Answers: <p>Aside from @Peter s great answer are you comparing Apples with Apples? Your comparison only works, if you compare a VPS as a "box" with another VPS, based on soimplistic criteria such as CPU clock speed, memory and disk space. With a cloud provider you can dramatically reduce costs with the following ways:</p>
  
  <ul>
  <li>run night time instance sizes vs day time instance sizes</li>
  <li>run no night time instances, not every Intranet is 24/7</li>
  <li>use long term commitments to reduce price</li>
  <li>spot price market for instances</li>
  <li>extract compute workload onto cheap services such as CDNs, event driven queues, serverless setups</li>
  </ul>
  
  <p>On top of that are these instances really the same? What about custom CPUs, hardware based Hypervisors and other technologies that only top 5 public cloud providers can access.</p>
  
  <p>These providers also have free tiers for services or free monthly allocations that you can factor into your cost calculations.</p>
  
  <p>Finally, what is the cost for change. How do you change instance sizes on the compared providers when your requirements change?</p>
  
Answers: CC BY-SA 4.0
Answers: 2020-01-09T19:19:17.173Z
Answers: @jfrog very appreciating, thank you for your answer as well!
Answers: Ta Mu
Answers: CC BY-SA 4.0
Answers: 2020-01-07T18:32:16.653Z
Answers: 2020-01-07T18:32:16.653Z
Answers: jdog
Answers: <p>I can think of two main reasons:</p>
  
  <ol>
  <li>Several of the larger companies offer cheap/free entry level tiers.  As the company begins to grow and needs to scale, then the providers charge more.  However, at this point most people are "locked in" to the cloud provider either through reservations of servers, provider specific services, or in-house expertise.</li>
  <li>Brand name is important when it comes to cloud computing.  While an "off-brand" cloud provider may have better and cheaper services than the big ones, most people are happy to spend more on a brand they have heard of.  Some clients are still wary of cloud providers (e.g. worried about security, reliability, relinquishing physical control), and are more likely to trust Amazon, Google, or Microsoft than a provider they have never heard of.</li>
  </ol>
  
Answers: CC BY-SA 4.0
Answers: 2020-01-07T18:45:32.640Z
Answers: 2020-01-07T18:45:32.640Z
Answers: Wesley Rolnick
Answers: <p>@jasper, and welcome to DevOps SE!</p>
  
  <p>While your statement can be <a href="https://www.quora.com/Is-DigitalOcean-cheaper-compared-to-AWS-EC2" rel="nofollow noreferrer">confirmed</a> by other voices, it's very hard to x-ray price policies of a company. It's a complex gameplay always driven by <a href="http://www.shareyouressays.com/knowledge/what-are-the-factors-influencing-pricing-decisions-in-a-market/112825" rel="nofollow noreferrer">many factors</a> and decisions and a question about pricing policies of Digital Ocean vs. AWS might be a good and on possibly well on topic question at Economics SE.</p>
  
  <p>For example, one could argue to find facts supporting the evidence of Digital Ocean currently being cheaper that:</p>
  
  <ul>
  <li><s>Docker, Inc. is in a <a href="https://www.zdnet.com/article/docker-is-in-deep-trouble/" rel="nofollow noreferrer">situation</a> where it cannot afford losing customers, so maybe they a cautious and prefer lower margin to attract customers.</s></li>
  <li>Amazon is the market's prime with top notch customers from overall industry and government: stability, seriousity and credability are way more important than money, especially given that expenditures on information technology is only a (small) part of industrial budget planning. Also, Amazon has many more data centers and is as whole <a href="https://www.fool.com/investing/2019/10/29/amazons-spending-surge-is-coming-at-the-perfect-ti.aspx" rel="nofollow noreferrer">investing</a> <em>billions</em> to AI technology ($0.8b in <a href="https://www.techrepublic.com/article/the-10-tech-companies-that-have-invested-the-most-money-in-ai/" rel="nofollow noreferrer">2017</a>, almost complete estimated <a href="https://en.wikipedia.org/wiki/Docker,_Inc." rel="nofollow noreferrer">market value</a> of Docker Inc.), custom data center hardware, buying startups etc.</li>
  </ul>
  
  <p>Please consider making your question more specific in the DevOps SE site context to get more answers.</p>
  
  <p>This sort of decision is possibly best to elaborate together with the customer, collect their business requirements if price is not the only one requirement and assess risks. </p>
  
  <p><strong>Further reading</strong>/related business topic: <em><a href="https://en.wikipedia.org/wiki/Due_diligence" rel="nofollow noreferrer">due diligence</a></em>.</p>
  
  <p><strong>Additional note</strong>: one might think, AWS would have way more customers than Digital Ocean but at least as of 2017 this was not the case. </p>
  
  <ul>
  <li>Digital Ocean: <a href="https://www.forbes.com/sites/janakirammsv/2017/02/14/with-almost-a-million-registered-users-digitalocean-is-ready-to-ride-the-cloud-wave/#5d2d143053ae" rel="nofollow noreferrer">1 million users in 2017</a></li>
  <li>AWS: <a href="https://www.contino.io/insights/whos-using-aws" rel="nofollow noreferrer">more than 1 million users in 2017</a></li>
  </ul>
  
Answers: CC BY-SA 4.0
Answers: 2020-01-10T18:18:31.103Z
Answers: Why are Docker's concerns about losing customers relevant to Digital Ocean's pricing decisions?
Answers: Jean-Paul Calderone
Answers: CC BY-SA 4.0
Answers: 2020-01-10T22:04:18.727Z
Answers: good point, thank you! will remove that. thought they were closely related but it's not the case.
Answers: Ta Mu
Answers: CC BY-SA 4.0
Answers: 2020-01-05T22:02:46.290Z
Answers: 2020-01-10T22:05:38.437Z
Answers: 2020-01-10T22:05:38.437Z
Answers: Ta Mu
Body: <p>I need to decide, for a small client and a small budget (around $500 a month) the proper Cloud Provider to have some compute instances to hold a web server, a database and an Apache server. I was wondering, seeing companies such as DigitalOcean, that offer compute instances on a very low price compared to Oracle, Azure, AWS, Google...</p>
  
  <p>Why do companies choose these big corporations instead of the cheaper options when it comes to infrastructure? What is the big difference between such high and low prices?</p>
  
Tags: <amazon-web-services><cloud>
Title: What makes a difference between high-cost cloud providers and low-cost ones?
UserDisplayName: jasper
ThreadText: # What makes a difference between high-cost cloud providers and low-cost ones?
  
  (Asked by: username_0 on 2020-01-05)
  
  I need to decide, for a small client and a small budget (around $500 a month) the proper Cloud Provider to have some compute instances to hold a web server, a database and an Apache server. I was wondering, seeing companies such as DigitalOcean, that offer compute instances on a very low price compared to Oracle, Azure, AWS, Google...
  
  Why do companies choose these big corporations instead of the cheaper options when it comes to infrastructure? What is the big difference between such high and low prices?
  
  **Tags:** amazon-web-services, cloud
  
  
  ---
  
  ## 3 answers
  
  ### Answer by username_2 on 2020-01-05. Score: 3 | Accepted answer
  
  @username_0, and welcome to DevOps SE!
  
  While your statement can be [confirmed](https://www.quora.com/Is-DigitalOcean-cheaper-compared-to-AWS-EC2) by other voices, it's very hard to x-ray price policies of a company. It's a complex gameplay always driven by [many factors](http://www.shareyouressays.com/knowledge/what-are-the-factors-influencing-pricing-decisions-in-a-market/112825) and decisions and a question about pricing policies of Digital Ocean vs. AWS might be a good and on possibly well on topic question at Economics SE.
  
  For example, one could argue to find facts supporting the evidence of Digital Ocean currently being cheaper that:
  
  * ~~Docker, Inc. is in a [situation](https://www.zdnet.com/article/docker-is-in-deep-trouble/) where it cannot afford losing customers, so maybe they a cautious and prefer lower margin to attract customers.~~
  * Amazon is the market's prime with top notch customers from overall industry and government: stability, seriousity and credability are way more important than money, especially given that expenditures on information technology is only a (small) part of industrial budget planning. Also, Amazon has many more data centers and is as whole [investing](https://www.fool.com/investing/2019/10/29/amazons-spending-surge-is-coming-at-the-perfect-ti.aspx) *billions* to AI technology ($0.8b in [2017](https://www.techrepublic.com/article/the-10-tech-companies-that-have-invested-the-most-money-in-ai/), almost complete estimated [market value](https://en.wikipedia.org/wiki/Docker,_Inc.) of Docker Inc.), custom data center hardware, buying startups etc.
  
  Please consider making your question more specific in the DevOps SE site context to get more answers.
  
  This sort of decision is possibly best to elaborate together with the customer, collect their business requirements if price is not the only one requirement and assess risks.
  
  **Further reading**/related business topic: *[due diligence](https://en.wikipedia.org/wiki/Due_diligence)*.
  
  **Additional note**: one might think, AWS would have way more customers than Digital Ocean but at least as of 2017 this was not the case.
  
  * Digital Ocean: [1 million users in 2017](https://www.forbes.com/sites/janakirammsv/2017/02/14/with-almost-a-million-registered-users-digitalocean-is-ready-to-ride-the-cloud-wave/#5d2d143053ae)
  * AWS: [more than 1 million users in 2017](https://www.contino.io/insights/whos-using-aws)
  
  > **Comments:**
  > **username_4**: Why are Docker's concerns about losing customers relevant to Digital Ocean's pricing decisions?  
  > **username_2**: good point, thank you! will remove that. thought they were closely related but it's not the case.  
  
  ---
  
  ### Answer by username_1 on 2020-01-07. Score: 2
  
  Aside from @Peter s great answer are you comparing Apples with Apples? Your comparison only works, if you compare a VPS as a "box" with another VPS, based on soimplistic criteria such as CPU clock speed, memory and disk space. With a cloud provider you can dramatically reduce costs with the following ways:
  
  * run night time instance sizes vs day time instance sizes
  * run no night time instances, not every Intranet is 24/7
  * use long term commitments to reduce price
  * spot price market for instances
  * extract compute workload onto cheap services such as CDNs, event driven queues, serverless setups
  
  On top of that are these instances really the same? What about custom CPUs, hardware based Hypervisors and other technologies that only top 5 public cloud providers can access.
  
  These providers also have free tiers for services or free monthly allocations that you can factor into your cost calculations.
  
  Finally, what is the cost for change. How do you change instance sizes on the compared providers when your requirements change?
  
  > **Comments:**
  > **username_2**: @jfrog very appreciating, thank you for your answer as well!  
  
  ---
  
  ### Answer by username_3 on 2020-01-07. Score: 1
  
  I can think of two main reasons:
  
  1. Several of the larger companies offer cheap/free entry level tiers. As the company begins to grow and needs to scale, then the providers charge more. However, at this point most people are "locked in" to the cloud provider either through reservations of servers, provider specific services, or in-house expertise.
  2. Brand name is important when it comes to cloud computing. While an "off-brand" cloud provider may have better and cheaper services than the big ones, most people are happy to spend more on a brand they have heard of. Some clients are still wary of cloud providers (e.g. worried about security, reliability, relinquishing physical control), and are more likely to trust Amazon, Google, or Microsoft than a provider they have never heard of.
  
  
  ---
  
  