Cost Estimator
Provides frameworks for estimating infrastructure costs, development effort, and total cost of ownership (TCO) for technical projects.
When to Use
- Planning infrastructure budgets
- Evaluating build vs. buy decisions
- Projecting costs at different scale points
- Comparing technology options by cost
- Creating business cases for technical investments
Cost Categories
Total Cost of Ownership (TCO)
TCO = Infrastructure + Development + Operations + Opportunity Cost
┌─────────────────────────────────────────────────────────────────┐
│ TOTAL COST OF OWNERSHIP │
├─────────────────────────────────────────────────────────────────┤
│ │
│ Infrastructure Development Operations Opportunity │
│ ──────────────── ──────────── ────────── ──────────── │
│ • Compute • Engineering • Support • What else │
│ • Storage • QA • Monitoring • could team │
│ • Network • DevOps • On-call • be building? │
│ • Third-party • Management • Training │
│ APIs/SaaS • Contractors • Incidents │
│ │
└─────────────────────────────────────────────────────────────────┘
Infrastructure Cost Reference
Cloud Compute Pricing (2024-2025)
AWS EC2 On-Demand (US regions)
| Instance | vCPU | RAM | Monthly Cost | Best For | |----------|------|-----|--------------|----------| | t3.micro | 2 | 1GB | $8 | Dev/test | | t3.medium | 2 | 4GB | $30 | Small apps | | t3.large | 2 | 8GB | $60 | Light production | | m6i.large | 2 | 8GB | $70 | General production | | m6i.xlarge | 4 | 16GB | $140 | Medium workloads | | m6i.2xlarge | 8 | 32GB | $280 | Heavy workloads | | c6i.2xlarge | 8 | 16GB | $250 | CPU-intensive | | r6i.2xlarge | 8 | 64GB | $370 | Memory-intensive |
GPU Instances
| Instance | GPU | VRAM | Monthly Cost | Best For | |----------|-----|------|--------------|----------| | g4dn.xlarge | T4 | 16GB | $380 | Inference | | g5.xlarge | A10G | 24GB | $730 | ML training/inference | | p4d.24xlarge | 8x A100 | 320GB | $23,000 | Large model training |
Savings Options
| Plan | Savings | Commitment | |------|---------|------------| | On-Demand | 0% | None | | Reserved (1yr) | 30-40% | 1 year | | Reserved (3yr) | 50-60% | 3 years | | Spot Instances | 60-90% | Can be interrupted |
Database Pricing
Managed Database (AWS RDS PostgreSQL)
| Instance | vCPU | RAM | Monthly Cost | Connections | |----------|------|-----|--------------|-------------| | db.t3.micro | 2 | 1GB | $15 | 50 | | db.t3.medium | 2 | 4GB | $50 | 100 | | db.m6g.large | 2 | 8GB | $120 | 200 | | db.m6g.xlarge | 4 | 16GB | $240 | 400 | | db.r6g.xlarge | 4 | 32GB | $350 | 500 | | db.r6g.2xlarge | 8 | 64GB | $700 | 1000 |
Add for storage: $0.115/GB/month (gp3) Add for IOPS: $0.02/IOPS/month (over 3000 baseline)
Redis/ElastiCache
| Node Type | RAM | Monthly Cost | |-----------|-----|--------------| | cache.t3.micro | 0.5GB | $12 | | cache.t3.medium | 3GB | $50 | | cache.m6g.large | 6.4GB | $100 | | cache.r6g.large | 13GB | $175 |
Storage Pricing
| Service | Cost | Use Case | |---------|------|----------| | S3 Standard | $0.023/GB | Frequently accessed | | S3 Infrequent | $0.0125/GB | Backups, archives | | S3 Glacier | $0.004/GB | Long-term archive | | EBS gp3 | $0.08/GB | Block storage | | EBS io2 | $0.125/GB + IOPS | High performance |
Network Costs (Often Overlooked!)
| Traffic Type | Cost | |--------------|------| | Data IN | Free | | Data OUT (first 10TB) | $0.09/GB | | Data OUT (next 40TB) | $0.085/GB | | Inter-AZ transfer | $0.01/GB each way | | Inter-region transfer | $0.02/GB | | CloudFront to internet | $0.085/GB |
Development Cost Estimation
Engineering Cost Framework
Development Cost = (Hours × Hourly Rate) × Complexity Factor × Risk Buffer
Hourly Rate (Fully Loaded):
- Junior Engineer: $75-100/hr
- Mid-level Engineer: $100-150/hr
- Senior Engineer: $150-200/hr
- Staff/Principal: $200-300/hr
Complexity Factors:
- Greenfield, known tech: 1.0x
- Existing codebase, known tech: 1.2x
- New technology for team: 1.5x
- Complex integrations: 1.3x
- Regulatory/compliance: 1.4x
Risk Buffer:
- Well-defined requirements: 1.2x
- Ambiguous requirements: 1.5x
- Experimental/R&D: 2.0x
Story Point to Cost Mapping
| Size | Story Points | Hours | Cost (Mid-level) | |------|-------------|-------|------------------| | XS | 1 | 2-4 | $200-400 | | S | 2 | 4-8 | $400-800 | | M | 3 | 8-16 | $800-1,600 | | L | 5 | 16-32 | $1,600-3,200 | | XL | 8 | 32-64 | $3,200-6,400 | | XXL | 13+ | 64+ | $6,400+ |
Team Cost Calculator
## Monthly Team Cost
Engineering Team:
- 2 Senior Engineers × $15,000 = $30,000
- 3 Mid-level Engineers × $10,000 = $30,000
- 1 Engineering Manager × $18,000 = $18,000
Overhead (benefits, tools, etc.): 30%
Monthly Burn: ($78,000) × 1.3 = $101,400
Annual Team Cost: ~$1.2M
Build vs. Buy Analysis
Decision Framework
Build vs Buy Decision Matrix:
LOW Differentiation HIGH Differentiation
┌────────────────────┬────────────────────┐
HIGH Volume/ │ │ │
Usage │ Consider │ BUILD │
│ Build │ (competitive │
│ (cost savings) │ advantage) │
├────────────────────┼────────────────────┤
LOW Volume/ │ │ │
Usage │ BUY │ BUY │
│ (no question) │ (then consider │
│ │ build if scales) │
└────────────────────┴────────────────────┘
TCO Comparison Template
## Option A: Build Custom Solution
### Initial Development
- Engineering time: X months × $Y/month = $Z
- Infrastructure setup: $A
### Ongoing Costs (Annual)
- Infrastructure: $B
- Maintenance (20% of dev time): $C
- On-call/support: $D
### 3-Year TCO
Year 1: $Z + $A + $B + $C + $D
Year 2: $B + $C + $D
Year 3: $B + $C + $D
Total: $XXX
---
## Option B: Buy SaaS Solution
### Initial Costs
- Implementation/integration: $X
- Training: $Y
### Ongoing Costs (Annual)
- License fees: $Z/year
- Per-user costs: $A × users
- API costs: $B
### 3-Year TCO
Year 1: $X + $Y + $Z + $A + $B
Year 2: $Z + $A + $B
Year 3: $Z + $A + $B
Total: $XXX
Common Build vs Buy Scenarios
| Capability | Build When | Buy When | |------------|------------|----------| | Authentication | Unique security requirements | Standard OAuth/OIDC works | | Payments | Core business differentiator | Standard e-commerce | | Search | Domain-specific relevance | Generic search needs | | Analytics | Proprietary insights needed | Standard dashboards work | | Email | High volume, custom delivery | Standard transactional | | ML/AI | Proprietary models needed | Pre-trained models work |
Cost Projection by Scale
SaaS Application Cost Model
| Scale | Users | Monthly Infra | Notes | |-------|-------|---------------|-------| | Startup | 0-1K | $200-500 | Single server, managed DB | | Growth | 1K-10K | $500-2,000 | Load balancer, caching | | Scale | 10K-100K | $2,000-10,000 | Horizontal scaling | | Enterprise | 100K-1M | $10,000-50,000 | Multi-region, HA | | Large | 1M+ | $50,000+ | Global, custom CDN |
Cost Per User Benchmarks
| Application Type | Cost/User/Month | Notes | |------------------|-----------------|-------| | Simple web app | $0.05-0.20 | Static + API | | Data-intensive | $0.20-0.50 | Analytics, storage | | Real-time | $0.50-2.00 | WebSockets, streaming | | ML-powered | $1.00-5.00 | Inference costs | | Video/media | $2.00-10.00 | Transcoding, CDN |
E-commerce Cost Model
## Monthly Infrastructure Cost by GMV
$0-100K GMV/month:
- Basic infrastructure: $500
- Payment processing (2.9%): ~$2,000
- Total: ~$2,500
$100K-1M GMV/month:
- Scaled infrastructure: $2,000
- Payment processing: ~$20,000
- Fraud protection: $500
- Total: ~$22,500
$1M-10M GMV/month:
- HA infrastructure: $10,000
- Payment processing: ~$200,000
- Fraud/security: $5,000
- CDN/performance: $3,000
- Total: ~$218,000
Hidden Cost Checklist
Often Missed in Estimates
Infrastructure:
- [ ] Data transfer costs (egress)
- [ ] Backup storage
- [ ] Log storage (CloudWatch: $0.50/GB)
- [ ] SSL certificates
- [ ] DNS queries
- [ ] Load balancer hours
Development:
- [ ] Code reviews (add 20-30% to dev time)
- [ ] Documentation
- [ ] Testing infrastructure
- [ ] CI/CD pipeline (GitHub Actions: $0.008/min)
- [ ] Staging environments
Operations:
- [ ] Monitoring tools (Datadog: ~$15/host/month)
- [ ] Error tracking (Sentry: $26+/month)
- [ ] Log management
- [ ] On-call compensation
- [ ] Incident response time
Third-Party Services:
- [ ] Email (SendGrid: $0.00025-0.001/email)
- [ ] SMS (Twilio: $0.0075/message)
- [ ] Video (encoding, streaming)
- [ ] Maps/geocoding (Google: $7/1K requests)
Cost Optimization Strategies
Quick Wins
| Strategy | Savings | Effort | |----------|---------|--------| | Reserved instances | 30-60% | Low | | Right-sizing instances | 20-40% | Medium | | Spot instances (non-critical) | 60-90% | Medium | | Storage tiering | 50-80% | Low | | CDN caching | 30-50% bandwidth | Low |
Architecture Optimizations
| Optimization | Impact | Complexity | |--------------|--------|------------| | Caching (Redis) | 50-80% DB load reduction | Medium | | Queue-based processing | Smooth traffic spikes | Medium | | Auto-scaling | Pay for what you use | Medium | | Serverless (appropriate use) | Variable → zero when idle | High | | Multi-region read replicas | Reduce cross-region costs | High |
Cost Estimation Templates
Project Budget Template
# Project: [Name]
# Duration: [X months]
## Development Costs
| Phase | Duration | Team Size | Cost |
|-------|----------|-----------|------|
| Discovery/Design | 2 weeks | 2 | $X |
| MVP Development | 8 weeks | 4 | $X |
| Testing/QA | 2 weeks | 3 | $X |
| Deployment | 1 week | 2 | $X |
| **Total Development** | | | **$X** |
## Infrastructure Costs (First Year)
| Component | Monthly | Annual |
|-----------|---------|--------|
| Compute | $X | $X |
| Database | $X | $X |
| Storage | $X | $X |
| Network | $X | $X |
| Third-party APIs | $X | $X |
| Monitoring/Tools | $X | $X |
| **Total Infrastructure** | **$X** | **$X** |
## Ongoing Costs (Annual)
| Category | Cost |
|----------|------|
| Infrastructure | $X |
| Maintenance (20% of dev) | $X |
| Support/On-call | $X |
| Tool licenses | $X |
| **Total Annual** | **$X** |
## Summary
| Metric | Value |
|--------|-------|
| Total First Year | $X |
| Annual Run Rate | $X |
| 3-Year TCO | $X |
| Cost per User (at scale) | $X |
Quick Estimate Calculator
## Quick Infrastructure Estimate
Inputs:
- Expected users: [X]
- Requests per user/day: [Y]
- Data storage per user: [Z GB]
- Growth rate: [W%/month]
Calculations:
- Daily requests: X × Y
- Monthly requests: Daily × 30
- Required compute: (Monthly requests / 100K) × $50
- Storage: X × Z × $0.10
- Database: (X / 10K) × $200
- Estimated monthly: Compute + Storage + Database × 1.3
12-month projection with growth:
Sum of (Monthly × (1 + W%)^month) for months 1-12
References
- Cloud Pricing Calculator - Detailed cloud provider comparison
- Build vs Buy Framework - Extended decision framework