CAPEX - CAPTITAL EXPENDITURE
- Buying your own infrastructure
- Initial investment is high – bigger servers …
- Maintenance required
- support staff
- power and networking
- hardware failures
- others…
OPEX - OPERATIONAL EXPENDITURE
- Renting infrastructure – cloud perfectly fits this model.
- cost is based on the usage.
- pay for what you use.
- Maintenance:- services is provided by cloud. you need to have only small operational team.
DIFFERENCE
Capital Expenditure | Operational Expenditure | |
Up front cost | Significant | None |
Ongoing cost | Low | Based on usage |
Tax Deduction | Overtime | Same year |
Early Termination | No | Anytime |
Maintenance | Significant | Low |
Value over time | Lowers(hardware value will be lower) | No change – move to the newest version Upgrade |