HACKER Q&A
📣 tcgv

How to evaluate a startup's cloud costs?


Hi there!

What would you say are meaningful metrics for startups / tech companies cloud infrastructure costs that one should look into and monitor closely?

So far I have come by the following metrics:

- Cloud Cost as % of Cost of Revenue

- Cloud Cost as % of ARR

- Total Annual Cloud Cost by Company Headcount

Do you think these are useful? Would suggest another metric?

References (with values):

[1] https://a16z.com/2021/05/27/cost-of-cloud-paradox-market-cap-cloud-lifecycle-scale-growth-repatriation-optimization/

[2] https://cms.harness.io/uploads/Harness_Saa_S_Cloud_Spend_Survey_2020_884eb6a583.pdf

  👤 dmarlow Accepted Answer ✓
Yup, absolutely useful. Also good for companies to know how they stack among peers in their industry.

Some are more difficult to figure out than others:

  - Cost per tenant/customer
  - Cost by environment
  - Cost of/by change (i.e., introducing changes to app or architecture)
  - Projecting costs into the future
  - Margins, once factoring in other OpEx costs (huge implications given fast rising cloud costs and companies market cap being reduced as a result of increased costs)
  - Pro forma capitalization can also be useful, if not required by some finance teams.
I could go on about this for days...
👤 icedchai
Also, you should look at these costs with and without the non-production (dev, test, staging, etc.) costs. In some startups, this is easier said than done because they're running everything in a single cloud account. Obviously that is bad for many reasons, but it makes it difficult to attribute costs accurately.