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

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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:

• Data transfer costs (egress)
• Backup storage
• Log storage (CloudWatch: $0.50/GB)
• SSL certificates
• DNS queries
• Load balancer hours

Development:

• Code reviews (add 20-30% to dev time)
• Documentation
• Testing infrastructure
• CI/CD pipeline (GitHub Actions: $0.008/min)
• Staging environments

Operations:

• Monitoring tools (Datadog: ~$15/host/month)
• Error tracking (Sentry: $26+/month)
• Log management
• On-call compensation
• Incident response time

Third-Party Services:

• Email (SendGrid: $0.00025-0.001/email)
• SMS (Twilio: $0.0075/message)
• Video (encoding, streaming)
• Maps/geocoding (Google: $7/1K requests)

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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

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References

• Cloud Pricing Calculator - Detailed cloud provider comparison
• Build vs Buy Framework - Extended decision framework