How to calculate the ROI of self-hosting your authentication

Understanding the Cost of Self-Hosting Authentication

For many businesses, the decision to self-host authentication is driven by the desire to reduce dependency on third-party services and control costs. However, the true cost of self-hosting is often misunderstood, especially when it comes to calculating the return on investment (ROI).

What Is ROI in the Context of Self-Hosting?

ROI, or Return on Investment, is a financial metric used to evaluate the efficiency of an investment. In the context of self-hosting authentication, ROI is calculated by comparing the cost of self-hosting to the savings achieved by not using a third-party service.

Breaking Down the Costs

When you self-host authentication, you're not just paying for the software; you're also paying for the infrastructure that supports it. This includes:

• Infrastructure costs (servers, storage, networking)
• Engineering time (development, maintenance, troubleshooting)
• Opportunity costs (time spent on self-hosting could have been used elsewhere)

These costs can quickly add up, especially when you're not using a third-party service that offers scalable pricing models.

Calculating the ROI of Self-Hosting Authentication

Now that we understand the costs involved, let's look at how to calculate the ROI of self-hosting authentication. The formula is simple, but the application can be complex.

The Practical Formula for Finance Teams

For finance teams, the formula to calculate the ROI of self-hosting authentication is:

ROI = (Infrastructure Cost + Engineering Time) / (Per-MAU Pricing at Current and Projected Scale)
      

This formula allows you to compare the cost of self-hosting to the savings achieved by not using a third-party service. It's a practical way to evaluate the financial impact of your decision.

Applying the Formula to Real-World Scenarios

Let's apply this formula to a real-world scenario. Suppose you're a business that has decided to self-host authentication using Bastionary. You're currently using 10,000 MAUs and plan to scale to 50,000 MAUs in the next year.

Let's break down the costs:

• Infrastructure Cost: $10,000 per year
• Engineering Time: 200 hours per year
• Per-MAU Pricing at Current Scale: $0.50 per MAU
• Per-MAU Pricing at Projected Scale: $0.60 per MAU

Using the formula:

ROI = (10,000 + 200) / (10,000 * 0.50 + 50,000 * 0.60)
      

This calculation will give you the ROI of self-hosting authentication in your specific scenario.

Why Bastionary Is a Good Choice for Self-Hosting Authentication

Bastionary is a self-hosted authentication and billing platform that offers businesses the ability to control their infrastructure while still benefiting from scalable pricing models. This makes it an ideal choice for businesses that want to self-host authentication without sacrificing the benefits of a third-party service.

By using Bastionary, you can:

• Reduce dependency on third-party services
• Control infrastructure costs
• Benefit from scalable pricing models
• Improve security and compliance

Bastionary also offers businesses the ability to scale their authentication usage while still maintaining cost control. This is a key advantage for businesses that are planning to grow their authentication usage over time.

Conclusion: Making the Right Decision for Your Business

Calculating the ROI of self-hosting authentication is a critical step in making the right decision for your business. By understanding the costs involved and applying the practical formula for finance teams, you can make an informed decision about whether self-hosting is the right choice for your business.

Remember, the decision to self-host authentication is not just about saving money; it's also about the value of the time and resources you're investing in your infrastructure. By making the right decision, you can ensure that your business is not only financially sound but also strategically positioned for long-term success.