Gpu Cost Planning

GPU cost planning

An H100 costs roughly the same to own for a year as to rent on-demand for a few months, so the buy-versus-rent answer turns entirely on how busy the card will actually be. Teams overspend by reserving for peak or underspend by bursting a steady workload on on-demand rates. The decision is arithmetic once you have an honest utilization number.

Method

1. Establish a true duty cycle first. Pull weeks of fleet utilization (see gpu-utilization-monitoring) and compute the fraction of hours GPUs do real work, not merely sit allocated. A steady duty cycle above 70 percent argues for owning or reserving; a spiky 20 percent with idle nights argues for on-demand or spot. Plan on measured hours, not aspirational ones.
2. Compute the break-even honestly. Amortize owned hardware over a useful life near three years, add power, cooling, networking, and colo, then divide by expected busy GPU-hours to get a real dollar-per-GPU-hour. Set it against reserved cloud, a one-to-three-year commit at roughly 40 to 60 percent off on-demand, and against on-demand list. Owning usually wins only above about 60 to 70 percent sustained utilization.
3. Layer commitment to the demand curve. Buy or reserve the steady baseline, burst the peaks on on-demand, and run interruptible work such as checkpointed batch training on spot at a 60 to 90 percent discount. Never reserve for peak: the reserved GPUs you cannot keep busy erase their own discount.
4. Price in lead time and capacity queues. New H100 or H200 capacity carries weeks-to-months lead time for owned hardware and can be quota-limited or waitlisted even in the cloud. If the roadmap needs GPUs in Q3, a cheaper owned option arriving in Q4 is not cheaper. Hold a reserved or on-demand bridge for the gap.
5. Count total cost, not the sticker. Add interconnect (InfiniBand or NVLink switches), storage, egress, the ops headcount to run a cluster, and idle-time overhead. Cloud folds these into the hourly rate; owned hides them. Egress and cross-zone traffic in particular can dwarf the compute line for data-heavy jobs.
6. Revisit on a fixed cadence. GPU prices, new silicon that can cut cost per token by two to three times, and your own utilization all move. Re-run the break-even quarterly and before any multi-year commit, and keep the commitment horizon shorter than the hardware stays competitive.

Litmus tests

• Is the buy-versus-rent call backed by a measured duty cycle, not a hoped-for one?
• Does the break-even include power, cooling, networking, and ops, not just the card?
• Is the steady baseline committed and only the spiky peak left on on-demand or spot?
• Does the plan account for procurement lead time and cloud capacity quotas?

Boundaries

This sizes and sources capacity; it does not tune the workloads that fill it or negotiate the contract. Utilization inputs come from monitoring (gpu-utilization-monitoring), and raising real utilization through sharing is a separate lever (gpu-sharing-mig). Final commitments still depend on your finance team's cost of capital and risk tolerance.