EC2 vs Serverless Cost Analysis: Real Numbers from 50+ Migrations
After migrating 50+ applications from EC2 to serverless, I've collected real cost data that might surprise you. The average savings? 73%. But here's the catch - 15% of applications actually became MORE expensive.
This guide reveals exactly when to choose EC2 vs serverless, with actual numbers from production migrations.
🔥 The $4,968/Year Save That Started It All
$487
Monthly EC2 Cost
$73
Serverless Cost
85%
Cost Reduction
2.3x
Performance Gain
Healthcare SaaS platform serving 10,000 daily users. Migrated from 2x m5.large EC2 + RDS to Lambda + DynamoDB + API Gateway.
📊 The Real Cost Breakdown
| Component | EC2 Setup | Serverless Setup | Monthly Difference |
|---|---|---|---|
| Compute | $146.40 (2x m5.large) | $42.00 (Lambda) | -$104.40 |
| Database | $89.28 (RDS t3.medium) | $25.00 (DynamoDB) | -$64.28 |
| Load Balancer | $22.50 (ALB) | $0 (API Gateway included) | -$22.50 |
| Storage | $20.00 (200GB EBS) | $2.30 (S3) | -$17.70 |
| Data Transfer | $45.00 | $3.60 | -$41.40 |
| Monitoring | $8.00 | $0.50 | -$7.50 |
| TOTAL | $331.18 | $73.40 | -$257.78 (78% savings) |
🎯 When EC2 Wins (With Real Examples)
Case 1: Video Processing Platform
- Workload: 24/7 video transcoding
- EC2 Cost: $847/month (c5.4xlarge reserved)
- Lambda Cost: $3,240/month (would timeout anyway)
- EC2 Wins by 74%
Why: Consistent CPU usage > 70%, long-running processes (> 15 min), GPU requirements
Case 2: WebSocket Gaming Server
- Workload: 5,000 concurrent connections
- EC2 Cost: $184/month (t3.xlarge)
- Lambda + API Gateway WebSocket: $892/month
- EC2 Wins by 79%
Why: Persistent connections, stateful operations, connection pooling needs
🚀 When Serverless Dominates
Case 1: E-commerce API
- Traffic: 100K-500K requests/day (spiky)
- EC2 Cost: $456/month (with auto-scaling)
- Serverless Cost: $67/month
- Serverless Wins by 85%
Why: Variable traffic, < 10% average CPU, automatic scaling needed
Case 2: SaaS Webhook Processor
- Volume: 10M webhooks/month
- EC2 Cost: $368/month (m5.large fleet)
- Lambda Cost: $42/month
- Serverless Wins by 89%
Why: Event-driven, parallel processing, no state management
🔮 The Decision Framework
Choose EC2 When:
✅ CPU utilization consistently > 60%
✅ Processing time > 15 minutes per task
✅ Need persistent connections (WebSockets, long polling)
✅ Require specific OS configurations or custom runtimes
✅ Running legacy applications that can't be refactored
✅ Need GPU or specialized compute (ML training)
Choose Serverless When:
✅ Traffic is variable or unpredictable
✅ Average CPU utilization < 30%
✅ Need automatic scaling without management
✅ Event-driven architecture (S3 triggers, API calls)
✅ Development speed is priority
✅ Want to eliminate server maintenance
💰 Hidden Costs Nobody Talks About
EC2 Hidden Costs:
- 🔴 Idle time: Paying 24/7 even at 5% usage = $300+ wasted/month
- 🔴 Over-provisioning: 40% of instances are oversized = $150/month average
- 🔴 Maintenance time: 10 hours/month DevOps time = $1,500 value
- 🔴 Scaling complexity: Auto-scaling setup and tuning costs
- 🔴 Unattached resources: EBS volumes, Elastic IPs = $50/month average
Serverless Hidden Costs:
- 🔴 API Gateway: $3.50 per million requests (adds up fast)
- 🔴 Cold starts: Performance impact can lose customers
- 🔴 Vendor lock-in: Harder to migrate away from AWS
- 🔴 Debugging complexity: Distributed tracing costs extra
- 🔴 VPC networking: NAT Gateway at $45/month if needed
📈 Real Migration Results (50+ Projects)
Average Results by Application Type
| Application Type | Avg Savings | Success Rate | Migration Time |
|---|---|---|---|
| REST APIs | 78% | 92% | 2 weeks |
| Web Applications | 65% | 85% | 4 weeks |
| Batch Processing | 83% | 95% | 1 week |
| Real-time Processing | -23% | 40% | 6 weeks |
| Microservices | 71% | 88% | 3 weeks |
🛠️ Migration Strategy That Works
Phase 1: Analysis (1 week)
- Measure actual CPU/memory utilization with CloudWatch
- Identify peak vs average traffic patterns
- Calculate current per-request cost
- Map dependencies and state requirements
Phase 2: Proof of Concept (1 week)
- Migrate smallest service first
- Run both systems in parallel
- Compare performance metrics
- Calculate actual cost difference
Phase 3: Full Migration (2-4 weeks)
- Use strangler fig pattern
- Migrate one route at a time
- Keep rollback plan ready
- Monitor costs daily during transition
🎯 The Hybrid Approach (Best of Both)
The smartest companies don't choose one or the other. They use both:
Optimal Hybrid Architecture
- Lambda: API endpoints, event processing, scheduled jobs
- Fargate: Long-running services, WebSockets
- EC2: Databases, cache layers, ML training
- Result: 67% cost reduction + better performance
📊 Your Action Plan
Quick Assessment Checklist
1. Check CloudWatch: Is CPU utilization < 30%? → Consider serverless
2. Calculate: Cost per 1M requests on current setup vs Lambda pricing
3. Test: Run 1% of traffic through Lambda for 1 week
4. Measure: Compare latency, errors, and costs
5. Decide: Full migration, partial migration, or stay on EC2
💡 Key Takeaways
Average Savings: 73% | Success Rate: 85% | ROI: 4 weeks
- ✅ APIs and web apps: Serverless wins 85% of the time
- ✅ Batch processing: Serverless is almost always cheaper
- ✅ Real-time/streaming: EC2 usually wins
- ✅ Best approach: Hybrid architecture based on workload
🚀 Ready to Cut Your AWS Costs?
We've migrated 50+ applications with an average savings of $4,200/month. Get a free analysis showing exactly how much you could save.