At first glance, on-premise hosting can be an attractive solution for small businesses. With lower long-term costs, no subscription fees, and ultimate control, its quite easy to see how IT executives consider it. But there are many costs associated with on-premise solutions that aren’t glaringly clear. Below we will discuss the hidden costs of on-premise hosting.

Server energy costs

Server energy costs are scarcely considered by business owners. It can be quite difficult to figure the exact amount spent on powering on-premise servers, working 24 hours a day, seven days a week and 52 weeks a year.  On top of the power consumed for your data center, you will also need electricity to properly cool the data storage system. Thankfully, on-premise servers are improving in terms of energy efficiency, but their electricity consumption rates are undeniable. In the case of cloud computing, this cost is almost eliminated

Hardware and Maintenance

While we can’t quite call this a hidden cost, many businesses fail to recognize the long-term costs associate with hardware and maintenance. It will be up to your team to determine the specifications you’ll need on your server to support your database hosting needs – and then purchase the required hardware. The costs to maintain your hosting hardware will also be purely your responsibility, whether the maintenance work is done in-house or outsourced. There are also your backups to consider – you will most likely have them on separate hardware, creating additional maintenance needs.


While both cloud and on-premise solutions both experience downtime, cloud solutions see much better reliability and uptime. In 2011, InformationWeek shed light on a study done by CA Technologies, providing insight on how much downtime costs businesses overall. Of 200 businesses surveyed, they found that a total of $26.5 billion is lost each year due to downtime.  Averaging that, it’s about $3,929 per hour in lost revenue for small enterprise, and $71,429 per hour for large enterprise.

LBMC Technology Solutions has certified experts to help you make the right decisions for your organization. Contact us to help you determine the best solution for your company.