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On-Prem Server Refresh vs Cloud Hosting TCO Calculator

When the ERP database host reaches the end of its warranty, the question is always refresh or move. This calculator lays out the cash cost of each path over your planning horizon and shows where the lines cross.

Your numbers

5 years
$
10 % of hardware
$
hours per year
$ per hour
$ per month
$ per year
hours per year
$

Your results

On-prem total over horizon
$257,500
Cloud total over horizon
$350,000
On-prem running cost per year
$33,500
Cloud running cost per year
$65,000
Cloud minus on-prem
$92,500
Positive means cloud costs more over the horizon.
Years until cloud costs overtake
2.1 years
Zero means cloud is cheaper per year or never crosses over.

Excludes software licenses that are the same in both options, downtime risk, performance differences, taxes and financing. Use quotes, not list prices.

Save results:

Cumulative cost vs planning horizon (years)

Sweeps Planning horizon from 1 to 10, holding your other inputs fixed.

Optional hosting decision review

Send your quotes and constraints and we will sanity check the assumptions. No obligation.

Optional. The tool and every export work without this. No spam.

How to use it

Enter a one-time on-prem outlay including servers, storage, network and licenses that only apply on-prem, plus the annual support percentage from your quote. Add power, cooling and space, admin hours and your loaded hourly rate. For cloud, enter the monthly hosting fee from a quote, extras like backup storage and egress, admin hours and one-time migration cost. Move the horizon slider to see how the answer changes, because refresh cycles run 5 years while cloud commitments are often 1 to 3.

  • Use real quotes with discounts and reserved terms
  • Count admin hours honestly in both cases
  • Run 3, 5 and 7 year horizons

The method

On-prem running cost per year is hardware times the support percentage plus facility cost plus admin hours times rate. Cloud running cost is twelve times the monthly fee plus extras plus admin cost. Totals over the horizon add the one-time item, hardware for on-prem and migration for cloud, to the annual cost times years. The break-even output divides the up-front difference by the yearly cost gap when cloud is dearer per year.

Worked example

With 90,000 in hardware, 10 percent support, 7,000 for facilities and 250 admin hours at 70, on-prem runs about 33,500 per year. Cloud at 4,500 monthly plus 4,000 extras and 100 hours is 65,000. Over five years on-prem totals about 257,500 against 350,000 for cloud, so cloud costs more by roughly 92,500. Cloud wins where utilization is spiky, hardware is oversized, or a site lacks staff to run the stack safely.

Common mistakes

Comparing a cloud quote that includes high availability to on-prem hardware with none, forgetting egress and backup charges, ignoring the cost of downtime during migration, and treating admin time as free. Also remember that some ERP vendors price subscription models differently, and that air-gapped or defense work may rule out public cloud altogether.

Frequently Asked Questions

Is cloud always cheaper than on-prem?

No. Steady, predictable workloads on well-utilized hardware often cost less on-prem over five years. Cloud tends to win for variable load, fast scaling, disaster recovery and sites without infrastructure staff.

What refresh cycle should I assume?

Five years is common for servers, with storage and network gear sometimes running longer. Warranty end, vendor support policy and the ERP version roadmap usually set the real date.

Should I include software licenses?

Only the part that differs between options. Database and OS licenses that are identical in both scenarios cancel out. Leave them out unless cloud licensing changes the price.

How do I handle risk and downtime?

This tool covers cash cost only. Add a separate risk assessment for migration downtime, performance, compliance and exit cost, and consider a pilot before committing to a multi-year term.

If data residency or export control means your ERP and AI must stay on your own hardware, Netray designs private on-prem deployments with open-weight models and can help size the servers.

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