Beyond a certain scale, commercial private clouds and OpenStack distributions are cheaper than public clouds, according to the latest Cloud Price Index from 451 Research.

Commercial private cloud offerings from vendors such as VMware and Microsoft offer a lower total cost of ownership (TCO) when labor efficiency is lower than 400 virtual machines managed per engineer, according to the report, which was published today.

This pricing model takes into account the two major factors impacting TCO — salaries and workload requirements.

The report also found that OpenStack offers a better TCO compared to a homegrown private-cloud approach. 451 analysts found the easier installation and management afforded by OpenStack distributions make efficiency more achievable.

But 451 analysts have also found that on a smaller scale, public clouds are the least wasteful option because on-demand provisioning means that enterprises don’t have to invest in capacity.

With private clouds, users have to plan for the right amount of usage. If they plan too much capacity, then resources won’t be utilized, and if there is not enough, then they may not be able to meet demand. Organizations that fail to meet their needed capacity can potentially waste thousands of dollars each month compared to the costs of using a public cloud, according to the report.

However, the report does note that TCO is just one factor that can be taken into consideration when choosing a particular model. Many times, the security and control offered by private clouds outweigh financial gains of either model at any scale.