When does an on-prem server actually cost less than cloud hosting?

Start with the whole cost over the same period, not just the server price versus the monthly compute bill. For on-prem, include hardware, replacements, software licenses, power, cooling, networking, backups and the time spent patching, monitoring and fixing things.

For cloud or a VPS, include compute, storage, backup, data transfer, networking and support. Check license terms too. Then compare setups with roughly the same backup and availability requirements. A single server in an office isn't equivalent to a multi-site setup.

You can estimate break-even by dividing the upfront on-prem cost by the monthly difference in running costs. If on-prem costs less each month, that gives you a rough payback period. It won't capture every replacement or price change, so run it with a few different assumptions.

Steady, always-on workloads are where local hardware can look pretty good. If you're renting cloud VMs all day just to reproduce a server room, you're paying for flexibility you might not be using. That doesn't guarantee a cheaper local setup, especially once support and downtime are included.

Don't dismiss cloud on compute price alone. If demand spikes for a few months, being able to add capacity and then actually remove it can be worth a lot. The same goes for workloads that need geographic redundancy or quick provisioning.

For very small or intermittent apps, usage-based services may also be worth pricing. Look beyond compute though. Database, storage and networking charges can make a cheap-looking design less cheap.

I'd split the workloads instead of making one big cloud versus server decision. Price the website, email, files, backups and internal apps separately. A simple website might be inexpensive to host remotely, while a steady internal app could make sense on local hardware.

Email and backups deserve their own comparison. Running a server doesn't make the work of managing either one disappear, and a local backup alone doesn't address the loss of the site.

The cash flow matters too. A server means paying upfront and committing to capacity that may or may not still fit in a few years. A monthly service costs more predictably upfront, but you're exposed to ongoing charges and price changes. A VPS can be another option to price alongside the larger cloud providers.