own hardware failures.
The Human Cost
Don't forget the salary of the person managing it.
- Cloud: "serverless" and managed services reduce admin time.
- Bare Metal: Requires a SysAdmin to manage updates, kernel patches, and backups.
If moving to bare metal saves $500/mo but requires 10 hours of extra work from an engineer being paid $100/hr, you lost money. TCO must include labor.
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