Cloud cost control also a challenge for small businesses and freelancers

Cloud services can save small businesses from having to invest and manage their own infrastructure. But there's a cost: lock-in. As cloud vendors increase their prices, businesses may well be trapped into paying more and more.
Written by David Gewirtz, Senior Contributing Editor

In his Monday Morning Opener this week, ZDNet Editor-in-Chief Larry Dignan discussed how cloud cost control is becoming a leading issue for enterprise. There is sticker shock when moving to the cloud, but Larry pointed out that because of a lack of cost controls, many companies aren't taking advantage of available discounts.

Cloud sticker shock

As a small business owner, I've experienced some cloud sticker shock as well. For me, it's not the price of moving to the cloud. Instead, it's been the fact that many cloud providers have raised their prices. None of the providers I use have had huge jumps, but lots of little increases add up as well.

Take, for example, G Suite. I have five Business seats, for which I've been paying $10/month each, or $50/month. As of April, that's going to $60/month. Now, there's no doubt I get $60/month in value. We store 15 terabytes of data, and that alone makes it worth it. But still, an extra ten bucks is an extra ten bucks -- and it adds up when other services increase as well.

Also: G Suite: Everything you need to know before signing up for Google's office suite CNET

QuickBooks Online is another good example. When we started with QuickBooks Online back in 2005, it was probably the first SaaS service we actively employed. At that time, we paid $19.95/month for what I recall was their mainstream business plan.

It went up in 2007 to $24.95, up again in 2012 to $26.95, and then up in 2017 to $35/month. It would have gone up more, to $60/month, but we dropped from the Plus plan back down to the Essentials plan.

We lost some features, but kept expenses under control. To be fair, that original $19.95 would have been $25.71 in today's money, but we're still paying almost a third more, for less service.

Other services have seen price changes as well. Last June, I spotlighted 24 lesser-known cloud services. Of the 24, five increased their prices in the past eight months:

  • Backblaze, a backup service provider, jumped from $5/month to $6/month
  • CloudPhone, an internet-based phone service provider, doubled in price. Their plan jumped from $12/month for one local number to $24.99. Their high-end plan changed from $49.99 for five numbers to $64.99 for ten numbers. This higher plan does reduce the cost per number, but the overall spend went up for those who don't need all ten numbers.
  • Drip, an e-marketing provider, increased their base plan from $43/month to $49/month.
  • Help Scout, the support service responsible for all those "how am I doing" forms at the bottom of support agent emails, boosted its entry rates from $10/month for a minimum of three support agents to $20/month minimum of two agents. Not only did the base spend jump from $30 to $40/month, the cost per support agent doubled.
  • Shopify, an e-commerce service provider, didn't increase pricing. Instead, it dropped its entry level tier. The $29/month basic plan price didn't go up, but they eliminated the $9/month lite plan tier we had spotlighted in our article.

Interestingly, in the eight months since June 2018, two companies lowered their prices as well:

  • Teachable, a learning management provider, dropped their price $39/month for their basic plan to $29/month. Their pro plan also went down, from $99/month to $79/month.
  • Wufoo, the forms provider with the funny name, also dropped prices. In their case, they dropped down from $19/month for their entry plan to $14.08/month. Their pro plan also went down, from $39/month to $29.08/month. I'm guessing there's a spreadsheet somewhere that provided detailed justification for just why that $0.08 was needed for the pricing plan to work.

One way you can start to keep all this in control is to conduct a cloud services audit. Go through all your cloud services and make sure you know what you're paying. All those $10/month, $20/month, $50/month, and $99/month services add up fast.

Renewal surge pricing

Beyond ongoing price increases, many cloud providers offer introductory pricing. This can reach out and bite you in the end. I've railed at particular length about this practice when it comes to hosting providers, but other SaaS providers seem to love this particular worst-practice just as much as the hosting providers.

The way this works is the company's published price list is for a discounted rate. For example, QuickBooks offers its Essentials plan for $17/month. On their pricing page, they actually cross out the smaller gray font that says $35/month and display a large, red $17/month offer.

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What most users don't realize is that this pricing is only for a limited period. Many of the hosting providers love to say that they offer a sub-$5/month plan. What they don't say until you reach checkout is that you're paying for two or three years at once.

What's really problematic is what happens when it's time to renew or when your promotional pricing runs out. At that point, you're faced with paying more. In QuickBooks case, you might be used to paying $17/month, but suddenly to have access to your accounting data, you're paying double that.

I've seen many hosting providers boost their pricing by as much as five times, leaving customers in a sticky situation: either pay the vastly increased prices or find an alternative solution.

Cloud lock-in

This brings me to the topic of cloud lock-in. Once you've put your data into a cloud provider's service, moving it to another provider is usually extremely painful.

Weirdly enough, as painful as it is, moving a website is one of the easiest processes, as long as you've used standards-based tools like, for example, WordPress. You do have to download all the files, move the database, reroute all your domains, redirect all your email, re-register and re-key all your add-on software, and so on, but at least it can work at the destination location.

Many other cloud services don't export in a format suitable for import somewhere else. If exports are made available, they're in XML format. XML is machine readable, but before you can import it, you often need to write custom code to convert the old data to new data.

Also: 5 tips: Choosing the best cloud vendor TechRepublic

Cloud storage and backup providers are also problematic. Back in 2017, I talked about how many of the unlimited cloud storage providers were setting limits. Even Amazon had an unlimited cloud storage plan that suddenly increased in price.

I have 15 terabytes in Google Drive. Moving that would take months. It's far easier for me to pony up the extra ten bucks a month than undertake a half-year long migration process.

It's that trap that most small business owners will experience (and, to an even bigger extent, enterprises). Once you're entrenched with a cloud provider, moving can be a real nightmare.

The challenge

So these are the three legs of the challenge: price increases out of our control, renewal surge pricing that may come as a surprise, and lock-in in the form of the level of difficulty it takes to move to another provider.

None of these factors should necessarily keep you away from the cloud. I've certainly embraced cloud services because they free me up from having to do all the IT for my small business myself. But giving up control over IT to service providers does come at a price.

These days, that price is going up.

You can follow my day-to-day project updates on social media. Be sure to follow me on Twitter at @DavidGewirtz, on Facebook at Facebook.com/DavidGewirtz, on Instagram at Instagram.com/DavidGewirtz, and on YouTube at YouTube.com/DavidGewirtzTV.

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