The Hidden Networking Costs of Centralized Observability

The AWS networking cost stack

When telemetry leaves your AWS environment for a SaaS observability provider, it passes through multiple billable services. Each adds cost.

The minimum cost to ship telemetry

Most AWS environments route outbound traffic through NAT Gateway. For telemetry destined for a SaaS provider, you pay:

These are floor prices. The actual cost depends on your architecture, AZ configuration, and whether you use PrivateLink.

Annual networking costs by volume

Let's calculate what this means at different telemetry volumes.

At 10TB/day—not unusual for a mid-sized enterprise with comprehensive instrumentation—networking costs alone approach half a million dollars annually. This is before your observability vendor subscription.

A detailed enterprise scenario

Let's model a realistic enterprise environment: 10TB/day of telemetry across 5 VPCs using Transit Gateway for centralized egress.

This is the cost of shipping data to your SaaS observability provider. The observability subscription itself—likely another $500K-$2M+ at this scale—is on top.

Why these costs are hidden

Several factors conspire to hide networking costs from observability buyers:

• Different budgets: Networking costs hit the cloud infrastructure budget, not the observability budget. Different teams, different approval processes.
• Aggregated billing: NAT Gateway charges appear as one line item for all traffic, not broken out by purpose.
• Growth over time: Telemetry volume grows with your infrastructure. Costs creep up without discrete purchase events.
• Vendor quotes ignore it: Observability vendors quote their subscription. Networking is "your cloud costs."

GCP and Azure costs

AWS is not unique. Other clouds have similar charges:

GCP

Azure

The volume multiplier effect

Telemetry volume is not static. Several factors drive exponential growth:

The observability bill you have today will double in 2-3 years from volume growth alone, even with no changes to your sampling rate.

Real-world examples

Some publicly known cases illustrate the scale of observability spending:

• OpenAI: Reportedly spends $170 million annually on Datadog
• Coinbase: Disclosed $65 million annual Datadog bill in 2021
• ClickHouse: Found self-hosted observability was 200x cheaper than Datadog equivalent

These figures include subscriptions, not just networking. But the networking component is a significant multiplier that makes alternatives economically compelling.

The BYOC alternative

BYOC—Bring Your Own Cloud—observability eliminates networking costs by keeping data in your cloud account:

• No egress: Data never leaves your VPC. Egress cost is $0.
• No NAT Gateway processing: Internal traffic stays internal.
• No Transit Gateway overhead: Telemetry does not cross VPC boundaries.
• Your storage: S3, GCS, or Azure Blob at your negotiated rates.

For the 10TB/day scenario above, BYOC eliminates the $453,000 annual networking cost entirely. That is not a discount—it is a different architecture.

How to calculate your hidden costs

To understand your actual observability networking spend:

1. Identify telemetry egress in Cost Explorer (filter by NAT Gateway, Transit Gateway)
2. Estimate telemetry percentage of total egress (often 40-60% for instrumented environments)
3. Add internet egress for observability endpoints
4. Project forward based on volume growth rate

Most teams are surprised. The networking cost is often 20-40% of the observability subscription itself—a hidden tax on visibility.

Frequently asked questions