Cloud hosting is renting computing power, storage and services from a provider such as Amazon Web Services, Google Cloud or Microsoft Azure, instead of owning servers. Your backend and database run there. Costs scale with usage: an early-stage product typically runs on $100 to $1,000 (€85 to €870, £75 to £740) per month, rising with users. The account must be in your company's name, with the development team given access, never the reverse.
Prices are in US dollars. Euro and pound figures in parentheses are approximate, rounded conversions. Quotes are issued in the currency of your contract.
In plain terms
Your app's backend and database have to run on computers somewhere. Cloud hosting means those computers belong to a large provider and you rent what you need by the hour or by usage. When more users arrive, you rent more. When they leave, you rent less. Nobody in your company touches a physical server.
What does the cloud bill cover?
- Compute. The servers or containers that run your backend.
- Database. A managed database service that handles backups and updates for you.
- Storage. Files, images, documents and backups.
- Networking. Delivering content to users quickly around the world.
- Supporting services. Monitoring, logging, email sending, queues, and the like.
Separate from the cloud bill are the third-party services your product uses, such as payments, SMS, maps and analytics, each billed by its own provider.
What does it cost?
| Stage | Typical monthly hosting | Notes |
|---|---|---|
| Prototype or pilot | $20 to $150 (€15 to €130, £15 to £110) | Small instances, minimal traffic |
| Launched product, first thousands of users | $100 to $1,000 (€85 to €870, £75 to £740) | Managed database, backups, monitoring, a staging environment |
| Growing product, tens of thousands of users | $1,000 to $10,000 (€870 to €8,500, £740 to £7,500) | Redundancy, autoscaling, content delivery, more storage |
Costs vary with what the product does. Video, real-time features and heavy data processing cost more. A good team estimates hosting during discovery so it is in your budget, and sets up cost alerts so a surprise cannot grow unnoticed.
Why should a founder care?
- Ownership. The cloud account holds your running product and your data. It must be your company's account, on your company's payment method, with the development team as administrators you can remove. This is the rule that founders most often get wrong and most regret. See who owns the code.
- Reliability. Uptime, backups and recovery are set up in the cloud. Ask what happens when something fails.
- Data location. Where the servers are matters for privacy law. EU customers' data in EU regions is a common requirement.
- Ongoing cost. It is a permanent line in your budget, and it grows with success.
Questions to ask your development team
- Which provider, which region, and whose account?
- What is the estimated monthly cost at launch and at ten times the users?
- What is backed up, how often, and has a restore been tested?
- Is there a separate staging environment for testing changes before they reach users?
- Are cost alerts set up?
Related terms
Backend, database, tech stack, API.
Frequently asked questions
Which cloud provider should I use?
Any of the major providers is a sound choice for a startup. Let the development team pick the one they know best, and check that the account is in your name and the region suits your customers' privacy requirements.
Is cloud hosting secure?
The major providers run some of the most secure infrastructure in the world. Security problems almost always come from how the product is configured and built on top of it, which is the development team's responsibility.
Can I switch providers later?
Yes, with effort proportional to how many provider-specific services the product uses. A mainstream stack on standard services moves in weeks. Deep use of one provider's proprietary services takes longer. Ask the team to keep the option open where it costs little.