Incorrect on-premise storage cost in azure migrate business case TCO

Question

Incorrect on-premise storage cost in azure migrate business case TCO

Sumit Rathore 25

Hi,

I am using Azure Migrate for discovery, assessment and migration of on-premise infrastructure. The business case is a crucial part of this as it gives the TCO comparison between on-premise and Azure.

I have 1000TB of storage on-prem, Azure Migrate provided me $2.4M for on-premise storage cost. While cross-checking the calculation (Total storage cost = Total volume of storage attached to VMs (across all machines) * Cost per GB per month * 12 ), the cost (with $2 as cost per GB per month) should come out as $24M. This is totally screwing up the TCO numbers and showing negative gain while moving to azure. What am I missing?

Mohan Krishna T Sreeramulu 280 Reputation points Microsoft External Staff Moderator

2025-05-22T05:46:40.48+00:00

Hi Sumit Rathore,

Just checking in to see if the answers below helped with your query.
If they did, please don't forget to "Accept the answer" and upvote it wherever the information provided was helpful. If you still have any other questions or need further clarification,
please let us know. We are happy to assist.

2 answers

Your answer

Mohan Krishna T Sreeramulu 280 Reputation points Microsoft External Staff Moderator

2025-05-22T05:46:40.48+00:00

Hi Sumit Rathore,

Just checking in to see if the answers below helped with your query.
If they did, please don't forget to "Accept the answer" and upvote it wherever the information provided was helpful. If you still have any other questions or need further clarification,
please let us know. We are happy to assist.

Answer 1

Deepanshu katara 16,720 MVP Moderator

Hello , Welcome to MS Q&A

To adjust the Total Cost of Ownership (TCO) report in Azure Migrate, you can follow these steps:

Navigate to the Azure Migrate project and open the TCO Calculator.
Access the "Assumptions" section within the TCO Calculator.
Manually adjust the On-Premises Storage Cost to $2 per GB per month, if this is the rate you want to use for your calculations.
Re-run the calculation to update the TCO report with the new storage cost assumption.

This process allows you to customize the assumptions used in the TCO calculation, ensuring that the report reflects your specific cost structure and provides a more realistic comparison for your migration scenario.

Please let me know if further ques

Kindly accept if it helps

Thanks

Deepanshu

1.

Sumit Rathore 25 Reputation points

2025-05-16T07:30:34.5266667+00:00

Hi Deepanshu,

I have adjusted the assumptions already. My question is that the calculation which Azure is doing behind the scene is seems incorrect.
Deepanshu katara 16,720 Reputation points MVP Moderator

2025-05-16T08:00:00.45+00:00
You are correct in your calculation:

1000 TB = 1,000,000 GB

$2/GB/month × 1,000,000 GB × 12 months = $24,000,000/year

However, Azure Migrate's business case tool does not use a flat $2/GB/month for on-prem storage. Here’s what you may be missing:

1. Azure Migrate Uses Industry Benchmarks, Not Your Input

Azure Migrate uses its own built-in cost models and industry benchmarks for on-premises storage costs, which are often much lower than public cloud storage prices. The $2/GB/month is a typical cloud price, but on-prem storage (especially for large volumes) is usually calculated at a much lower rate (sometimes as low as $0.10–$0.20/GB/month, depending on hardware, depreciation, and operational costs).

2. Depreciation and Amortization

On-prem storage costs in TCO models are often amortized over 3–5 years, not calculated as a monthly “rental” like cloud. This further reduces the annualized cost.

3. Utilization and Deduplication

Azure Migrate may factor in actual used storage (not just provisioned), and may apply deduplication or compression ratios, further reducing the “effective” storage cost.

4. Default Cost Model

The $2.4M/year you see is likely based on Azure Migrate’s default on-premises storage cost model, which is much lower than $2/GB/month. You can check or override these assumptions in the business case settings.

Summary:

Azure Migrate’s on-prem storage cost is not calculated at $2/GB/month.

It uses a much lower industry benchmark, amortization, and possibly only counts used storage.

This can make the on-prem TCO look artificially low, and the Azure TCO less attractive.

What to do:

Go to the “Business case” settings in Azure Migrate.

Look for “On-premises cost assumptions” or “Storage cost per GB per month.”

Adjust the storage cost to match your actual on-prem costs if you have better data.

Let me know if you want step-by-step instructions to adjust these settings in Azure Migrate!
Sumit Rathore 25 Reputation points

2025-05-16T08:03:56.6133333+00:00

Thank you for your answer. Is there some official documentation which mention all these things you just shared? That will really help us.
Mohan Krishna T Sreeramulu 280 Reputation points Microsoft External Staff Moderator

2025-05-16T12:40:12.5666667+00:00

Hi Sumit Rathore,

Thank you for your response.

According to the answer provided by Deepanshukatara-6769, all these points were collected and shared with you from the Business case overview, Build a business case and Review business case documents.

You can refer to the documents below to get a clear picture of the TCO.

On-prem storage costs in TCO models are often amortized over 3–5 years, not calculated as a monthly “rental” like cloud. This further reduces the annualized cost.

https://learn.microsoft.com/en-us/azure/migrate/concepts-business-case-calculation?view=migrate-classic#tco-steady-state-azure-cost

https://learn.microsoft.com/en-us/azure/migrate/concepts-business-case-calculation?view=migrate-classic#year-on-year-costs-current-state-on-premises-cost

Azure Migrate may factor in actual used storage (not just provisioned), and may apply deduplication or compression ratios, further reducing the “effective” storage cost.

https://learn.microsoft.com/en-us/azure/migrate/concepts-business-case-calculation?view=migrate-classic#how-are-utilization-insights-derived

The below document will help you, how to build a business case for on-premises servers and workloads in your datacenter with Azure Migrate https://learn.microsoft.com/en-us/azure/migrate/how-to-build-a-business-case?view=migrate-classic#build-a-business-case

This article describes how to review the business case reports for on-premises servers and workloads in your datacenter with Azure Migrate: Discovery and assessment tool. Review a business case with Azure Migrate - Azure Migrate | Microsoft Learn

Please let us know if you need further clarification or have any additional questions. We are here to assist you.

Thank you!

Please do not forget to "Accept the answer” and upvote it wherever the information provided helps you, this can be beneficial to other community members.it would be greatly appreciated and helpful to others.
Sumit Rathore 25 Reputation points

2025-05-19T05:44:55.73+00:00

None of these documents are helping. Infact they are pointing to same document. I request, please do not try to guess the answer. The TCO report exported as excel shows how the storage cost for on-premise is calculated, There is no mention of amortized over 3–5 years, or factoring only used storage not provisioned storage. And why will it factor only used storage when the on-premise storage should be calculated using provisioned storage because that what we pay for. Also if Azure migrate uses industry benchmarks not our inputs then why does it ask for our inputs and why does it change the TCO when my inputs are changing.
Ashok Gandhi Kotnana 10,270 Reputation points Microsoft External Staff Moderator

2025-05-19T08:57:50.3566667+00:00

HI @Sumit Rathore,

I have reached out to you in a private message

Answer 2

@Sumit Rathore

Azure Migrate only includes storage that is actively attached to virtual machines in its Total Cost of Ownership (TCO) calculation. It does not account for:

Archival data
Detached volumes
File shares or backup storage not associated with VM usage

Manually Include Non-VM Storage

If a significant portion of your 1000 TB storage is not attached to VMs (e.g., file servers, backup appliances), consider one of the following options:

Manually include the cost of this storage in your TCO estimate outside of Azure Migrate
Or create a separate Azure Files or Blob Storage assessment to capture it accurately Azure Migrate only includes storage that is actively attached to virtual machines in its Total Cost of Ownership (TCO) calculation. It does not account for:
- Archival data
- Detached volumes
- File shares or backup storage not associated with VM usage
Manually Include Non-VM Storage If a significant portion of your 1000 TB storage is not attached to VMs (e.g., file servers, backup appliances), consider one of the following options:
- Manually include the cost of this storage in your TCO estimate outside of Azure Migrate
- Or create a separate Azure Files or Blob Storage assessment to capture it accurately

Business Case and Assessment Access

The Business Case in Azure Migrate uses recommendations derived from specific assessments. However, you won’t have direct access to those underlying assessments.

To explore detailed sizing, readiness, and Azure cost estimates, you can create individual assessments for your servers or workloads.

User's image

Reference:

https://learn.microsoft.com/en-us/azure/migrate/how-to-build-a-business-case?view=migrate-classic&source=recommendations

let us know if any help, we will always help as you needed.!

User's image

Please do not forget to "Accept the answer” and upvote it wherever the information provided helps you, this can be beneficial to other community members.it would be greatly appreciated and helpful to others

Sumit Rathore 25 Reputation points

2025-05-27T04:57:41.0466667+00:00

@Ashok Gandhi Kotnana

I did azure migrate assessment on my on-premise servers. In that assessment it is showing 1000 TBs only. The monthly storage cost for azure in that assessment is also for 1000 TB. So 1000 TB are being attached to vms and from azure migrate assessment report it is confirmed that azure is also finding the same amount of storage volume attached to servers. Then why in on-premise tco cost it is only considering 100 TB

Share via

Incorrect on-premise storage cost in azure migrate business case TCO

2 answers

1. Azure Migrate Uses Industry Benchmarks, Not Your Input

2. Depreciation and Amortization

3. Utilization and Deduplication

4. Default Cost Model

Your answer