When does the migration pay itself back?
You have an estimate. The real question is the break-even month. Enter your migration cost, current monthly on-prem, and target monthly cloud, the calculator shows when cumulative savings cover the migration project.
Break-even calculator
When does the migration pay itself back?
Monthly net savings
+$9K
Cloud saves money vs on-premise.
ROI analysis
Break-even
45 mo
3-year ROI
-19%
3-year net
$-76,000
5-year net
+$140K
36-month cumulative net
Estimates for guidance only. Actual savings depend on workload efficiency, cloud pricing changes, and hidden cost management.
What drives the savings
Hardware refresh avoidance
$3K–$10K / serverServers need refresh every 5-7 years. Cloud eliminates this CapEx entirely.
Data centre costs
$1K–$3K / month / rackColocation, power, cooling, physical security. Cloud shifts to OpEx and eliminates most.
Staff time reallocation
15–30% of IT timeInfra maintenance frees engineering time for product. Quantify as salary × time saved.
Elastic scaling
15–40% compute savingOn-prem provisions for peak. Cloud scales down off-peak. Big for variable workloads.
DR simplification
$20K–$100K / yrCloud provides built-in geo-redundancy. Replaces dedicated DR site and licences.
Licence optimisation
Varies widelyMoving Oracle / SQL Server to RDS or Cloud SQL can cut DB licensing 30-80%.
When cloud migration does not pay off
Five scenarios where staying on-premise is financially better. We are an independent calculator, we will not pretend the cloud always wins.
Stable workloads on depreciated hardware
Servers 3+ years old, fully depreciated, predictable demand. Cloud monthly may exceed current spend.
Regulatory on-premise requirements
Data sovereignty rules requiring physical location. Either not feasible or requires expensive sovereign cloud.
Very high-egress workloads
Workloads streaming TBs of data daily. Cloud egress costs can wipe out compute savings.
On-prem already at peak efficiency
Highly utilised data centre with dedicated team. The compute saving is small to negative.
Rushed, under-defined scope
Wave one delivers but discovery gaps surface massive parallel running cost. Better to delay and re-scope.
Published ROI references
Forrester (TEI)
155% ROI · 6 mo payback
Well-executed Atlassian Cloud migration case
IDC
192% 5-yr ROI
Azure migrations · Microsoft-sponsored, caveat
McKinsey
30–40% TCO reduction
Median 3-year cloud savings vs on-prem
Gartner
12–30 mo payback
Median across mid-market migrations
Medians, not guarantees. Actual results vary substantially by starting point, strategy, and execution.
ROI questions
Q. What is the typical ROI of cloud migration?
Forrester reports 155% ROI over 3 years for well-executed cloud migrations. IDC reports 192% 5-year ROI for Azure migrations (Azure-sponsored, treat with caution). McKinsey reports median 30-40% total cost reduction vs on-premise over 3 years. Actual ROI depends heavily on starting point, migration strategy, and whether hidden costs are managed.
Q. How long does cloud migration take to pay off?
Break-even typically occurs 12-30 months after go-live for well-executed migrations. If monthly cloud savings are $5,000 and migration cost was $100,000, break-even is 20 months. Refactor migrations take longer to break even (higher upfront cost) but save more long-term. Small businesses with lift-and-shift to lower-cost tiers (AWS Lightsail, Azure SMB) can break even in 8-14 months.
Q. When is cloud migration NOT worth it?
Cloud migration may not provide positive ROI when: workloads have stable predictable demand and fully depreciated on-premise hardware, regulatory requirements demand on-premise storage, very high-egress workloads where cloud transfer costs exceed compute savings, organisation already runs on-premise at peak efficiency, or migration scope is rushed and under-defined.
Q. What drives cloud migration savings?
Main savings sources: avoided hardware refresh ($3K-$10K per server every 5-7 years), data centre space and power ($1K-$3K per month per rack), staff time reallocation from infra maintenance to development, elastic scaling vs peak provisioning, simplified disaster recovery, and software licensing optimisation when moving to managed databases.