How much does it cost to do a project in the cloud? Cloud project pricing

If you’re thinking about doing something new in the cloud, there is a good chance you’re wondering how much it is going to cost you. The thing is, it’s not just the price tag for the cloud itself but also additional software, professional services, and work of your team.

We have been delivering cloud projects for 6+ years across multiple project types, technologies, industries, and geographies. It makes us pretty comfortable to discuss the project cost, cloud cost, and all the elements which form your cloud project price tag.

Still, it is based solely on our experience, and so these estimates might vary to some extent. Why? Because the prices here are based on averages, and there are many variables.

The final cost always depends on multiple factors and business needs. I will try to cover and explain it in this guide, so you can have an idea of what it may look like in your case.

So, let’s break it down!

Key points

  • What are the typical costs of cloud projects?
  • What do these costs depend on?
  • Where to look for ways to optimize costs?

What are the main cost factors in cloud projects?

Your project will have two major cost variables:

  • Professional services – such as projects (also internal) or consulting
  • Cloud resources – what you use, how much of it, and how you optimize it.

Let’s deal with professional services costs first.

How much do professional services cost?

A typical organization starts its cloud project with partner selection. It allows you to move faster and leverage the experience of someone who did it before.
In some cases, partner support might also come with your cloud vendor package – either attached to the cloud purchase you’ve made or in subsidized project support.

Professional services for the cloud are delivered in two main models:

  • Fixed fee: a partner takes on a task and delivers it within an agreed scope and time frame with an agreed set of deliverables
  • Time and materials (T&M): a partner delivers work and charges you based on the agreed rates and time taken.

Here’s a summary of features that easily shows the differences.

Fixed fee vs T&M project flexibility and risk comparison

A comparison between fixed fee and T&M projects

When to use the fixed fee model vs Time and Materials approach?

It will vary across geographies, as in some countries T&M is a standard way to do it. However, here are the general guidelines.

Typical use cases for fixed fee and T&M projects

When should you consider a fixed-fee engagement, and when may a T&M project be better?

What are the cloud consultants’ hourly rates?

That’s a good question. We know that hourly rates might vary greatly depending on the industry, geography, and current demand on the market

Typically, you can expect the hourly rates in the range between $60/hr and $180/hr but it depends on many factors. What influences these rates?

You can expect different rates for junior-level people who deliver tasks that are well defined (lower price range) and for senior / architect-level people, who can define the overall task and break it down into smaller stages (higher price range).

There are cloud areas that are easier to implement and those which are more complex and in demand. For standardized cloud services, you can get rates in the lower ranges. For cloud areas that are still complex or in great demand, you can expect a higher range of rates.

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What are the more complex or in-demand cloud roles?

It always changes but at the time of writing, here are the most frequent roles:

  • Cyber Security and Cloud Security architecture experts
  • Data, Machine Learning and AI experts
  • DevOps, MLOps (operations in data environments), and SecOps (security in DevOps projects) consultants
  • Financial Operations (FinOps) professionals (sometimes called Cloud Economists).

Typically, you will experience a blended labor rate, dependent on the assigned team structure, with an average between $90-120/hr.

These are the usual rates in our case. They might be higher or lower than your local partners (depends on your geography). For us, there are additional factors that may affect project rates:

  • The ability for global delivery and coverage across multiple time-zones and geographies (Europe, MEA, US)
  • Seniority and experience of consultants – with employee attrition way below the industry average, we are delivering consistency of engagement and projects.
  • Delivering within the specified SLA and predictability, with full transparency towards the end client (in some cases – you).

You can typically expect higher rates than those discussed here if you engage with big brands, e.g. Microsoft Consulting Services, or the Big 5 in consulting.

What are the typical fixed-fee project costs?

Fixed-fee project cost is defined in two areas:

  • Standardized offering or project that can be delivered multiple times and the supplier has a defined price tag for it
  • Scoped delivery where the price tag is delivered after a scoping engagement and negotiation process.

The size and price of these projects will vary across providers. Here are some examples of a typical project delivered across many organizations, where I have averaged the prices of our services and those of companies we know.

Microsoft 365 security services deployment

Projects in this area vary based on the scope and size of the organization. Typical project cost is between $20,000 (initial services deployment, advisory) and $200,000 (full-service deployment of all M365 services, enterprise-scale customer 10k+ employees).

Cloud governance and landing zone deployment

A typical project in Cloud Governance and landing zone deployment area is done by larger-scale customers with more than one cloud subscription.

Its size varies depends on the scale and needs of the organizations between $45,000 (mid-size enterprise with few resources deployed already in the cloud and simpler on-premises environment) and $150,000 (enterprise-grade environment, complex security, and compliance requirements, complex network environment).

Cloud DevOps engagements

It is hard to speak of a typical DevOps engagement, but usually, we see two types of projects delivered in the organization:

  • Initial level DevOps workshops and entry to the organization to introduce CI/CD mechanisms and delivery process build around DevOps principles
  • Delivery of full cloud operations center with automation of various resources deployment, creation of shared templates, and CI/CD infrastructure for an entire organization.

The cost of those projects will vary between $20,000 (entry-level project, mid-size organization) and $100,000 (full DevOps deployment, enterprise organization with 10k+ employees).

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Cloud projects size from the cost perspective

In short, you can expect three sizes of projects related to cloud deployment:

  • Small engagement: $10,000-$50,000 – typical entry-level projects, PoCs, migration enablement, ready-to-use service deployment
  • Mid-size engagement: $50,0000-$150,000 – large-scale migrations, operations programs, complex cloud governance, and environments deployment, initial machine learning projects, data analytics, and visualizations.
  • Large-size project: $150,000 and beyond (the cloud is the limit!) – large-scale, massive migrations, custom line-of-business applications development, data-warehouses, and custom AI projects.

Disclaimer: as I wrote earlier, these are averages we see across the industry and geographies. Your actual cost of a project will land somewhere on this scale, depending on your organization size, type of project, area, and overall complexity.

Now we have professional services covered, let’s look at the cloud service cost profile.

The cost of cloud resources

Your cloud project cloud resources project cost will vary depends on the following factors:

  • Your resource usage
  • The way you purchase your cloud
  • Cost optimization methods you use.

How is cloud pricing calculated?

Your cloud bill depends on what you consume in your project. That’s a given. (Almost) every resource in the cloud will increase your costs. It isn’t true that it can’t be predicted up-front, at least to some degree.

What you need to remember when thinking about cloud resource cost is:

  • Resources which are online all the time (e.g. virtual machines, compute resources based on deployed units, like containers) will incur cost even if you are not using them
  • Volume size resources, mostly storage or storage-based services will cost you based on the volume (size) of data but also on availability (hot, cold storage) and time (retention period)
  • The higher SLA and fail-over requirements for your resource, the more it will cost you. SLA requirements from your vendor might force you to use higher-priced resources (e.g. premium storage vs standard storage for disks)
  • Cloud environment design matters. Network traffic might cost you if it is between the regions or using specific services, e.g. VPNs.

You can estimate your expenses with tools provided by your cloud vendor. For Azure, you can use Azure Pricing Calculator to estimate your cloud bill based on your planned resources.

Cloud resources purchasing methods

The cost of your cloud resources might depend on the method you purchased from your vendor. Here are the typical options to purchase cloud.

Pay-as-you-go (PAYG)

You attach your credit card to the subscription(s) and pay for resources as you consume them. Most convenient and easy to use, but in most cases not the best from a financial point of view.

It’s good for a start and the initial phase of using cloud resources, or if you don’t want to engage in any other kind of relationship. You process all payments and invoicing directly with your cloud vendor.

Cloud Service Provider (CSP)

Purchase of cloud through a dedicated partner of your cloud vendor. For Microsoft Azure, this option is called Cloud Service Provider (CSP).

How is a CSP different from Pay-as-you-Go?

  • You settle your payments and cloud purchases with a local partner, not the cloud provider directly (might be easier from a legal and taxes point of view)
  • Cloud resources prices are discounted compared to the PAYG model and you can negotiate those discounts directly with your partner based on how much you are using.

Vendor agreement

You sign a cloud agreement directly with a cloud vendor. This option is used typically by a larger organization and requires some up-front commitment or pre-purchase of the volume of cloud credits towards your usage. With Microsoft, this option is available through Enterprise Agreement (EA) or Microsoft Customer Agreement (MCA) options.

In direct comparison, Pay-as-You-Go is typically the most expensive option with CSP being optimal for many customers and EA providing some negotiation options with a vendor but requires up-front commitment and is reserved for the largest accounts.

Your final cost will depend on the last, but crucial factor – cloud optimization methods you use in your environment.

Cloud cost management methods

Every cloud vendor provides multiple ways to optimize the cost of resources in the cloud. Cloud providers have different ways to deploy these services and names for them. I will cover here the most typical methods for Microsoft Azure but if you use other vendors, they will have similar options available.

Reserved resources or usage

Reserved resources or usage of resources can cut your bills up to 40% – basically, you commit to using those resources for a longer time and you pay this cost up-front or in specific installments for a discount.

It is a great way to cut the cost of resources like Virtual Machines or Storage accounts. If you finish using those resources earlier – no problem. There is a model to re-calculate the costs and settle them with a vendor.

Using specific types of subscriptions

Cloud vendors typically provide subscriptions for development and test purposes. The limitation might be in the legal agreement or SLA on these subscriptions, which makes it less suitable for production workloads, but for dev/test purposes it provides a great reduction in cost.

Bring your own license

For many resources (VMs, appliances, SQL databases) you can bring your licenses if you have them and apply them to the cloud resources. It can cut the cost of the services up to 40-50%, depending on the type of resource.

Those optimization models can be combined with the way you purchase your service. For example, you can get your purchase through a CSP provider and get a volume discount, and on top of that apply those optimizations to reduce the total cost further under your discount.

In short – it depends!

As you can see, cloud project costs might vary – key factors are the type of the project and the size of your organization. The way you purchase the cloud resources and how you optimize it also is important, especially when the size of your cloud bill will increase.

I hope this guide gives you an idea of what the cost of your project might be. You should also have an indication of the main areas where you can look out for cloud cost itself to try to optimize it. Feel free to post questions below or contact us if you’d like to know more.

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