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:

Development:

Operations:

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

cost-estimator