Most users of cloud services pay the going right. But why? In fact, there is considerable room to negotiate when it comes to getting the best price on cloud hosting.
With the right approach is it possible to haggle a double-digit discount off the headline price. Furthermore, there may be extra gains, in the form of consultancy services and extra tools thrown in, to sweeten the deal.
How to get the best price on cloud hosting
Information Age asked five renowned cloud experts for their top tips on how to get the best price on cloud hosting:
#1 – Understand there is room to haggle
David Ciccarelli, technology entrepreneur and founder of Voices.ai
“Cloud hosting prices can sometimes feel like the final price at an auction house – non-negotiable. But in my experience, there’s always a dance before the deal. Even with behemoths like AWS or Azure, there’s room for SMEs to wiggle. It’s all about understanding your value and their pain points. Longer contracts, commitment to certain support tiers, or even leveraging added features can serve as bargaining chips.
“For Voices.ai we negotiated with a smaller provider, A2 Hosting. We managed to secure a discount of approximately 15 per cent off the quoted price. It was a significant cut, especially considering the magnitude of our hosting needs at the time. What really swung the deal in our favour was a blend of factors. Beyond the evident cost considerations, it was our commitment to a long-term relationship that held weight. We showcased our projected growth trajectory and the potential value we would bring to them as an expanding tech company.”
#2 – Go line by line
Eric Helmer, CTO, Rimini Street
“Haggling makes the tender process competitive, but you must conduct due diligence on your own to ensure you are getting the best value in your ask. If you are evaluating AWS, request a bid from another provider such as Google Cloud or Microsoft Azure. Prices for most services are made public, and many offer online calculators for transparency and faster sales processes. In reality, there is little wiggle room in the specific hourly/day rate for storage and compute resources, so I would recommend negotiating over other areas of the contract:
- Line item everything. You must break down the total cost to know exactly what you are paying for. This can be tricky to understand as there are many classes of services to choose from.
- Be clinical and only provision what you need. Not every workload requires a premier service. Example: take an application in a non-productive environment which does not need highly responsive SLAs or performance horsepower
- Decide whether you want to adopt an elastic or a reserved model.
- Reserved instances allow you to control costs and ensure less variability, but this approach also becomes quite static. Carefully evaluate the impact of taking away or adding compute resources if/when that occurs over the life of the contract. A reserved model may not provide the agility you require.
- Elastic models may lead to overpaying if not carefully monitored and controlled. Fully understand the characteristics of the workload and the availability you require.”
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#3 – Work with partners to cut costs
Jon Shanks, CEO at Appvia
“Major cloud providers like AWS, Azure, or IBM Cloud might have their standard pricing, but they also have partner programs and incentives that can be leveraged. For instance, AWS has a Migration Acceleration Program (MAP) that recognises the expertise of partners in migrating applications, data, and workloads to AWS. By aligning with partners who have achieved these competencies, SMEs can potentially access benefits such as promotional credits or subsidies for specific services.”
#4 – Buy in bulk
Maria Opre, lead writer at EarthWeb
“Is it really possible for an SME to haggle on price? The short answer? Absolutely. The longer, nuanced answer? A very honest ‘it depends’. Larger cloud providers may seem intimidating, but they also understand the value of securing long-term clients. They’re often more amenable to price adjustments than one might think, especially if you can project your company’s growth and how that translates into increased usage down the road. It’s a bit like going to a market: sure, the price of the apple is marked, but if you’re buying in bulk, the vendor might just give you a discount.”
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#5 – Look at the extras
Justin Rutherford, CTO of OryxAlign
“Even where haggling may not be possible, you may still be able to come away with a better deal by negotiating extras, such as contract length or fixed-rate rises. For example, if you are bringing a high volume of business to the provider, you may be able to secure a free or reduced rate for the first three months, or a better deal on support and maintenance charges.
Another area is future price rises. Especially if you’re using a software licensing model, incremental price increases can be costly over time, so being able to lock-in a fixed rate for a given period may help you maintain long-term price stability.”
Further reading
How businesses can drive value from cloud bursting – We explore the concept of cloud bursting — how it benefits organisations, where it can be valuable, and the possible risks to consider
