Let's take a look under the hood and see how we're able to save so much money on AWS:

• The prices for our EC2 instances are based on a 3 year reserved instance price with a partial upfront payment. Is this a fair comparison? Yes and no. You would probably be locked in to a fixed hardware contract with your on-premises or co-located solution, so it makes sense to apply similar contract terms to your AWS pricing model. In reality, you'd probably want to think about purchasing reserved instances after you've moved to AWS and performed some fine-tuning around which instance types to use. On the flip side, the AWS costs could be reduced even further if your servers ran under All Upfront instance reservations.
• The comparison of object storage systems may or may not be fair, depending on the feature set of your on-premises or co-located solution. For example, S3 has the ability to apply an infrequently accessed storage class on stored objects, which reduces their cost if they are not frequently accessed. You'd probably not have this feature in your on-premises or co-located storage.
• The 3 year cost for storage in our on-premises/co-located facility is AU $69,660, of which a whopping 97% is the monthly cost to operate a rack. This includes rental of space, cooling, power, and so on.
• While the cost calculator is taking a pure infrastructure view, it also does factor in support costs. If you are new to AWS, you will probably be leaning on AWS support a little bit to get up and running.
• You'll also want to factor in some costs around training and potentially hiring staff who are skilled in deploying and migrating systems to AWS. Your developers are also going to start thinking differently about how to build and deploy their applications. Make sure to factor this in, too.
• If you aren't totally happy with the on-premises or co-location estimates, you can go ahead and change the figures used in the calculation. Scroll to the top of the page and click Modify Assumptions to input your own hardware prices: