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Comment by peeters | Hacker News Reader

The reality is when you get to another certain point (larger than the point you describe) you start negotiating directly with those cloud providers and bypass their standard pricing models entirely.

It's the time in between that's the most awkward. When the potential savings are there that hiring an engineering team to internalize infrastructure will give a good return (were current pricing to stay), but you're not so big that just threatening to leave will cause the provider to offer you low margin pricing.

All I'd say is don't assume you're getting the best price you can get. Engineers are often terrible negotiators, we'd rather spend months solving a problem than have an awkward conversation. Before you commit to leaving, take that leverage into a conversation with your cloud sales rep.

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> Engineers are often terrible negotiators, we'd rather spend months solving a problem than have an awkward conversation.

My experience is the opposite: lots of software developers ("engineers") would love to do "brutal" negotiations to fight against the "choking" done by the cloud vendors.

The reason why you commonly don't let software developers do these negotiations is thus the complete opposite: they apply (for the mentioned reasons) an ultra-hardball negotiation style (lacking all the diplomatic and business customs of politeness) that leads to vast lands of burnt soil. Thus, many (company) customers of the cloud providers fear that this hardball negotiation style destroys any future business relationship with the respective (and perhaps for reputation reasons a lot of other) cloud service provider(s).

Even with the discounts of volume pricing cloud prices are still quite inflated unless you need to inherit specific controls like the P&E ones from FedRAMP High/GovCloud. The catch there is lock-in technologies that may require to re-develop large swaths of your applications if you're heavily reliant on cloud-native tools.

Even going multi-region, hiring dedicated 24/7 data center staff, and purchasing your own hardware amortizes out pretty quickly and can you a serious competitive advantage in pricing against others. This is especially true if you are a large consumer of bandwidth.

> The reality is when you get to another certain point (larger than the point you describe) you start negotiating directly with those cloud providers and bypass their standard pricing models entirely.

And even if you do, you still end up with pretty horrible pricing, still paying per GB of "premium" traffic for some outrageously stupid reason, instead of going the route of unmetered connections and actually planning your infrastructure.

> It's the time in between that's the most awkward.

That's an odd way to describe hemorrhaging money.

But the article states they negotiated.

This was more a response to the comment I replied to, that cloud is always more expensive. And saying it more for everyone, not OP.

It's almost always less expensive at the start, which is super important for the early stages of a company (your capital costs are basically zero when choosing say AWS).

Then after you're established, it's still cheaper when considering opportunity costs (minor improvements in margin aren't usually the thing that will 10x a company's value, and adding headcount has a real cost).

But then your uniqueness as a company will come into play and there will be some outsized expense that seems obscene for the value you get. For the article writer, it was S3, for the OP, it's bandwidth. For me it's lambdas (and bizarrely, cloud watch alarms). That's when you need to have a hard look and negotiate. Sometimes the standard pricing model really doesn't consider how you're using a certain service, after all it's configured to optimize revenue in the general case. That doesn't mean the provider isn't going to be willing to take a much lower margin on that service if you explain why the pricing model is an issue for you.

Even starting out, with used/refurbed hardware you can put a lot of compute power into a colocation facility for very little money.

At what sort of scale can you do that? $1M, $10M, $100M, $1B?

I don’t remember if our first enterprise agreement was at $1M or $2M, but it was low and in that neighborhood [but also 10 years ago, well before cloud was the default and had growth baked into it].

Cloud providers are looking for multi-year term, commitment to growth as much as/more than exact spend level now.

So obviously this is an extreme, but I worked for a company that had long dismissed third party cloud providers as too expensive (customers would be routing all of their network traffic through our data centers, so obviously the bandwidth costs would just be too dang high). Then that company got purchased by a certain mega corporation who then negotiated an exclusive deal with GCP, and the math flipped. It was now far too expensive to run our own set of datacenters. Google was willing to take such a low margin on bandwidth that it made no sense not to.

So in this case, hundreds of billions. But the principle stands at lower company sizes, just with different numbers and amounts of leverage.

> hundreds of billions

That doesn't seem right. GCP's entire run rate is around $50B/yr.

Sorry I was giving the company's size, not their spend.

In my experience with GCP, go through a Google partner (that will aggregate multiple clients to get discounts) and you'll be able to get commitment discounts with $500K/year or even less. But don't save too much money during your commitment period: if you don't expend your commitment, you'll pay for it anyway, and you might even lose some discounts.

Also, one trick to inflate your commitment expenses is asking your SaaS providers if it's possible to pay them through AWS or GCP marketplaces: it often counts against your commitment minimum expense, so not everything has to be instances and storage.

You can commit right there in the console - no need to work with a partner unless you want “flex” commit where saving is less. Even with 3y commit its still nowhere near cheap compared to buying servers and renting colo space especially for bandwidth and storage

It's not the same commitment. When doing a commitment through a partner, you're doing an expense commitment (let's say, 600k in a year) in ALL your expenses. Well, except for Google Maps API it seems :P. So not tied to an specific product or type of instance, as the typical commitment, but to your whole GCP billing.

From this, you get a wide range of discounts in a bunch of products, not just instances. And I think those discounts go on top of some of the other discounts you regularly have, but I'm not sure and I'd had to check our billing.

Sounds like the trap for Middle Class.

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