Over one third of businesses stung by unexpected cloud hosting costs

Civo has published the result of its research on cloud costs. It surveyed 1,000 developers at businesses of all sizes and found that over one-third of public cloud users (37%) have been stung by unexpected costs in the last 12 months. Half affected said that it was a mistake or configuration change that led to the unexpected cost as opaque and complicated cloud usage hinders proper cost planning.

Time and again, respondents pointed to a lack of transparency amongst providers. Thirty-four percent claim to find it difficult to calculate how much their cloud provider is going to charge them each month. Indeed, only 17% said that there are no areas of their cloud usage where it is difficult to monitor costs. The areas that businesses find the most challenging to monitor include:

Data transfer – 21%

Compute – 16%

Storage – 15%

On demand instances – 14%

Hyperscale growth has accelerated during the COVID-19 pandemic; in its last reported quarter Amazon reported profits of almost $5 billion on sales of over $16 billion – an operating margin of over 30%. The research shows that businesses have a low opinion of the hyperscalers. Civo’s research found that 82% companies think the big three hyperscalers should reduce their charges and 81% believe the hyperscalers try to give the impression they are low cost.

Despite this healthy revenue growth and a growing number of organisations relying on public cloud services, individual customers are still seeing their cloud costs increase at a high rate. Civo’s research shows 74% of businesses have seen their cloud costs increase over the last 12 months with an average increase of 66%.

Mark Boost, CEO of Civo commented “It’s still the wild west when it comes to cloud billing. The hyperscalers purposely create opaque billing models with a myriad of confusing options and hidden extras. These offerings are clearly built to maximise shareholder value, not to deliver on the needs of the organisations that use them.”

“There’s no recourse to accidental billing, businesses can only plead for leniency when mistakes happen and hope for the best.”

In 2020, a start-up accidentally incurred a bill of over $71,000 overnight even though it had set a budget of $7. Google cancelled the bill as a one-time gesture, but the incident demonstrated the potential dangers.

Mark Boost, CEO of Civo continued: “For any organisation, thorough and accurate cost planning is essential for sustainable growth. Receiving an unexpected bill from your cloud provider, for something as simple as data transfer, can be costly for any business but has the potential to be crippling for a new start-up or organisation running on fine margins. The practice of employing these unexpected charges is exploitative and unethical when considering hyperscaler revenue growth.

“The status quo in today’s cloud market is unsustainable. Customers are more discerning than ever and will be willing to make the switch to cloud providers that don’t penalise them with hidden charges and unexpected costs. 

“The industry needs to put the needs of their customers first, offering businesses a streamlined approach to infrastructure that is transparent on pricing and delivers for the organisation. This will free up development teams from worrying about infrastructure management and allow them to focus on what these businesses do best: creating the innovative solutions that are essential for success in today’s tech-driven world.”