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Build a Cost Calculator: Should You Buy SSDs or Outsource Backups to Cloud?

sstorage

2026-01-28

11 min read

A pragmatic 2026 pricing model to compare PLC/TLC SSDs vs cloud backups — includes replacement, energy, bandwidth & hybrid strategies for SMBs.

Hook: Are you overpaying for backups — or risking them?

Small business owners and ops teams face a stubborn question in 2026: is it cheaper and safer to host backups on on-prem SSDs, or to outsource them to the cloud? You’ve told us the same pain points: opaque pricing, high bandwidth bills, unpredictable replacement costs, and uncertainty about data sovereignty and recovery time. This guide gives you a transparent, repeatable pricing model that factors in SSD type (PLC vs TLC), replacement cycles, energy, bandwidth and operational costs — and compares those numbers side-by-side with monthly cloud backup fees.

The key tradeoffs — summarized

CapEx vs OpEx: On-prem SSDs are upfront capital expenditures and require replacement planning; cloud is operational spend billed monthly.
Endurance and reliability: PLC (high-density, lower endurance) is cheaper per GB but wears out faster than TLC (higher endurance).
Bandwidth and egress: Cloud providers still charge for egress and some network traffic; initial seeding and restore events can become costly.
Compliance and sovereignty: New options like AWS European Sovereign Cloud (launched late 2025 / early 2026) improve cloud choices for regulated SMBs; see guidance on compliance and identity.
Operational overhead: Admin, monitoring, replacement logistics, and cooling/power are often undercounted in on-prem math.

Why update your model in 2026?

Two recent shifts make a fresh calculator essential:

Hardware: SK Hynix and others have accelerated PLC density improvements — lowering per-GB SSD prices but not yet fully closing the endurance gap with TLC.
Cloud: Providers are introducing regionally isolated and sovereign clouds and reworking egress tiers. That changes compliance and bandwidth-cost math for SMBs operating across jurisdictions.

"Storage decisions are no longer only about price/GB — they’re about lifecycle economics, bandwidth, and regulatory fit."

The pricing model — variables to capture

Below is a compact but comprehensive model you can implement in a spreadsheet. Replace the example numbers with quotes from vendors and your actual workload metrics.

Define the inputs

D = initial data size (TB)
Δ = monthly data growth or churn (TB/month)
R = replication/overhead multiplier (snapshots, RAID, dedupe inefficiency). Example: 1.2–2.0
P_ssd = SSD cost per TB ($/TB) — vendor list price or quote
SSD_type = PLC or TLC (influences replacement cycle and price)
Life_ssd = expected replacement cycle (years). Example: TLC 4–7 yrs, PLC 2–4 yrs
U = usable capacity per drive (TB)
W = average power draw per drive (Watts)
Elec = electricity cost ($/kWh)
Admin = annual ops/admin cost for storage (salaries, monitoring, $/yr)
Space = rack/colocation cost $/U or $/TB/year (if colocating)
Bandwidth_in = $/GB ingress (usually 0 for cloud)
Bandwidth_out = $/GB egress from cloud
Cloud_monthly = $/GB-month cloud storage (select tier: hot/IA/archival)
Restore_freq = expected annual restore TB (for estimating egress hits)

Formulas you can paste into a spreadsheet

Required usable capacity (TB) = (D + 12 * Δ) * R
Number of drives = CEIL(Required capacity / U)
CapEx SSDs = Number of drives * U * P_ssd
Annualized CapEx = CapEx SSDs / Life_ssd
Electricity cost/year = Number of drives * W (W) * 24 * 365 / 1000 * Elec
Replacement wear cost/year (optional TBW method) = CapEx SSDs / (TBW_life_years) — see remarks below
Network cost/year = (Initial seed TB * Bandwidth_out if seeding via internet) + (Restore_freq * 12 * Bandwidth_out)
- Note: initial seed often done via physical transfer (snowball / transfer device) to avoid egress.
Total annual on-prem cost = Annualized CapEx + Electricity + Admin + Space + Network cost + Spare parts allowance
Monthly equivalent = Total annual on-prem cost / 12
Cloud annual cost = (D + 12 * Δ) * 1024 (GB/TB) * Cloud_monthly * 12 + expected egress charges

Example: A 10 TB SMB backup (illustrative)

Build a side-by-side using conservative example inputs. Replace with your quotes.

Inputs (example)

D = 10 TB initial
Δ = 1 TB/month (12 TB/year new)
R = 1.25 (snapshots + modest RAID overhead)
U = 4 TB usable per SSD (example 4 TB drive)
TLC P_ssd = $80/TB (enterprise TLC average, example)
PLC P_ssd = $45/TB (high-density PLC example)
Life_TLC = 5 years (replacement cycle)
Life_PLC = 3 years
W = 6 W per drive
Elec = $0.15/kWh
Admin = $3,000/year
Space = $600/year (colocated fraction)
Cloud_monthly_standard = $0.023/GB-month (example S3-like)
Bandwidth_out = $0.05/GB (example egress)
Restore_freq = 0.5 TB/month expected restore activity

On-prem TLS calculation (TLC)

Required capacity = (10 + 12) * 1.25 = 27.5 TB
Number of 4 TB drives = CEIL(27.5 / 4) = 7 drives (28 TB usable)
CapEx = 28 TB * $80 = $2,240
Annualized CapEx = $2,240 / 5 = $448/year
Electricity = 7 * 6W * 24 * 365 /1000 * $0.15 = ~$55/year
Network cost (egress for restores) = 0.5 TB/month * 12 * 1024 GB/TB * $0.05 = 6 TB/year * 1024 * $0.05 ≈ $307 (approx)
- Initial seeding assumed via physical transfer — zero egress
Total annual on-prem = $448 + $55 + $3,000 + $600 + $307 = $4,410/year
Monthly = $367/month

On-prem PLC calculation (PLC)

CapEx = 28 TB * $45 = $1,260
Annualized CapEx = $1,260 / 3 = $420/year
Electricity and other items same: $55 + $3,000 + $600 + $307
Total annual on-prem PLC = $420 + $55 + $3,000 + $600 + $307 = $4,382/year
Monthly = $365/month

Cloud calculation (standard tier)

Data stored (avg) = 10 + 12 = 22 TB (we assume monthly adds but older data purged per retention)
Cloud annual storage = 22 TB * 1024 GB/TB * $0.023/GB-month * 12
- 22 * 1024 * 0.023 * 12 ≈ $6,214/year
Egress = restores 6 TB/year * 1024 * $0.05 ≈ $307/year
Total cloud annual = $6,214 + $307 = $6,521/year
Monthly = $543/month

Interpretation of example

In this specific illustrative case, on-prem TLC or PLC looks cheaper (~$360/month) than cloud (~$543/month). But notice the dominant non-hardware costs: the admin and space line items ($3,600/year) dominate the on-prem budget. If you can reduce admin or colocate more cost-effectively, your TCO shifts. Conversely, if you negotiate committed cloud discounts, cloud costs fall quickly.

Practical adjustments & advanced considerations

1) Factor endurance (TBW) and actual write load

Drive replacement cycles should be tied to write volume, not calendar years only. PLC endurance is lower; if your backup pattern writes high daily deltas (e.g., large database backups), PLC drives will wear out faster. Use vendor TBW ratings or estimate lifespan by:

Lifespan years ≈ TBW rating / annual TB written

Then set Life_ssd = min(calendar replacement policy, lifespan years). For DIY or retrofit labs, see projects like turning Raspberry Pi clusters into low-cost infrastructure for ideas on measuring write loads and lifecycle testing.

2) Account for recovery time objective (RTO)

Cloud backups may be slower to restore large datasets due to egress limits and throttles, increasing downtime costs. On-prem restores are faster if local bandwidth supports it. When RTO costs per hour are high for your business, weight that into the model (e.g., $X per hour of downtime) and consider edge/low-latency strategies for fast local restores.

3) Use hybrid strategies

Increasingly in 2026, SMBs adopt hybrid backup: keep recent snapshots on-prem for fast restores (SSD), and tier older data to cloud for long-term retention. Hybrid often gives the best risk-adjusted ROI and matches modern edge sync approaches.

4) Negotiate cloud pricing and use tiers

Cloud providers now offer more sovereign-region and tiered pricing. For example, cold/archival tiers are often 10–50x cheaper per GB-month. If your retention allows, route long-term backups to archival tiers and keep only critical recent data in the hot tier. See guidance on cost-aware tiering & autonomous indexing for practical tiering strategies.

5) Avoid surprise egress — seed and restore wisely

Initial bulk transfers are expensive over the internet. Use physical import/export services or cloud transfer devices for initial seeds. Also design restores to be incremental; avoid full site restores over the internet when possible.

6) Consider security, compliance, and sovereignty

For EU-regulated SMBs, the appearance of sovereign clouds (e.g., AWS European Sovereign Cloud) in 2025–2026 removes a key compliance blocker for some businesses. If controls and data residency matter, factor any reduced legal risk as a monetary benefit in the cloud column. Identity-first security thinking (see identity & zero trust) reduces governance risk in hybrid designs.

When to choose SSD on-prem

You have predictable, low-to-medium growth and limited restore egress needs.
RTO velocity is critical — you need local restores in minutes/hours.
Your team already manages colo/ops and can absorb admin costs at low marginal expense.
You can reuse existing rack space, power, and networking (low incremental space cost).

When to choose Cloud backups

You need easy scalability and don’t want to manage hardware lifecycle.
Your data changes unpredictably and bursts would require frequent hardware refreshes.
You require multi-region replication, certified compliance, or quick geographic failover.
You want predictable OpEx and pay-for-what-you-use billing, and you can optimize tiers/egress.

2026 trends to watch (and how they affect your calculator)

PLC density advances — SK Hynix’s innovations and similar vendor work are reducing per-GB costs; if PLC endurance improves, PLC on-prem becomes more attractive for cold backups.
Sovereign clouds — regional clouds improve cloud suitability for compliance-bound SMBs; they also sometimes change pricing models (new egress tiers, regional discounts).
Egress economics — providers are experimenting with lower egress for multi-region replication partners and private backbone transfers, making hybrid cloud cheaper for frequent restores.
AI-driven optimization — 2026 tools can auto-tier backups, dedupe more aggressively, and forecast replacement cycles, saving both cloud and on-prem spend; see work on cost-aware tiering that applies ML to storage lifecycle.

Actionable checklist — run this quick audit in 30 minutes

Export last 12 months: average monthly data added, restore volumes, and peak restore events.
Request quotes: SSD $/TB for TLC and PLC, TBW ratings, cloud storage $/GB-month by tier, and egress $/GB.
Fill the spreadsheet model with your numbers and the formulas above.
Compute three scenarios: all-on-prem, all-cloud, hybrid (recent 30/90 days on SSD, tier to cloud older data).
Stress-test: double restore frequency and compute worst-case egress cost for cloud; double write churn and compute replacement frequency for PLC.
Factor soft costs: downtime $/hour, compliance fines, and staff hours for management.

Case study — a quick real-world sketch

Midwest e-commerce SMB, 25 employees, 20 TB of backups, 2 TB/month delta. Ops team lacks spare sysadmin capacity. They ran the model and found:

All-TLC on-prem cost ~$1,100/month when including a full-time-equivalent (FTE) allocation.
All-cloud cold-tier strategy (30-day hot, archival beyond) cost ~$1,350/month but saved ~10 hours/week in ops time and improved compliance.
Hybrid strategy cost ~$850/month: 30-day local SSD cache for fast RTO, cold archival in cloud for long-term retention — best ROI for them.

Final recommendations

Use the model above with your real numbers. A few pragmatic rules-of-thumb for 2026:

If your ops overhead is low and RTO matters: start with on-prem TLC, but plan hybrid tiering.
If you prefer predictable OpEx, regulatory comfort, and little ops headspace: choose cloud and optimize with tiering and transfer services.
If cost-per-GB is king and you can tolerate slower restores: PLC may be a good fit for cold backups — but always size for replacement cycles based on your write workloads.

Quick reference formulas

Required capacity = (D + 12 * Δ) * R
Annual on-prem cost ≈ CapEx/years + Electricity + Admin + Space + Network + Spares
Cloud annual cost ≈ (Avg stored GB) * cloud $/GB-month * 12 + egress

Closing — make the decision with confidence

There isn’t a one-size-fits-all answer in 2026. The right choice depends on your growth, restore patterns, regulatory constraints, and the real cost of staff time. Use the model here to quantify tradeoffs, test PLC vs TLC in scenarios, and consider hybrid architectures to capture the best of both worlds.

Next step: Download our spreadsheet (link) or use the built-in calculator on storage.is to plug your numbers, run the three scenarios, and get an instant recommendation and supplier shortlist tailored to SMBs. If you want, send your inputs to our marketplace team and we’ll return a vendor-verified quote that includes PLC and TLC options and a hybrid plan calibrated to your RTO.

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