How the cloud vps cost is calculated

November 28, 2016

Have you ever answered your executives the questions related to “Why use cloud computing?” and “How the cloud VPS cost is calculated?”?

Now, they are asking whether it is more saving to go with an Infrastructure as a Service provider than to build your private cloud computing platform. When you ask an IaaS cloud provider for a price quote, it is important to understand how they set prices for their services. The three largest cost centers that are related to a cloud environment include computer, network and storage.


Network: Cost per Rack Unit

When setting price, VPS cloud Vietnam providers determine the expense to maintaining the network. They begin by calculating costs for network infrastructure maintenance network hardware and labor. These expenses are added together and divided by the total of rack units a business will need for its IaaS. Some of the factors that go into these costs include:

Network hardware costs: Every VPS requires the provider to invest in certain types of network hardware. They will buy the hardware and depreciate the cost of each device’s lifecycle.


Labor: Cost for staff to manage, maintain, monitor and troubleshoot cloud infrastructure. This job should be 24/7 to guarantee uptime and availability of the cloud environment.

Network infrastructure maintenance: The costs will include security tools such as load balancers, firewalls, patch panels, LAN switching, routing and uplinks – all of the infrastructure that can keep the network smoothly.

Compute: Cost per GB of Virtual RAM

Each company/ organization has a unique requirements including use of CPU. Most of the providers calculate the cost of CPU by define the respective company’s cost per GB of virtual RAM including:

Hardware acquisition: This computation shows your provider how much it costs to acquire hardware for each GB of RAM that you will be using. They also depreciate the costs over the lifecycle of hardware.


Hardware operation: The providers look at the total of virtual RAM deployed in their public clouds and divide that into the cost per rack unit of your hardware. Your costs may include usage-based and licensing subscription costs, depending on your virtual operating system.

Shared Costs

Your individual cloud VPS best infrastructure costs are not all that go into your price quote. Your quote includes a share of what it costs to power and cool the underlying infrastructure for the IaaS platform in the datacenter. Your price may also include charges related to software hosting licenses, support and other service components. Sharing the costs with other companies/ organizations in the public cloud is what makes IaaS so saving.

Storage: Cost per GB of Virtual Disk

Storage costs are same to compute costs. The provider will calculate how much it costs to perform your storage hardware and upgrade new hardware for your storage demands.