David Heinemeier Hansson

September 15, 2023

Our cloud exit has already yielded $1m/year in savings

Getting our applications out of the cloud provided the main celebration for our exit, but seeing the actual spend tumble is the prize. See, the only way to get pricing in the cloud down from obscene to merely offensive is through reserved instances. This is where you sign up for a year or more in advance on a certain level of spend. Therefore, we didn't get the instant collapse in our bills after the applications were moved, but now it's coming. Oh it's coming!


Our cloud spend (sans-S3) is down by 60% already. From around $180,000/month to less than $80,000. That's a cool million dollars in savings at the yearly run rate, and we have another big drop coming in September, before the remaining spend will petter out through the rest of the year.

Now compare that to what we spent on buying our own servers. We had to buy about half a million dollars worth of new machines to replace all the cloud rentals. While there are some additional other costs associated with the extra servers, it's relative peanuts in the grand scheme (our ops team stayed the same, for example). Which means that by the basic comparison of money saved vs money spent, we'll be in the money on the big purchase with the current monthly savings in less than six months. That's just astounding!

Let's see where things end up when it's all said and done, but we don't have to squint hard to see the eventual savings climb all the way up to about $2m/year. That would be TEN MILLION DOLLARS over five years. Just absolutely bonkers amount of money straight to the bottomline.

Again, and as always, your mileage may vary. Maybe you're not using these expensive services like Aurora/RDS or OpenSearch, like we were. Maybe you have wild swings in load. Maybe this, maybe that. But I don't think our case is some crazy anomaly.

In fact, from having looked at the unoptimized cloud bills at other software companies, our savings may in fact be modest compared to what's possible. Did you know that Snapchat has spent three billion dollars on the cloud in the past five years they've been a public company? Don't tell me there was a billion or so in potential savings on that tab. That didn't used to matter, because who cared if the business was profitable or not, but now it sorta does!

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.