Cloud TCO Isn’t Just About Licenses: Hidden Networking & Egress Costs Explained

When businesses think about cloud costs, the conversation often revolves around licenses, instance pricing, or storage tiers. Yet for many enterprises, the silent drain on budgets comes not from the obvious line items but from networking and egress costs. These hidden charges—often overlooked in early cloud migration plans—can inflate Total Cost of Ownership (TCO) and lead to nasty billing surprises.

Cloud TCO is not simply about paying for compute, storage, or licenses. It’s about understanding how data moves across regions, between clouds, and even out to customers. Without accounting for networking and egress costs, businesses risk underestimating their true cloud spend by 20–40%. According to Flexera’s State of the Cloud Report 2024, 30–35% of cloud spend is unclassified or hidden costs, and networking is a major contributor.

Let’s break down where these costs come from, how AWS, Azure, and GCP handle them, and how smart strategies can optimize spend without sacrificing performance.

The Real Impact of Networking & Egress Costs

Most cloud providers make it cheap to move data into their platforms—but costly to move it out. This pricing model incentivizes adoption while creating “stickiness” that discourages workload migration. For enterprises, this means that serving global customers, replicating data for resilience, or running multi-cloud strategies can quickly drive up costs.

Example:

• AWS charges about $0.09/GB for the first 10TB/month of outbound data transfer.
  
• Azure and GCP are in a similar range, averaging $0.08–$0.12/GB depending on region.
  

A company transferring 50TB/month could be paying $4,500/month ($54,000 annually) just to move its data out. At enterprise scale, egress alone can reach hundreds of thousands per year. IDC reports these fees contributed heavily to $21B in cloud waste in 2023.

How Networking & Egress Costs Differ Across AWS, Azure, and GCP

Each cloud provider has its own structure, but common patterns exist:

AWS

• Internet egress: Tiered pricing by volume and region.
  
• Cross-AZ traffic: Charged per GB (often overlooked in high-availability designs).
  
• Cross-region traffic: One of the most expensive components.
  
• CloudFront CDN: Can offset some egress when caching is configured.
  

Hidden drain: Inter-region transfer costs run $0.02–$0.05/GB. Replicating 10TB/day across regions can add $150,000 annually.

Azure

• Outbound transfers: Charged per GB, with regional differences.
  
• Zone-to-zone transfers: Billed even within the same region.
  
• ExpressRoute: Predictable hybrid connectivity, but with fixed costs.
  

Hidden drain: Azure bills for zone-to-zone traffic, a cost enterprises often miss during design.

Google Cloud

• Intra-zone traffic: Free.
  
• Cross-zone traffic (same region): Often free, unlike AWS/Azure.
  
• Cross-region & internet egress: Still charged, but sometimes lower.
  
• Cloud Interconnect/CDN: Reduce costs for high-volume workloads.
  

Advantage: GCP can be cheaper for regional architectures but similar to AWS/Azure at global scale.

Common Hidden Networking & Egress Costs Businesses Miss

1. Cross-Region Replication – Improves resilience but adds constant egress charges.
   
2. Data Transfer Between AZs – Redundancy comes with inter-AZ fees, often forgotten in cost models.
   
3. Public Internet vs Private Links – Using public paths racks up egress; Direct Connect, ExpressRoute, and Interconnect offer cheaper, predictable pricing.
   
4. No CDN Usage – Serving data directly from origin instead of CloudFront, Azure CDN, or GCP CDN inflates internet egress.
   
5. Chatty Architectures – Microservices and APIs across zones/regions create heavy “hidden” network chatter.
   
6. Data Lakes & Analytics – BigQuery, Athena, Synapse, and Snowflake queries can trigger massive egress when moving or exporting data.
   

Why Networking Must Be in Every TCO Analysis

While license and compute/storage costs are easy to forecast, networking is harder because it scales unpredictably with growth, global reach, or microservices complexity. A Forrester study found that companies underestimating egress paid 15–20% more on total cloud bills than those who modeled it upfront.

This is why many enterprises complain their cloud invoices are higher than expected—not because compute or storage grew, but because networking traffic patterns were never modeled.

Strategies to Optimize Networking & Egress Costs

The good news: these costs are manageable.

1. Localize workloads – Keep compute and storage in the same region.
   
2. Use CDNs – Can cut internet egress costs by 40–60% for global apps.
   
3. Adopt private connectivity – Direct Connect, ExpressRoute, and Interconnect reduce recurring public internet fees.
   
4. Monitor “chatty” microservices – Consolidate colocated services and reduce cross-zone chatter.
   
5. Optimize analytics data flows – Query locally where possible, avoid unnecessary cross-region exports.
   
6. Audit regularly – Use AWS Cost Explorer, Azure Cost Management, and GCP Billing Reports to track and forecast.
   

The Role of FinOps in Networking Cost Optimization

FinOps ensures networking costs aren’t ignored. By embedding cost accountability into engineering and finance, teams can:

• Tag & allocate egress costs to workloads/teams.
  
• Set budget alerts for network-heavy apps.
  
• Factor egress into design decisions upfront.
  

This transforms networking costs from a surprise line item into a planned, managed spend category.

Closing Thoughts

Cloud TCO is more than just licenses, compute, and storage. Networking and egress are recurring, scaling costs that silently inflate bills and contribute to billions in waste annually. But with the right strategies—localization, CDNs, private connectivity, FinOps discipline—enterprises can reduce networking costs by 20–40% without compromising performance.

At Transcloud, we help businesses uncover and tackle these hidden costs across AWS, Azure, GCP, hybrid, and multi-cloud—turning egress from an uncontrolled drain into a predictable, optimized component of cloud strategy.