Cloud-based server cost: How to choose and pricing guide

When searching online for information about cloud-based server costs, you’re faced with either one or all of the following: 

• Search results display an overview of pricing from a single cloud provider or a broader look at pricing across multiple vendors. 
• Affordability concerns because, for most SMBs, every dollar counts. 
• Need for clarity on their complex pricing models, hidden fees, and the nagging fear of vendor lock-in. 

The promise of seamless scaling can be a double-edged sword. How can your resources benefit from cloud server technology while you keep your business competitive?

This article will discuss cloud-based server costs in-depth, explain vendors’ various pricing models, and provide valuable insights to help you select a cloud server.

Table of contents

• Cloud-based server cost: How to choose and pricing guide
• What is a cloud-based server, and why do you need one?
• Benefits of cloud-based servers
• The 5 best cloud-based server providers
• Cloud server pricing structure
• Factors to consider when choosing a cloud server
• Cost optimization strategies
• FAQs about cloud-based server cost
• Maximize your cloud-based server cost with Liquid Web

What is a cloud-based server, and why do you need one?

A cloud-based server is a virtualized computing resource hosted and managed by cloud providers that offer data storage, delivers applications, and processes information.

Unlike dedicated servers and physical machines hosted on-premise or in a data center, cloud-based servers exist solely in the cloud. This means you can access your server from anywhere, anytime, and scale your resources up or down as needed. 

With a cloud-based server, you don’t need to worry about hardware maintenance, upgrades, or replacements; you can reallocate your team’s time and resources toward more strategic, revenue-driving initiatives.

Benefits of cloud-based servers

Cloud-based servers offer numerous benefits that can transform your business operations. Here are some of the key advantages.

1. Flexibility and agility

Cloud-based servers allow you to quickly spin up or down resources as needed. This elastic provisioning capability suits businesses with fluctuating workloads or seasonal spikes. For instance, you can quickly expand your storage volumes to accommodate large data influxes during peak periods and scale back when it suits, aligning your costs with actual usage. The agility enables you to rapidly respond to market changes and launch your product faster.

2. Business continuity and disaster recovery

With cloud-based servers, your data and applications are stored in multiple locations, ensuring your business remains operational during an outage or disaster. Plus, your data recovery service can failover to redundant resources in case of hardware failure or malicious attacks, helping to prevent data loss.

3. Cost-effective pricing model

Cloud-based servers offer a cost-effective and flexible pricing model that combines the benefits of reduced capital expenditure (CapEx) and pay-as-you-go or consumption-based pricing (OpEx). This eliminates the need for upfront investments and saves you money because you pay for the resources you use, and there’s no upfront cost for hardware, etc.

4. Globally distributed infrastructure

Most cloud providers operate globally distributed data centers, so you can use your resources worldwide, such as in various regions and countries. 

The 5 best cloud-based server providers

There are many options for cloud-based server providers. Here are five of the best with their unique features and pricing.

1. Liquid Web 

Liquid Web is a managed cloud hosting provider that offers dedicated, virtual, and cloud-dedicated servers. Our Virtual Private Cloud offers dedicated cloud resources with enhanced security and optimized performance, while Cloud VPS provides flexible and scalable virtual private servers ideal for various workloads. 

2. Amazon Web Services (AWS)

AWS provides a robust suite of computing services tailored for various workload requirements. Its flagship EC2 virtual servers come in over 750 instance types, from general-purpose to compute-optimized, memory-optimized, and accelerated computing instances. 

It also offers serverless computing with Lambda functions, container services like ECS and EKS, and fully managed platforms like Elastic Beanstalk for rapidly deploying applications. 

With its global infrastructure, auto-scaling capabilities, and a vast array of complementary services for storage, databases, networking, and more, AWS allows businesses to build highly scalable and flexible cloud environments.

3. Google Cloud Platform (GCP)

GCP’s compute offerings include Google Compute Engine, which provides scalable and high-performance virtual machines, and Google Kubernetes Engine (GKE), a fully managed and production-ready environment for deploying and managing containerized applications.

GCP stands out with its advanced data analytics capabilities, powered by tools like BigQuery for large-scale data warehousing and Google Cloud Dataproc for running Apache Spark and Hadoop clusters.

4. Microsoft Azure Cloud Services

Azure provides serverless computing with Azure Functions, enabling event-driven scalability and fully managed container services like Azure Kubernetes Service (AKS) for deploying and managing containerized applications. It features GitHub Copilot for AI-based coding suggestions — great for even those with no coding experience. 

5. Oracle Cloud Infrastructure

Oracle’s suite of services consists of cloud-based compute instances, ranging from bare metal servers to GPU-accelerated VMs and serverless functions. 

OCI provides robust storage solutions, including block volumes, object storage, and archival storage, along with advanced networking capabilities like dedicated bare metal connectivity and virtual cloud networks. This cloud-based server has enterprise-level security and compliance, with security zones, vulnerability scanning, web application firewall, threat intelligence, and more. 

Cloud server pricing structure

Cloud server pricing structures vary depending on your needs and preferences. Here are four common pricing structures to consider:

1. Pay-as-you-go (utility pricing)

Pay-as-you-go or utility pricing charges you only for the resources you use, without any long-term commitments. This pricing structure is ideal for businesses with variable or unpredictable workloads. Prices are usually hourly or monthly; you can scale up or down as needed.

2. Reserved instances (long-term commitments)

This pricing structure offers a discounted rate for a long-term commitment (usually one to three years). It suits businesses with steady and predictable workloads, as you can save up to 72 percent compared to pay-as-you-go pricing.

3. Spot instances (bidding for spare capacity)

This allows you to bid on spare cloud capacity, providing significant discounts (up to 90 percent) compared to pay-as-you-go pricing. This pricing structure is for businesses with flexible workloads and can tolerate interruptions. You can terminate instances if the spot price exceeds your bid.

Beyond pricing, there are several other factors that may influence your decision when choosing a cloud server provider. 

Factors to consider when choosing a cloud server

When selecting a cloud server, there are several factors to consider to ensure that the chosen solution aligns with your business requirements, application needs, and IT strategy. 

1. Performance requirements

Your application’s performance requirements are essential when choosing a cloud server. Consider metrics such as:

Response times: How quickly does your application need to respond to user requests?

Throughput: How much data needs to be processed, and how quickly?

Availability: How often does your application need to be available, and what are the consequences of downtime?

2. Scalability needs

Assess your provider’s vertical and horizontal scalability strength if you have a varying workload: 

• Vertical scalability: Can you increase resources (e.g., CPU, RAM) as needed?
• Horizontal scalability: Can you add more instances or nodes to handle increased traffic?

Ensure that your chosen cloud provider offers seamless auto-scaling capabilities to adjust resources based on workload fluctuations, minimizing manual interventions and ensuring optimal resource utilization.

3. Security considerations

Security should be a top priority when choosing a cloud provider. Check their data protection and encryption measures, identity and access management (IAM) controls, and adherence to industry-standard security practices, such as hardening processes. The provider should meet your organization’s compliance requirements and offer robust security certifications.

4. Cost implications

Cloud costs can add up quickly. Before choosing any cloud server provider, research different providers’ cost implications. These include computing costs, storage costs, network costs for data transfer, load balancing, VPN, and any additional services or features you may require. 

When migrating to the cloud, you may face upfront costs, such as migration services, data transfer, and setup fees. But the long-term benefits of cloud computing can offset the costs. These benefits include lower capital and operational costs. Monthly costs include ongoing expenses like instance pricing, storage, and support.

5. Cloud provider ecosystem

Consider whether your application uses a monolithic or microservices architecture and whether you require container orchestration tools like Docker or Kubernetes. 

You may need to consider serverless computing and function-as-a-service (FaaS) options, as well as high availability and disaster recovery requirements. Other important factors in a cloud provider ecosystem are backup and data recovery strategies, as well as monitoring and logging requirements.

6. Migration and transition strategies

Choose a cloud provider that offers guidance and assessment tools to analyze your existing infrastructure, identify potential compatibility issues or dependencies, and provide recommendations for right-sizing your cloud environment.

A good migration strategy provides different approaches, such as lift-and-shift, refactoring, or re-architecting your applications. Lift-and-shift involves moving your applications as-is to the cloud. Refactoring and re-architecting require changes to take advantage of cloud-native features.

Your cloud provider should also offer data migration and transfer support, including data encryption, compression, and transfer acceleration. 

7. Support and managed services

Your cloud server provider’s customer support system, response time, communication channel, and availability of knowledgeable support staff can make or break your business. A robust customer support system and the option to outsource to third-party managed service providers is essential. 

Some cloud providers like Liquid Web offer managed services for specific workloads or applications, which can be beneficial for your businesses — especially if managing and optimizing those workloads isn’t a core strength.

8. Cloud hosting cost factors

To better understand and optimize your cloud hosting costs, you must be aware of the different cost factors involved. Let’s explore some key areas.

Computing resources 

The computing power required for your workloads, such as the number of CPUs, amount of RAM, and other resources, directly impacts the cost of cloud hosting. More powerful instances with higher specifications typically come at a higher price point.

Storage and data transfer

Storage costs, such as block or object storage, can vary based on the storage type. When determining your cloud hosting expenses, consider the storage required and the data transfer volume, as these factors directly impact costs. Larger storage needs and higher data transfer volume result in higher costs. 

Inbound data transfer is generally free or less expensive than outbound data transfer, which reduces costs, depending on the provider and the volume of data transferred.

Networking and connectivity

Networking costs can include charges for load balancing, virtual private networks (VPNs), and other connectivity services. The complexity of your networking requirements and the amount of data transferred can impact your overall cloud hosting costs.

Geographical regions

Cloud providers often offer different pricing models across different geographical regions. Hosting resources in regions closer to your target audience can enhance their experience by minimizing latency, resulting in faster load times and smoother interactions with your applications or services.

Usage duration and patterns

The duration and patterns of your resource usage can affect the cost. For example, sustained usage over longer periods may qualify for discounted rates or reserved instance pricing models. Sporadic or burst usage may be more cost-effective with on-demand or pay-as-you-go pricing. 

Cost optimization strategies

Proper planning is important for cloud optimization. Without it, organizations often overspend by 70 percent and fail to achieve the expected value from their cloud investments. Here are some strategies to optimize cloud costs.

1. Right-size resources

Size your cloud resources appropriately for your workloads by estimating your workload requirements to avoid overspending on excessive capacity or facing bottlenecks due to insufficient resources. Regularly review and adjust your resource allocations based on actual usage patterns.

2. Autoscaling and load balancing

Implement autoscaling and load-balancing strategies to adjust resources based on demand. This ensures that you only pay for what you need and avoid over-provisioning during periods of low utilization.

3. Spot instance usage

Leverage spot instances, which are spare computing capacity offered at discounted rates, for workloads that can tolerate interruptions or have flexible schedules.

4. Reserved instances for long-term commitments

If you have predictable and steady resource requirements, consider reserved instances involving upfront or long-term commitments for significant discounts compared to on-demand pricing.

5. Cost monitoring and optimization tools

Use cost monitoring and optimization tools provided by cloud providers or third-party solutions to gain visibility into your cloud spending, identify cost-saving opportunities, and enforce budgeting.

FAQs about cloud-based server cost

As businesses explore cloud server options, common questions arise regarding the associated costs.

1. How much does a cloud server cost for a small business?

This depends on the chosen plan and resources. Liquid Web offers cloud servers starting at $159 per month, while a cloud server can be set up starting at $5 per month, with most businesses spending around $40 per month for adequate resources.

2. Is it expensive to build your own server?

For a small business, the cost ranges from $1000 to $3000, depending on the required CPU, bandwidth, disk space, and memory. As well as upfront hardware costs, you’ll need to factor in expenses for data center facilities, IT personnel, utilities, and ongoing maintenance.

Maximize your cloud-based server cost with Liquid Web

Many factors, such as resource usage, storage requirements, and data transfer costs, influence a cloud-based server’s cost. Understanding these cost factors helps you manage and optimize your expenditure, enabling you to set up a more efficient, cost-effective, and scalable IT infrastructure for your business.

At Liquid Web, we understand SMBs’ challenges when managing their technology needs. Our cloud hosting solutions provide reliable performance, scalability, and security.

Our transparent pricing, expert guidance, and flexible cloud server options enable you to make informed decisions and tailor your cloud environment to your specific needs. Contact us for more information on our cloud server offerings, including pricing, features, and configurations. Or check out our plans to get started today.