Comment by Lazare | Hacker News Reader

Comment by Lazare | Hacker News Reader

Meh.

The big cloud platforms offer a rich selection of different offerings, which (just like in every other industry) cross subsidize each other.

When I go to a restaurant, I don't expect that they will be making the same profit margin on every item on the final bill, and in fact, they almost never do. Drinks tend to have a very high profit margin, some labour intensive items may be a break even at best, and the complimentary bread sticks or chips and salsa (if offered) will certainly be a loss.

I guess I could write a very upset article about how my local mexican restaurant is SERIOUSLY SCREWING ME OVER with their drink prices, but if I don't write the companion piece about their cheap burritos (subsidized, of course, by the drink prices), it would only show half the picture.

The reality is that I'm buying a whole package (at AWS or a restaurant) and I should evaluate the whole picture. Yes, I can get bandwidth cheaper outside AWS (or a can of coke a lot cheaper from a big box retailer). But I can't really get the total package of integrated, managed services outside AWS (certainly not for the cost they charge), any more than I can get someone else to show up in my kitchen and cook a three piece meal and then do all the dishes. (Which is to say, I totally could hire a chef to do that, but it would cost me a lot more. I could BUILD an internal SQS clone if I had to, but my employer would never break even on the cost of getting me to do so.)

AWS is very cheap for some things and very expensive for others. Depending on your usage and workload it may or may not be economical to buy the package they offer. If it is, go for it. If not, don't. Just like, you know, every other good or service you purchase in both your personal and professional life.

There's a site on Neocities we host for free that would cost $560/mo to host on Amazon's CDN.

It costs me less than $5 with my current configuration (which is also a global CDN). It's way over our "soft limit", but it's an awesome site so I don't care. The important part is, I don't have to care.

This isn't about slightly more expensive tacos. It's about spending $560 on tacos instead of $5. "Meh" wouldn't exactly be my first reaction to getting that bill at the taco cart (or the fanciest taco place in the world, for that matter).

I can get IP transit in datacenters from $240-$600/Gb right now. So even his $960 transit cost for datacenters is off by quite a bit. He's comparing with a pretty high price and it still looks ridiculous.

It's the drinks that are expensive, not the tacos.

And soda has a 1,150% markup [1], so it actually is like that.

[1] http://www.businessinsider.com/products-high-markups-2014-7

P.S. You could host it on Github for even less, if you were really price conscious.

Bandwidth is generally a necessity for cloud hosting, unlike drinks with your tacos.

Lots of bandwidth is generally only necessary for CDN. And that could be anyone.

Alright, so $560 for a soda instead of a $5 soda.

> P.S. You could host it on Github for even less.

I'm not going to attempt to save an inconsequential amount of money by hosting a site I'm hosting on another host.

But that strategy probably wouldn't end well. The $560 site uses 25x more bandwidth than Github's fairly low soft limit of 100GB (https://help.github.com/articles/what-is-github-pages/) and is likely above the 1GB site limit (which is also just the sum of any changes ever, because git) of a Github pages site.

From seeing who their CDN provider is (one that charges basically the same CDN rates as AWS), my guess is that Github is paying a lot more for CDN transit than I am. It's perhaps not a coincidence that the 100GB BW limit was quietly introduced after they started using the CDN.

Yeah Fastly (github's CDN) is ridiculously expensive and they charge for requests just like cloudfront which can become very expensive. They are the only major CDN provider other than cloud services which charges for requests.

We went from cloudfront -> edgecast -> keycdn and our bill dropped from $3000 -> $500 -> $120

Edgecast when you buy is through a reseller is quite cheap but we moved because we needed custom domain SSL which is quite expensive in edgecast

I realize this is far away from the point, but that infographic starts off stupid. Painting has a 6,000% markup? That could only possibly be true if you don't count the painter's time. Just because it's all labor doesn't mean it's high markup; the painter isn't selling you the paint he's selling you the service.

And mixed drinks are more like a 4x markup. Lower at the high end even. Not sure where they pulled that number from. If it's anything like the coffee total, they'er comparing the garbage ingredients people typically use at home against the highest quality ingredients in the best places.

Agreed. 3,900% for snow removal?

>There's a site on Neocities we host for free that would cost $560/mo to host on Amazon's CDN.

Neocities isn't just for static websites? How much traffic are getting that it would $560 on s3?

I bet that site loses money for Neocities every month. But it's subsidized by the tens of thousands of $5 sites that don't consume their allotment of resources.

Read again: it's free for the user, $5 is the cost to neocities (so yes, it looses them money. $5 a month)

Whoops. You are correct.

Hi Kyle. You've got me curious now, which Neocity site are you talking about, I would love to check it out.

I look forward to your promised blog posts on how you've affordably built your scalable infrastructure.

Is the basic principle to use cheap cloud VPSes or dedicated hosting (e.g. of the Digital Ocean, Hetzner, or OVH ilk)? And then you can afford lots of servers, and have then geographically distributed?

This is a nice way to look at the pricing model in the context of something we can all understand: Mexican food.

> I guess I could write a very upset article about how my local mexican restaurant is SERIOUSLY SCREWING ME OVER with their drink prices

I notice that I drink less (too little, even, if I'm out for an evening) because of these prices. If each drink costs a few euros for 200ml glasses, I'd be crazy to drink a liter if at home the cost is somewhere between negligible (tap water) and 1.50 for that whole liter.

What I don't understand is why they can't spread out the profit margin. It'd make me feel a lot better about buying drinks and I'd probably spend more than I do now. Courses are a few euros in ingredients but I don't hesitate to pay €9-15 for it because I know labor is involved and someone has to pay rent. For drinks there is hardly any labor or ingredient cost (assuming all I ask is tap water, which is often since Dutch tap water tastes better than bottled water, and it's not cooled). Prices might also be higher because people don't order it in great quantities, which they might if restaurants wouldn't inflate drink prices to pay for rent (and other such costs), which would be so if you just pay per hour for a seat or something. I heard some places in Italy do that and people were surprised to be charged for it, but it's just itemizing costs and in my opinion more transparent.

That would be workable if humans would be perfectly rational, but they are not. If I set up a pizza shop with totally fair prices across the board, my pizza will cost 8 EUR and the drinks maybe 1 EUR. The pizza shop across the street will however put up a ginormous billboard advertising their 5 EUR pizza with a peace of free pizza bread (and have the 3 EUR drink prices in the small print menu). I get very few customers with my "normalized prices pizza and drinks" billboard. Most people would be just like: WTF? and go to the other shop.

People just don't behave rationally to this. Restaurants learned ages ago that people focus on entree pricing, as a result their is little to no margin on many main dishes (sometimes even negative). This is made up on wine, desserts, things that people have price elasticity on or poor information or both.

All that said, the operating margins on high end restaurants are ridiculously low. Franchises and fast food do better at this (economy of scale), but if it is a proper linen-table-cloths and local sourcing sort of place, they are playing with very thin margins at the best of times.

Perhaps an even better analogy is popcorn and soda at the movie theater. Its 10x the price of buying it at costco (perhaps 100x), but you are paying for the movie. In the world of cloud computing this is things like TPUs. I think the lesson here is if you are merely looking for connected bandwidth, maybe cloud providers aren't for you. Shop elsewhere. The point of cloud computing is clearly moving in the direction of data-driven services, at large scale, for big businesses.

Agreed... this article makes a useless one-dimensional comparison of several different services based on their pricing for a single aspect of each of those services. I'm not saying there aren't price discrepancies, or opportunities for more competition that might benefit consumers and enterprises... but the comparisons as portrayed in this article are just not useful except to show how pointless such one-dimensional comparisons are.

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