Everyone says the cloud saves money until the first invoice arrives, and your finance team sees a bill that looks like it belongs to someone else entirely.
If you’ve ever wondered, “Why does moving to the cloud suddenly cost so much?”, this guide is for you.

In simple words, this blog will help you understand what cloud migration costs include, how to estimate them, and how to keep your spending under control, without needing to be a cloud expert.

What “Cloud Migration Cost” Actually Includes

Before you can estimate your cloud migration budget, it helps to understand what you’re truly paying for.
Most people assume cloud migration means “paying for cloud servers,” but that’s actually only one piece of the puzzle.

In reality, cloud migration costs fall into three big categories:

1. One-time migration costs
2. New, ongoing cloud costs
3. Risk and impact costs (the hidden ones)

1. One-Time Migration Costs (The cost of “moving house”)

These are costs you only pay once, while actually moving your systems to the cloud.

When you move from one house to another, you pay for movers, trucks, packing supplies, cleaning fees, etc. Cloud migration works the same way.

Here’s what is included:

a. Engineering & Migration Work

This includes the time and effort your team (or external consultants) spend on:

• Analyzing your current systems
• Designing your cloud architecture
• Updating code and configurations
• Setting up your cloud environment
• Testing everything
• Fixing issues
• Planning cutover
• Doing the final switch

Even for a “simple lift and shift,” engineers need to review dependencies, environment variables, secret management, network rules, permissions, etc.

This is often one of the largest cost buckets.

b. Data Migration Costs

Moving your data into the cloud costs money.
Depending on volume, you might pay for:

• Bulk uploads
• Transfer tools
• Temporary storage
• Network bandwidth
• Appliances (for huge migrations)

For example, if you have 50 TB of databases, that alone can have migration fees, especially if you use dedicated pipelines or appliances.

c. Tooling for Migration

Sometimes you need migration-specific tools:

• Database migration services
• Application discovery tools
• Dependency mapping
• Temporary monitoring tools
• Backup tools

These are usually used only during migration and then turned off.

d. External Support or Consultants

Many companies bring in:

• Cloud migration experts
• Security specialists
• Solution architects

This reduces risk but increases upfront cost.

These are all one-time expenses.

2. New Ongoing Cloud Costs (Your “new rent”)

Once you move into the cloud, you have regular, monthly/annual expenses.

Think of this as paying rent and utilities on your new apartment.

These include:

a. Compute (Servers / Instances / Containers)

Your virtual machines, Kubernetes clusters, serverless functions, etc.

b. Storage

You may pay for:

• Object storage (like S3)
• Block storage (for VMs)
• Database storage
• Backups
• Snapshots

c. Networking

Cloud networking often has hidden costs:

• Outbound data transfer
• Cross-region traffic
• Load balancers
• NAT gateways

These can add up fast, especially for SaaS companies serving large amounts of traffic.

d. Managed Services

If you use cloud-provided databases or platforms:

• RDS / Cloud SQL
• BigQuery
• DynamoDB
• Messaging queues
• Redis / Memcached

These are extremely helpful — but not free.

e. Monitoring, Logging, and Security Tools

Almost every cloud workload needs:

• Cloud monitoring
• Log storage
• SIEM tools
• Security posture management

Depending on the setup, logs alone can cost thousands per month if not optimized.

3. Risk & Impact Costs (The “invisible” expenses)

These costs don’t show up on your cloud bill.
But they affect your budget, timeline, and internal resources.

They’re often overlooked, and that’s where companies get surprised.

a. Downtime During Migration

Even with careful planning, you may have:

• Planned downtime
• Slower systems
• Unexpected delays

If your app makes $2000/hour and migration causes a 3-hour outage, that’s $6000 of impact right there.

b. Productivity Slowdowns

During migration:

• Engineers focus on migration instead of feature work
• Teams slow down due to temporary instability
• Everyone adapts to new tools and processes

This “learning curve dip” impacts your timeline and budget.

c. Parallel Environments (Double-Running Costs)

For a while, you’ll have:

• Old on-prem systems running
• New cloud systems are running

So you pay for both at the same time.
This period might last weeks or months.

d. Compliance, Security, and Audit Work

Moving to the cloud often requires:

• Reviewing permissions
• Updating compliance documentation
• Additional audits
• Security workshops
• Pen tests

These are still “migration impacts,” even though they don’t appear as a line item on your cloud bill.

The 4 Big Buckets of Cloud Migration Spend

When you break cloud migration down into simple parts, almost every expense fits into four big buckets.
Think of these as the four sections of your migration bill. Once you understand them, the whole process becomes much less confusing.

These four buckets are:

1. Infrastructure & platform costs
2. Data & network costs
3. Applications & engineering costs
4. People, training, and organizational change costs

1. Infrastructure & Platform Costs

This is the part most people think about first — the actual cloud services you’ll use after you migrate.

These include:

a. Compute (servers, containers, serverless functions)

For example:

• EC2 instances on AWS
• Azure VMs
• Google Cloud compute engines
• Kubernetes clusters
• Lambda functions

You pay for CPU, RAM, and runtime.

b. Storage

Cloud storage can come in different forms:

• Block storage (attached to VMs)
• Object storage (S3, Blob Storage)
• File storage
• Backups and snapshots

Each has different pricing depending on size, access frequency, and redundancy.

c. Databases and Managed Services

If you choose managed databases instead of self-hosted ones, you pay for convenience:

• RDS / Cloud SQL
• DynamoDB / CosmosDB
• Redis (managed)
• BigQuery / Redshift / Snowflake

These reduce your maintenance burden but increase monthly cost.

d. Networking & Load Balancers

This includes:

• Load balancers
• Firewalls
• NAT gateways
• VPNs
• Private links

Why this bucket matters

This becomes your new monthly cloud bill, so you want to size it correctly.
If you oversize resources or turn on unnecessary managed tools, this bucket becomes expensive.

2. Data & Network Costs

Data movement is one of the most commonly underestimated parts of cloud migration.
Cloud providers charge based on how much data you:

• upload
• download
• move between regions
• move between services

Here’s what this bucket includes:

a. Migrating Large Databases or File Systems

If you have:

• 20 TB of databases
• 50–100 TB of files
• 5+ years of logs

Moving all of that isn’t free.

b. Ongoing Data Transfer (Egress + Inter-Region Traffic)

Cloud makes you pay when data leaves the cloud, this is called egress cost.

Examples:

• Traffic going to users
• APIs sending data externally
• Multi-region replication
• Cross-cloud communication

These numbers can grow silently until they cause a surprise bill.

c. Tools or Appliances for Migration

For large migrations, companies sometimes use:

• AWS Snowball / Azure Data Box
• Network accelerators
• Dedicated migration pipelines

These tools help move data faster and more safely, but they have a cost.

Why this bucket matters

If your business deals with lots of media, logs, customer uploads, analytics data, or large databases, your biggest hidden costs live here.

3. Applications & Engineering Work

Even if you pick the simplest migration (lift and shift), applications still need effort to:

• configure
• package
• deploy
• test
• optimize

This bucket includes the engineering time required to get your systems cloud-ready.

a. Rehosting (“lift and shift”)

Even this “easiest” method needs:

• VM images
• network adjustments
• dependency tracking
• configuration changes

b. Replatforming

You might move:

• a self-hosted PostgreSQL database → AWS RDS
• a monolithic app → containers
• a cron service → serverless jobs

This needs coding or configuration changes.

c. Refactoring

This is when you actually modify your app’s architecture:

• breaking monoliths
• decoupling services
• making apps stateless
• enabling autoscaling

This is the most expensive technique, but it often gives the biggest long-term savings.

d. Integration Fixes

Apps don’t live alone. They talk to:

• other services
• databases
• third-party APIs
• payment gateways
• internal tools

When you move to the cloud, some of these connections need to be adjusted.

e. Testing & Validation

Before going live, teams test:

• performance
• reliability
• failover
• security
• API behavior
• user-facing experience

This takes time — and sometimes rework.

Why this bucket matters

This is usually the largest migration cost because it’s powered by human time and expertise.
Good planning can cut this dramatically.

4. People, Training, and Organizational Change

Cloud migration changes how your team works, deploys, troubleshoots, and designs systems.

This bucket covers all the “people costs.”

a. Training Teams

Your engineers, security team, and operations staff need to learn:

• cloud basics
• cloud security practices
• new tools (IAM, Kubernetes, CI/CD, etc.)
• new operational processes

Training can be:

• internal workshops
• certifications
• external trainers
• documentation time

b. Shifting Existing Workloads

Migration doesn’t stop your day-to-day business.
While your engineers focus on migration, other tasks slow down:

• feature development
• bug fixes
• roadmap items
• customer requests

This opportunity cost is real.

c. Project Management

Someone needs to coordinate:

• timelines
• migration waves
• testing
• approvals
• rollbacks

Bigger migrations require a dedicated migration project manager.

d. Security & Compliance Work

Moving to the cloud changes:

• audit requirements
• access controls
• logging
• permissions
• compliance documentation

Security teams often spend weeks reviewing the new environment.

e. Temporary Productivity Dip

People need time to adjust to:

• new dashboards
• new monitoring systems
• new deployment processes
• new incident workflows

This adjustment period affects team velocity.

Why this bucket matters

Many companies forget this bucket entirely, but it ends up consuming massive time once the migration starts.

Here is an expanded, clearer, example-driven version of “Hidden & Easily Missed Costs,” written in the same simple, friendly style as the haptics article, plain language, straightforward explanations, and relatable scenarios.

Hidden & Easily Missed Costs

Even with a well-planned migration, there are certain costs that quietly sneak into the picture. These don’t always show up on a neat spreadsheet, and cloud providers don’t put them in bold on their pricing pages. But in real-world migrations, these “invisible” costs often make the biggest difference.

Let’s break down the hidden costs you should watch for, with simple explanations and everyday examples.

1. Double-Running (On-Prem + Cloud at the Same Time)

This is one of the easiest costs to overlook, and one of the most expensive.

During migration, companies usually have:

• the old system running on-premises, and
• the new version running in the cloud

running simultaneously.

Why?
Because you can’t just switch everything off and move instantly. You need time for:

• testing
• data syncing
• cutover planning
• rollback safety

A simple example:

Imagine renovating a house.
You don’t sleep on the sidewalk while the new house is being built; you stay in the old home until the new one is ready.

But during that overlap period, you’re paying for two places.

Cloud migrations work the same way.

For weeks or even months, you may pay:

• on-prem server costs
• on-prem software licenses
• cloud infrastructure
• cloud databases
• cloud support plans

This overlap surprises a lot of teams and causes budget spikes early in the project.

2. Downtime and Degraded Performance

Even the best-planned migration has moments of:

• planned downtime
• partial downtime
• slower performance
• system instability
• temporary disconnects

These moments come from activities such as:

• database cutovers
• network reconfigurations
• DNS propagation
• final sync jobs
• environment switching

Why this matters:

Every hour of downtime has a cost:

• lost sales
• Support tickets increase
• Reduced employee productivity
• Unhappy customers
• Slower internal tools

Even if you plan perfectly, you should budget for these temporary dips.

In simple terms:

Migration is like traffic due to road construction.
The final road will be better, but during construction, the traffic slows down.

3. Licensing Surprises (The Silent Bill Spikes)

Software licensing behaves differently in the cloud.

You may discover:

a. Your on-prem license doesn’t transfer

Some licenses don’t allow “bring your own license” (BYOL).
You may need a cloud-specific version.

b. Cloud editions cost more

Certain enterprise features cost extra when used in a cloud environment:

• database engines
• VPN tools
• monitoring agents
• antivirus or EDR tools
• virtualization technology

c. You may need a larger edition than expected

Simple example:

• Your on-prem monitoring tool works with 500GB of log retention
• In the cloud, you suddenly need 3TB
• Result: You’re bumped into a more expensive tier

d. Per-core or per-node pricing changes

When apps scale differently in the cloud, license counts can change too.
This happens frequently with:

• SQL Server
• Oracle Database
• VMware
• Commercial load balancers

Bottom line:

Licensing doesn’t behave the way people expect, and it’s easy to underestimate.

4. Compliance and Security Extras

Security doesn’t go away in the cloud; it transforms.

Many companies find they need new tools or additional controls to meet:

• HIPAA
• SOC 2
• GDPR
• PCI-DSS
• ISO 27001
• Government/regional regulations

These costs can include:

a. New security tools

Tools like:

• cloud firewalls
• WAFs
• vulnerability scanners
• SIEM tools
• identity and access management tools
• Key Management Services
• posture management tools

b. Additional logging and monitoring

Security compliance often requires:

• more log retention
• more detailed audit logs
• cross-region replication
• immutable backups

These increase storage and data-transfer costs.

c. Compliance audits

If you’re migrating regulated workloads, external auditors may need to:

• review your new cloud environment
• validate controls
• update compliance documents
• review cloud architecture

This means extra time from security teams, compliance officers, and auditors.

d. Extra engineering time

Security changes might require:

• rearchitecting IAM roles
• rewriting configs
• encrypting data
• segmenting networks
• setting up zero-trust access

These efforts weren’t part of the original migration plan but became necessary once you dig into the details.

Why These Costs Matter

These hidden costs matter for one major reason:

They don’t appear in your cloud provider’s calculator but they absolutely appear in your budget.

If you only estimate:

• servers
• storage
• databases

You will miss some of the biggest real-world expenses.

When planning your migration, be sure to:

• Add time and cost buffers
• expect delays
• budget for training
• account for security and compliance
• prepare for double-running
• plan for temporary downtimes

This makes your cost estimate more realistic and dramatically reduces surprise bills later.

A Simple Framework to Estimate Your Cloud Migration Cost

Estimating cloud migration cost doesn’t have to feel like decoding an ancient puzzle.
You don’t need dozens of spreadsheets, and you don’t need to know every cloud service by heart.

What you do need is a simple, practical framework that helps you understand:

• What you’re moving
• How do you plan to move it
• What resources will it require
• How much human effort is involved
• And what risks or surprises might appear along the way

Below is a step-by-step approach that anyone, even someone new to the cloud, can follow.

Think of this like creating a travel plan for a long trip. Before you start the journey, you list your luggage, pick your route, estimate fuel, and consider weather delays. Cloud migration is similar.

Step	What It Means	What You Should Do	Why It Matters
1. Inventory Your Applications & Infrastructure	Understand what you're actually moving.	List all applications, databases, servers, storage systems, and integrations.	Provides clear visibility into the current environment and migration scope.
2. Classify Each System by Migration Strategy	Decide how each workload will move to the cloud.	Assign each system a strategy: Rehost, Replatform, Refactor, Retain, or Retire.	Different strategies require different levels of effort, time, and cost.
3. Estimate Cloud Infrastructure & Data Transfer	Calculate the cloud resources and data movement required.	Use cloud calculators to estimate compute, storage, network usage, and migration data size.	Helps avoid underestimating ongoing cloud bills and transfer costs.
4. Layer On Engineering & People Costs	Account for the human work needed to execute the migration.	Estimate engineering hours for architecture setup, refactoring, testing, and cutover.	This is often the largest and most underestimated cost category.
5. Add a Risk Buffer	Prepare for unexpected issues during migration.	Add a 20–30% buffer for delays, rework, downtime, extra tools, and unforeseen challenges.	Protects the budget from surprises and ensures realistic planning.

Absolutely here is an expanded, clearer, and beginner-friendly version of the Quick Example: Cost Estimate for a Mid-Size SaaS Company section.

It follows the same simple, analogy-rich, and practical tone as before.

Quick Example: Cost Estimate for a Mid-Size SaaS Company

To make cloud migration costs easier to understand, let’s walk through a simple, realistic example.
Imagine a mid-size SaaS company preparing to move their systems from an on-premise setup into the cloud.

This example won’t cover every detail of your environment, but it will give you a clear picture of how costs stack up and why migration budgets sometimes look bigger than expected.

Company Background

Let’s imagine the SaaS company has:

• 40 total applications
  (customer-facing app, admin dashboards, internal tools, analytics services)
• 80 TB of total data
  (databases, file storage, logs, backups)
• 100 on-prem virtual machines
• A product used globally, meaning uptime is important
• A dev team of ~25 engineers

Out of the 40 applications:

• 24 will be rehosted (simple lift & shift)
• 10 will be replatformed
• 6 will be refactored for better performance

This is a typical distribution for a mid-size company.

1. One-Time Migration Costs

These are costs you pay only once, the cost of “moving house.”

a. Engineering & Architecture Work

This includes:

• Planning the migration waves
• Building the landing zone (VPC, IAM, security baselines)
• Updating app configs
• Setting up monitoring & pipelines
• Testing & validating environments
• Running cutovers

Let’s estimate:

• 6 engineers × 4 months × $15,000/month ≈ $360,000

b. Data Migration Costs

80 TB of data, split across:

• databases
• media files
• backups
• logs

Costs may include:

• accelerated transfer tools
• temp storage
• bandwidth
• database migration services

Estimated cost:

• ≈ $25,000

c. Tools & Services Used During Migration

This may include:

• cloud migration tools
• dependency analysis tools
• temporary observability tools

Estimated cost:

• ≈ $15,000

Total One-Time Migration Cost: ≈ $400,000

2. New Ongoing Cloud Costs

(The company’s new “monthly rent” in the cloud)

Once all systems are up and running, here’s what typical monthly spend looks like:

a. Compute (VMs, containers, autoscaling)

Lift-and-shift workloads often cost more initially, before optimization.

• Estimated monthly compute: $35,000

b. Storage

80 TB across multiple storage types:

• database storage
• object storage
• backups
• snapshots
• logs

Estimated monthly storage: $10,000

c. Managed Database Services

Using RDS, Cloud SQL, or equivalent:

• $12,000/month

d. Networking & Data Transfer

Including:

• egress traffic
• CDN
• cross-AZ data
• load balancers

Estimated: $6,000/month

e. Monitoring, Logging & Security Tools

Such as:

• CloudWatch / Stackdriver
• SIEM tools
• security scanners

Estimated: $7,000/month

Total New Cloud Run Rate: ≈ $70,000/month

Yearly: ≈ $840,000

3. Risk & Impact Costs

(These don’t show up on your cloud bill, but they matter)

a. Downtime During Migration

Let’s assume:

• Traffic load is moderate
• A few planned maintenance windows
• Minor unplanned slowdowns

Estimated impact:

• ≈ $10,000 from productivity or revenue dips

b. Training & Adjustment Period

Engineers need time to:

• learn new tools
• adapt to cloud processes
• update internal documentation

Estimated rough cost:

• ≈ $20,000 (lost productivity/time)

c. Parallel Running (On-Prem + Cloud)

A 2-month overlap could cost:

• ≈ $15,000 in duplicated resources

Total Impact Cost: ≈ $45,000

Putting It All Together

Let’s calculate the full cost picture for the first year.

Migration Cost (One-Time):

≈ $400,000

Cloud Run Rate (12 Months):

≈ $840,000

Risk & Impact Cost:

≈ $45,000

Grand Total for Year 1: ≈ $1,285,000

This number may sound high, but remember:

• The company was already spending money on on-prem hardware, maintenance, and licenses.
• After the first year, one-time costs disappear.
• Cloud costs stabilize once right-sizing and FinOps practices kick in.

Strategies to Control Cloud Migration Costs (Before, During, After)

Phase	Key Actions	Why It Matters
Before Migration	- Do a lightweight assessment- Prioritize simple workloads first- Right-size resources before moving- Retire or replace outdated apps- Estimate costs early and refine regularly	Builds a clear plan, reduces unnecessary migration work, and prevents early cost overruns.
During Migration	- Migrate in small waves- Enable budgets & usage alerts- Tag resources for cost visibility- Monitor data transfer closely- Minimize on-prem + cloud overlap- Remove idle or orphaned resources	Helps control spending in real time, avoids hidden data and duplicate costs, and keeps the migration smooth.
After Migration	- Adopt FinOps practices- Rightsize resources regularly- Use Savings Plans & Reserved Instances- Clean up leftover resources- Improve architecture for efficiency	Reduces long-term cloud bills, prevents waste, and ensures your cloud environment stays optimized.

Absolutely — here is an expanded, beginner-friendly version of “Tools Worth Using (and How to Use Them)”, written in the same clear, conversational style, and including actual links to every tool mentioned.

Cloud Provider Cost Calculators

Every major cloud provider offers an online calculator where you can model:

• VM sizes
• storage needs
• network traffic
• managed services
• region-by-region pricing

These calculators won’t capture everything (like engineering effort or downtime), but they give a solid starting point.

a. AWS Pricing Calculator

Link: https://calculator.aws/

Use this tool to estimate:

• EC2 instance costs
• RDS databases
• S3 storage
• Lambda functions
• Data egress

How to use it:

1. Click “Create estimate.”
2. Add the services you think you’ll need (e.g., EC2, S3, RDS).
3. Adjust CPU, memory, storage, and network settings.
4. Compare Reserved Instances vs On-Demand pricing.
5. Save or export your estimate.

b. Azure Pricing Calculator

Link: https://azure.microsoft.com/en-us/pricing/calculator/

Use this tool for:

• VMs
• Azure SQL
• Blob storage
• Load balancers
• App services

How to use it:

1. Click services from the list to add them.
2. Choose the region where you plan to run workloads.
3. Set the estimated usage (CPU hours, storage size, bandwidth).
4. View costs instantly in the right-hand panel.

c. Google Cloud Pricing Calculator

Link: https://cloud.google.com/products/calculator

Use this calculator to price:

• Compute Engine
• Cloud SQL
• BigQuery
• Cloud Storage
• GKE clusters

How to use it:

1. Select the services you expect to use.
2. Enter how many vCPUs, GB of RAM, and storage you need.
3. Add network traffic estimates.
4. View monthly and yearly estimate summaries.

Here’s a shorter, clean version that still promotes Obsium naturally:

Final Thoughts

Cloud migration becomes far less overwhelming when you understand the cost drivers and take a structured approach. With the right planning, careful monitoring, and ongoing optimization, you can avoid bill shock and unlock the real value of the cloud.

If you want expert support, Obsium can help minimize costs at every stage of your migration. From early assessments to post-migration optimization, Obsium ensures your move is efficient, predictable, and cost-effective.

If you are ready to migrate with confidence and control, Obsium is ready to guide you.