http://blog.zencoder.com/2011/10/18/zencoder-benchmarked-2x-...
Thanks for the trust. ;)
In my experience it is far more efficient to transcode very high resolution files (4k or even 1080p) locally, and then upload a real deliverable (at much greater speed now that it has been compressed).
As a short answer, though, we're actually quite cheap for most customers. Major internet publishers use Zencoder for a few hundred dollars/month. Large-volume providers use us for less than the cost of a full-time engineer - and the alternative to Zencoder at large scale is a team, not a single engineer. Mission-critical encoding requires a lot of engineering and operations, even when starting from the excellent open-source libraries available.
Beyond that, we generally do things faster, more reliably, and at higher quality than "default" encoding systems, especially around the edges. That's what happens when you throw >10,000 hours of engineering at this problem. Again, get in touch if you want specifics.
To a certain extent, this is an apples and oranges comparison, but the service model really seems to fit precisely with video encoding (or I wouldn't be here).
That said, love what Zencoder's doing. Very good for the industry.