For over a decade, we’ve been told that the cloud is the fastest, cheapest, and most efficient way to run software. Spin up compute in seconds, scale elastically, pay only for what you use. What’s not to love?
But for startups, independent developers, and even mid-sized companies, that story is starting to crack. Infrastructure bills balloon. Budgets grow opaque. And suddenly, the cloud doesn’t feel so cheap anymore.
Here’s the uncomfortable truth: the cloud isn’t cheaper, it’s just someone else’s margin.
The Original Cloud Pitch
When AWS first launched EC2 in 2006, the message was revolutionary: why invest in your own hardware when you could rent capacity by the hour?
And for many use cases, this made perfect sense. Rapid prototyping. Spiky workloads. Event-driven systems. Startups loved it. Enterprises were skeptical, but eventually followed suit.
But what started as a cost-saving convenience has become an industry with aggressive margins, subsidized by your wallet.
The Hidden Cost Structure of Hyperscale
Cloud providers make money by reselling compute, storage and bandwidth, resources that, at scale, are dirt cheap. Yet pricing doesn’t always reflect this:
- Bandwidth: AWS charges ~$90/TB for outgoing data from most of their services. Many infrastructure providers offer 100x more bandwidth for the same price.
- Compute: A single t3.2xlarge instance costs ~$243/month. You could rent a server 4 times as powerful for the same price.
- Storage: Cloud block storage often comes with IOPS limits and egress fees. Dedicated servers offer full-speed NVMe performance without any caps.
These aren’t isolated examples. They’re a part of a systemic pattern. Hyperscalers charge premiums for convenience, and the margin between your bill and their cost is enormous.
The Illusion of “Only Pay for What You Use”
The idea of pay-per-use sounds efficient. But in practice, cloud billing is engineered to be unpredictable.
Auto-scaling doesn’t always scale down fast enough. Functions trigger too often. A single misconfigured Lambda or provisioned instance can burn thousands overnight. And when you try to optimize? You’re navigating a maze of tiered pricing, opaque dashboards, and dozens of microservices with interdependent costs. It’s no wonder large enterprises need to employ entire teams of people to optimize their cloud spend.
Compare that to owning the server running your workload. Fixed price. Full access. No surprises.
“Cheaper” for Whom?
Let’s be clear: the cloud can be cheap, for companies that design specifically for it, understand every nuance of its pricing model, and commit substantial engineering time to active cost management.
But for the average startup, the indie SaaS founder, or the team just trying to ship product? It’s not cheaper. It’s just easy to start, hard to leave, and expensive to scale.
It’s not unlike using credit cards for your entire business budget. Fast and convenient, but the long-term interest will catch up.
What’s the Alternative?
No, you don’t have to rack your own servers or go full-on colocation (though that’s making a comeback too). You can get predictable, high-performance infrastructure with flat monthly pricing and no middleman margin.
Virtual private servers (VPS) and bare-metal dedicated servers from independent providers offer real CPU, real storage, and full root access, without surprise billing.
That doesn’t mean “never use the cloud.” But it does mean being thoughtful about what workloads actually benefit form the cloud model, and which ones are just paying someone else’s profit margin.
Build for Sustainability, Not Hype
When you’re trying to survive as a startup, or grow responsibly, the goal isn’t to have the most “cloud native” architecture on the planet. The goal is to ship product, serve users, and keep infrastructure sane.
Simple, predictable infrastructure is underrated. So is performance per dollar. If you’re spending $1,500/month on AWS and wondering why things feel slow and fragile, you’re not alone.
You’re just subsidizing someone else’s margin.
Final Thought
The cloud is powerful. But it’s not always the answer. It’s not magic. And it’s definitely not cheap… unless you’re the one selling it.
Make your infrastructure choices intentionally. Your product, and your budget, will thank you.
TL;DR
- Cloud pricing is often bloated with hidden margins
- Many workloads don’t need elastic scale or event-driven infra.
- Simpler setups on VPS/dedicated servers offer better performance-per-dollar.
- Predictable costs are critical for early-stage startups and lean teams.
- You’re not paying for resources, you’re paying for some else’s markup.
Want help planning a cloud exit strategy or running production apps outside the hyperscale ecosystem? You have options, and they don’t involve giving up reliability or control. Have a chat with us by clicking the chat button at the bottom of the page. We’d love to help.