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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →37signals estimated in December 2023 that moving workloads off public cloud could save the company $7 million over five years. That was a company forecast—not an audited result. The company had completed its migration earlier that year and separately described its savings as at least $1.5 million per year, using what co-owner and CTO David Heinemeier Hansson called “back of the napkin” math.
The distinction matters: 37signals did not simply stop paying for infrastructure. It bought servers, continued renting data-center space and related services, and relied on an operations team experienced in running its systems. Its figures are a case study in weighing recurring cloud bills against hardware, colocation and staff—not a savings promise for every business.
What 37signals meant by “save $7 million”
In a December 19, 2023 FAQ, Hansson said 37signals ordered $600,000 worth of Dell servers and estimated, conservatively, that the move would save $7 million over the next five years. The estimate belongs to the company; the cited account does not provide an independent audit or a realized five-year savings total.
The number is distinct from two other company figures. In June 2023, after completing the migration, Hansson estimated “at least $1.5 million per year” in savings, explicitly describing that as back-of-the-napkin math. A later company cloud-exit page summarizes projected savings of roughly $10 million over five years. These are claims made at different times and with different framings, not interchangeable measures of verified savings.
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How much cloud spending was 37signals replacing?
37signals’ January 2023 accounting put its 2022 AWS spending at $3.2 million. The company called that budget highly optimized: it said it inspected costs monthly, right-sized resources, used long-term commitments and had a Private Pricing Agreement. The 2022 total is a historical spending figure, not a direct statement of what the company would have spent in each of the five forecast years.
| 2022 AWS category | Company-reported amount | Context given by 37signals |
|---|---|---|
| S3 storage | $907,838 | The company said it stored around eight petabytes with dual-region replication. |
| OpenSearch | $519,959 | Company accounting published January 13, 2023. |
| EC2 and EKS | $759,983 | Company accounting published January 13, 2023. |
| Total AWS spend | $3.2 million | 37signals’ reported 2022 total; the company described it as a highly optimized budget. |
The listed service amounts do not add up to the total because they are selected items from a broader spending breakdown. 37signals said cloud supported HEY and legacy applications and dependencies; current Basecamp and Basecamp 2 already ran largely on company hardware.
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Leaving cloud did not mean building a private data center
37signals owned the servers, but it rented the facilities and services around them. The company bought Dell hardware and leased rack space, bandwidth, power and “white glove” services from Deft. Its August 2023 operations overview identified Deft-run data centers in Ashburn, Virginia, and Chicago, Illinois. The company said its own employees did not need to rack equipment or pull cables.
In the June completion account, 37signals said the purchase added 4,000 vCPUs, 7,680 GB of RAM and 384 TB of NVMe storage. An August overview described an approximate footprint of 90 servers at each site. Both are company-reported capacity figures from 2023, not independent measurements of performance or cost.
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How the migration worked
37signals said the migration took six months and was completed in 2023. It moved services in stages, including databases, cache servers, mail services, application instances and the more complex HEY service. The company reported that HEY moved without a hitch and that it did not need to expand its operations team; those are the company’s accounts, not independently verified results.
- Virtualization: KVM virtual machines running on Dell R7625 servers.
- Applications: Docker containers for containerized services.
- Deployment: Kamal for deployment and rollback.
The approach retained familiar cloud-era tools rather than requiring a wholesale change in how applications were packaged and deployed. That helped make the transition possible for 37signals, but its experience does not establish that another company could migrate the same way or at the same cost.
Why the company said the economics worked
37signals’ October 2022 position statement argued that its growth and demand were stable enough that paying a premium for cloud elasticity did not make sense for its current workloads. In Hansson’s words, “Renting computers is (mostly) a bad deal for medium-sized companies like ours with stable growth.” He also wrote that promised savings from reduced complexity “never materialized” in the company’s experience.
That was not a claim that cloud has no place. 37signals said cloud had helped when it launched HEY and sign-ups exceeded its forecast. Hansson identified very early, simple services and workloads with highly irregular demand as cases where cloud can be useful. His February 2023 description of cloud costs as “grotesque in several key instances” was his opinion about those costs, not a universal pricing finding.
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Cost was also not the company’s only stated motive. In February 2023, Hansson cited independence, support for a distributed internet, a preference for spending on owned hardware and people, and a desire to lead by example. These are the founder’s stated reasons, alongside the financial case.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to judge whether the case applies to another business
The $7 million estimate cannot be transferred to another company without its own cost model. The comparison needs to include more than a cloud invoice and a server quote: it should account for workload patterns, the hardware lifecycle, colocation, labor, service responsibilities and how quickly capacity must grow.
- Demand: Can you forecast usage well enough to plan capacity, or do large, unpredictable spikes make elasticity valuable?
- Stage and complexity: Would managed services save a small or early-stage team substantial setup and operating work?
- Operational capability: Do you already have staff and experience to manage infrastructure? 37signals said the same team operated its services before and after the move.
- Capital and capacity timing: Can your business pay for equipment up front and amortize it over several years? Can it tolerate the delay between ordering hardware and putting it into service?
- Cost concentration: Are storage, databases or compute a large enough part of spending to justify comparing owned equipment plus colocation with cloud services?
- Provider-specific dependencies: Would leaving managed cloud services require replacing capabilities or changing application architecture?
For 37signals, the move combined owned hardware, rented colocation, stable demand, existing infrastructure experience and a particular application setup. Its published figures offer a useful example of the questions to ask, but do not provide an independent total-cost model for other businesses.
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