Compare the 3-year total cost of ownership between on-premise servers and Microsoft Azure. Factor in hardware, energy, staff time, licensing, and depreciation to see your true return on investment.
| Business Size | Servers | On-Prem Annual | Azure Annual | Typical Saving |
|---|---|---|---|---|
| Small (10–25 staff) | 2–3 | £15,000–25,000 | £8,000–15,000 | 25–40% |
| Medium (25–50 staff) | 4–8 | £30,000–60,000 | £18,000–40,000 | 30–45% |
| Mid-Market (50–100 staff) | 8–15 | £60,000–120,000 | £35,000–75,000 | 30–40% |
| Large (100–250 staff) | 15–30 | £120,000–250,000 | £70,000–160,000 | 35–45% |
| Enterprise (250+ staff) | 30+ | £250,000+ | £140,000+ | 35–50% |
On-premise costs include hardware depreciation, maintenance, energy, cooling, software licensing, and estimated staff time. Azure costs are based on typical workload profiles with pay-as-you-go pricing. Reserved instances provide additional savings. All figures exclude VAT. View our Azure solutions
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Over a 3-year period, Azure is often cheaper once hardware refresh cycles, energy costs, physical space, and IT staff time for maintenance are factored in, though the comparison depends heavily on workload type and existing infrastructure age. On-premise can still work out cheaper for stable, predictable workloads with hardware already paid off.
A fair comparison includes hardware purchase and refresh cycles, software licensing, energy and cooling, physical space, backup and disaster recovery infrastructure, and staff time spent on maintenance for on-premise - versus subscription or consumption costs, reduced maintenance overhead, and built-in redundancy for cloud.
Many UK SMEs see a payback period of 18 to 36 months on cloud migration once reduced hardware refresh costs, lower energy bills, and decreased IT staff maintenance time are accounted for. Businesses with ageing on-premise servers nearing replacement tend to see faster payback than those with recently purchased hardware.
Ongoing risks include unplanned hardware failure requiring emergency replacement, rising energy costs for running a server room, and the growing difficulty of finding staff experienced with ageing on-premise systems. This calculator compares 3-year total cost of ownership across hardware, licensing, energy, and staff to surface these often-overlooked costs.
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