Azure in correct issue

Question

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?

Answer 1

Hi ,

Thanks for reaching out to Microsoft Q&A.

What Azure Migrate is Actually Doing:

Azure Migrate does not always assume the full 1000 TB is charged at the $2/GB/month rate. It often makes optimistic assumptions, such as:

A blended cost per GB/month based on real-world on-prem averages (usually far less than $2).

Deduplicated, compressed, or low-cost storage tiers (like file/NAS/archive).

• Only includes attached storage volumes, ignoring spare or non-utilized disks.

Takes into account hardware amortization and bulk storage depreciation, not just retail storage pricing.

So, if you got $2.4M/year, that suggests Azure Migrate is estimating:

$2.4M / 12 months = $200K/month

$200K/month ÷ 1000 TB = $0.20/GB/month

That is much closer to industry average onprem storage TCO, which ranges from $0.10 to $0.25/GB/month, depending on:

Equipment age

Tier (SAS, SATA, SSD)

Utilization

RAID/NAS/SAN overheads

So what are you missing here?

You are using list/retail pricing for storage. Azure Migrate uses blended real-world TCO estimates, not inflated pricing, for on-prem infra. This is intentional, to prevent biased comparisons.=

What You Can Do:

Edit the Business Case assumptions:

In Azure Migrate’s “Business Case” tab, go to "View/Edit Assumptions".

  Override the on-prem storage cost per GB/month with your actual number.
  
  Export the calculation sheet (or JSON/CSV) and validate all cost inputs, especially:
  
     Storage cost
     
        Compute sizing (many machines get rightsized)
        
           Network and labor
           
           If your internal storage cost is genuinely $2/GB/month, you should update the model accordingly. That will show a much higher on-prem TCO and may flip the Azure ROI back to positive.
           

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Bottom Line:

Azure Migrate is not wrong, but it is making conservative real-world assumptions to avoid overestimating on-prem costs. You can and should customize the input values if your reality is different.

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