AI Infrastructure Total Cost of Ownership (On-Prem vs Cloud GPU) Calculator
Monthly cost
Owning is cheaper by $2,857 a month
- On-prem
- $11,543
- Cloud
- $14,400
- On-prem per GPU-hour
- $3.61
- Cloud per GPU-hour
- $4.50
Buying pays for itself after about 36 months, within its 4-year life. The two cost the same at 319 busy hours per GPU a month (44% utilization); busier than that favors owning.
Cumulative cost over 4 years
Months on the horizontal axis.
- On-prem total
- $554,063
- Cloud total
- $691,200
On-prem breakdown
| Up-front hardware | $392,000 |
|---|---|
| Hardware spread over 48 months | $8,167 |
| Electricity (3,136 kWh incl. cooling) | $376 |
| Fixed costs | $3,000 |
| Monthly total | $11,543 |
Idle power, resale value, financing costs, taxes and the cost of the engineers who run the cluster are not included; add staff time to fixed costs. Cloud egress and storage fees are not included either.
Compare buying GPUs with renting the same GPU-hours from a cloud provider. The calculator spreads the hardware cost over its useful life, adds electricity (with cooling, via PUE) and fixed costs, and shows the monthly cost of each option, the cost per GPU-hour, how many months the purchase takes to pay back and the utilization at which owning becomes cheaper.
Formula
Worked Example
Spread over four years the cluster costs $8,167 a month, plus $376 of electricity (3,136 kWh including cooling) and $3,000 of fixed costs. Renting the same 3,200 GPU-hours costs $14,400, so owning saves $2,857 a month and the $392,000 purchase pays back in about 36 months, inside its four-year life. Below about 319 busy hours per GPU a month (44% utilization) renting would be cheaper.
Frequently Asked Questions
At what utilization is owning GPUs cheaper than renting?
When the monthly cost of owning, which barely changes with use, drops below the cloud bill, which grows with every GPU-hour. The calculator solves for the busy hours per GPU where the two match; with the example inputs that is about 319 hours a month, or 44% utilization. Clusters that sit idle most of the month are almost always cheaper to rent.
Why does the payback period differ from the monthly comparison?
The monthly comparison spreads the purchase over the hardware's useful life. Payback counts cash: you pay for the hardware up front, then each month save the cloud bill minus your electricity and fixed costs. If payback takes longer than the useful life, renting is the better deal.
What is PUE and why does it matter?
Power usage effectiveness is total facility power divided by the power the IT equipment draws. At a PUE of 1.4, every kWh the GPUs use needs another 0.4 kWh for cooling and power conversion, so it scales the electricity bill. Staff time, financing, resale value and cloud egress fees are not modelled; add staff time to the fixed costs.