Why are cloud platforms like Azure or AWS more expensive than dedicated server providers like Hetzner, OVH or Strato?

tcwlm

4/27/24, 6:24 PM

I'm wondering why cloud platforms like Azure or AWS tend to be more expensive than dedicated server providers like Hetzner, OVH or Strato. What factors contribute to this pricing discrepancy, and are there any advantages to using a cloud platform that justify the higher cost?

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cloud

azure

amazon-web-services

hetzner

ovh

Greg Askew

4/27/24, 8:56 PM

`What factors contribute to this pricing discrepancy?` Market dynamics.

HBruijn

4/27/24, 9:28 PM

Don’t overlook the fact that there is a big difference between list price and actual prices that people pay in enterprise agreements with (large) cloud and other providers. - Also - Different providers target different audiences with different feature sets and value propositions. A provider specializing in a more or less barebones product like dedicated servers can offer them at a different price point then a provider that offers a more comprehensive portfolio of services that also happens to include dedicated servers.

Tim P

4/28/24, 2:46 PM

Adding on to what others have said, the "power" and cost savings of the cloud generally comes when you do things the "cloud way". Running a server 24x7 will be expensive. Running 10 will be 10x as expensive. However if you can scale with demand you get cost saving AND the ability to scale past your hardware limits. If you go to a server-less system like AWS Lambda, it gets even cheaper.

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Server

HBruijn

4/28/24, 10:20 AM

The "TLDR" : we on ServerFault can't possibly know why vendors select the particular prices they list. (Or when somebody here is "in the know" most likely they won't be allowed to disclose such privileged information.)

Wikipedia lists many different product/service pricing strategies & tactics that make for interesting reading and background knowledge.

Some things to take home:

A price difference does not necessarily mean that there is an fundamental underlying difference in quality/features/advantages between the different offerings. The price can be the only difference.
When there are differences in quality/features/advantages between the different offerings, only you can determine if those offer you sufficient added value to make you willing to pay a premium price.

HIPAA certification for example, would not add value for me, but might be crucial for an American health care provider and their French counterpart would instead looking for ASIP HDS rather than HIPAA certification.
Don't overlook that there can be big differences between list price and the actual prices that people pay in enterprise agreements with their (large) cloud and other providers.
A provider that already primarily competes on price typically won't be able to offer comparable discounts to large (enterprise) customers, which likely makes the effective price difference per server much smaller than list prices would suggest.

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