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The cloud cost shape: predicting what migration actually costs.

Most cloud migrations land 30–60% over budget, not because of mistakes, but because of architectural decisions made at lift-and-shift time. Here's how to model the real cost shape before you start.

Author
· Department Lead — NEXUS (Cloud & Platform)
Published
February 28, 2026
Reading time
9 min read

Almost every cloud migration we audit landed over budget. The number we hear from clients is 30–60% above projection in the first year, recovering toward parity in years 2–3 with disciplined FinOps. The reason isn't usually mistakes during execution. It's architectural decisions made at lift-and-shift time, before anyone modeled what the cost shape would actually look like in production.

The cost-shape variables

  • Compute architecture (instance size + autoscaling response shape)
  • Storage architecture (hot vs warm vs cold tier ratios under real access patterns)
  • Egress / inter-region data transfer (often invisible in TCO calculators)
  • Reserved Instance / Savings Plan strategy (which can swing 30–50%)
  • Managed-service uplift vs DIY operational cost
  • Observability cost (Datadog, New Relic, etc. scale with metrics volume)

Why lift-and-shift produces the worst cost shape

Lift-and-shift preserves your on-prem architectural assumptions in a different cost regime. On-prem, idle capacity is free; in the cloud, idle capacity is meter-on. On-prem, intra-DC bandwidth is free; in the cloud, cross-AZ traffic costs $0.01 per GB. On-prem, you sized for peak; in the cloud, sizing for peak with no autoscaling burns most of your savings on idle compute. Lift-and-shift gets you cloud-hosted but not cloud-native economics.

What we model in discovery

Six things, in writing, before any workload moves: workload load profile (peak, sustained, idle); architectural disposition (lift / replatform / rearchitect); RI / SP commit envelope (typically 60–80% of baseline); egress estimate (intra-cloud, cross-region, internet); managed-service uplift (where managed services replace operational labor); observability cost projection (often 5–12% of cloud bill at scale).