Cloud Hosting Explained for Business Owners: What You Are Actually Paying For

Cloud hosting is renting space on somebody else's computers instead of owning your own. That is genuinely the whole concept, and everything else is detail about which bits you rent and how they charge for them.

The reason it feels more complicated is that the bill is itemised in the vendor's language rather than yours. This article translates it.

The four things you are renting

Almost every hosting bill is some combination of these.

Compute. The processing. This is the server itself: the thing that runs your application and responds when someone visits your site. Priced per hour the machine exists, whether or not anyone is using it, unless you are on a model that scales to zero.

Storage. Where your files and database live. Priced per gigabyte per month, and much cheaper than compute. Storage is rarely where the money goes.

Transfer. Data leaving the provider's network, usually called egress. Almost always free to send data in and charged to send it out. This is the line that surprises people, particularly if you serve video or large images.

Managed services. The provider running something on your behalf so you do not have to: a managed database, backups, a load balancer, a content delivery network. You pay a premium over doing it yourself, and for most small businesses it is worth it, because the alternative is somebody's time.

What the tiers actually mean

Shared hosting, roughly £3 to £30 a month. Your site sits on a machine with hundreds of others. Fine for a brochure website. The constraint is that a busy neighbour can slow you down, and you have limited control.

Virtual private server, roughly £15 to £150 a month. A reserved slice of a machine. More control, more responsibility. You or somebody you pay is now responsible for updates and security patching.

Managed platform, roughly £20 to £400 a month. You supply the application, the platform handles servers, scaling and deployment. This is where most small business web applications should sit, because it removes the part that needs an ongoing specialist.

Cloud infrastructure, from tens to thousands a month. The full toolkit from AWS, Azure or Google Cloud. Enormously capable, priced per component, and the only tier where you can genuinely lose control of the bill. See AWS vs Azure vs Google Cloud for UK small businesses.

The four things that quietly multiply the bill

Egress on media. Serving video or high-resolution images directly from storage is the most common cause of a bill that suddenly triples. A content delivery network in front of it typically costs a fraction of the egress it saves.

Environments you forgot. A staging server, a test database, a machine spun up for a migration in 2023. These accrue silently. An annual audit of what is actually running frequently finds 20 to 30 per cent of the bill going to things nobody uses.

Provisioning for the peak, all year. Sizing your infrastructure for Black Friday and paying for it in February. Auto-scaling or a smaller baseline with the ability to grow is usually much cheaper.

Backups and snapshots with no retention rule. Automated snapshots that are never deleted grow forever. Set a retention period.

What most small businesses actually need

A brochure website: managed static hosting or a good shared plan. £0 to £25 a month. Anything more is over-engineering.

A content-driven site with a database: a managed platform plus a managed database. £30 to £120 a month.

A customer-facing web application: managed platform, managed database, a CDN, and monitoring. £80 to £400 a month at modest scale.

Anything with unusual compliance or data residency needs: this is where the full cloud providers earn their complexity, and where you should expect to pay for someone who knows what they are doing.

Real figures with worked examples are in what cloud hosting actually costs a UK small business.

The questions to ask a provider or developer

What is in this number and what is not? Specifically: is the domain included, the certificate, the CDN, the backups, the monitoring, the egress?

What happens at ten times the traffic? You want a number, not a reassurance.

Who patches the operating system? On a VPS the answer is frequently "nobody has been", and that is how businesses end up running unsupported software.

Can I take my data and go? Ask what the export looks like and whether anything is in a proprietary format. This is the beginning of the lock-in question covered in vendor lock-in.

What you are actually buying

Strip away the terminology and cloud hosting buys you three things: somebody else owning the hardware, the ability to grow without buying a machine, and someone to call at three in the morning.

The third one is what you are really paying the premium for, and it is worth checking you are actually getting it. Plenty of hosting arrangements include no meaningful support at all, and the difference only becomes apparent on the day it matters.

Key Takeaways

• You rent four things: compute, storage, transfer out, and managed services. Storage is cheap. Compute and egress are where the money goes.
• Most small business applications belong on a managed platform, because it removes the part that needs an ongoing specialist.
• Four things multiply bills: media egress, forgotten environments, provisioning for peak year-round, and backups with no retention rule.
• An annual audit of what is actually running commonly finds 20 to 30 per cent of the bill going to things nobody uses.
• Ask what happens at ten times the traffic and get a number. Ask who patches the operating system. The answers are revealing.

Frequently Asked Questions

Is cloud hosting cheaper than owning a server?

At small scale, almost always yes, once you count the machine, the space, the power, the replacement cycle and somebody's time. At large and very predictable scale the arithmetic can reverse, which is why some large businesses have moved workloads back. For a UK SME the answer is effectively always cloud.

What is the difference between hosting and a domain?

The domain is the address, rented annually from a registrar for roughly £10 to £40. Hosting is the building the address points at. They are frequently bought from the same supplier, which is convenient and makes it slightly harder to move one without the other. See the cloud hosting glossary entry.

Do we need a CDN?

If you serve images, video or have visitors outside the UK, almost certainly, and it usually saves more in egress than it costs. For a small text-based site serving one country, it is optional.

How do we stop the bill growing?

Set a billing alert on day one, review what is running every quarter, apply retention rules to backups, and put a CDN in front of anything media-heavy. Those four cover the great majority of runaway bills.

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Not sure whether your hosting is right-sized or quietly wasteful? Talk to Halo Technology Lab. Our strategy and scoping service includes a review of what you are actually paying for, and we frequently recommend spending less.