Tony Stratton, driver of strategic growth in cloud innovation across the Asia-Pacific region
TL;DR
Compute costs are climbing faster than most Australian MSPs built into their customer pricing, and unstructured data — customer backups, logs, archives — is usually the biggest unmanaged cost sitting inside that squeeze. Tiered storage is the standard fix, but only with a provider whose pricing model doesn’t compete for the customer relationship you built. This piece covers what tiered storage and storage tiering actually mean, where unstructured data quietly erodes margin, and what to look for in a tiering partner before your next customer renewal.
Most Australian MSPs didn’t price their storage offering around a 90 percent jump in the hardware cost behind it. But that’s roughly what happened: conventional DRAM pricing rose 90 to 95 percent quarter-over-quarter in early 2026, and that kind of cost pressure flows straight into the storage bill an MSP has already quoted a customer, whether or not anyone agreed to absorb it.
The MSPs feeling it hardest are the ones managing large volumes of customer unstructured data — backups, media, logs, archival records — sitting in storage that was never actually tiered by access pattern. Hot-tier pricing on cold customer data is one of the most common, least-visible sources of margin erosion in an MSP’s storage line, and it compounds every time the underlying compute cost moves.
Tiering is supposed to solve this. The problem is most MSPs either never finish the tiering work across every customer, or they’re reselling a platform whose tiering model doesn’t actually protect margin because the vendor prices unpredictably or because the vendor sells direct and competes for the same customer relationship the MSP is trying to protect.
What is tiered storage, and why does it matter for MSP margins?
Tiered storage matches data placement to access frequency, so margin isn’t absorbed by premium pricing on data clients rarely touch.
For an MSP quoting storage as part of a managed offering, tiering is the biggest lever available to protect margin without cutting client-facing performance — but only if the tiering reflects real usage, not a one-time setup that’s never revisited.
What is storage tiering, and how does it protect customer billing predictability?
Storage tiering continuously reclassifies data by access pattern, so cost control compounds instead of decaying after the first migration.
Data that’s hot today — an active client project, a recent backup — becomes cold within weeks or months. A tiering approach that only runs once at onboarding stops protecting margin the moment a client’s usage pattern shifts, which is most clients within a quarter.
How does unstructured data erode reseller margin if it isn’t tiered?
Untiered unstructured data sits in expensive hot storage by default, quietly consuming margin on data nobody’s actively accessing.
Australian organisations face four compounding cost variables in hyperscaler storage billing — egress fees, minimum duration charges, API request fees, and USD exchange rate exposure — none of which appear in initial estimates.
Client backups, logs, and archival records are usually the largest share of storage under an MSP’s management, and the easiest to leave untiered because no one’s actively watching it day to day. Left in a default hot tier, it becomes the most expensive storage an MSP carries relative to how often any client ever opens it.
Why are cloud storage costs rising for Australian MSPs right now?
Underlying compute and memory price increases are flowing into storage billing independent of any change in client usage.
Conventional DRAM pricing rose 90 to 95 percent quarter-over-quarter in early 2026 — a cost increase vendors pass through in one form or another. Combined with 85 percent of organisations already citing cloud spend management as a top challenge, Australian MSPs are absorbing cost pressure they didn’t create and can’t fully offset through client usage discipline alone.
What should Australian MSPs look for in a tiered storage partner?
Look for transparent, usage-matched tiering, flat egress pricing, and a channel-only vendor that won’t compete for the client relationship.
The advertised per-gigabyte rate is the least useful number here. What actually protects margin: whether tier pricing is predictable, whether moving or retrieving data triggers extra fees, and whether the vendor sells exclusively through partners or is willing to go direct to the same client an MSP has already won.
Want to see where your storage costs actually land?
Explore ThinkOn’s most cost-effective cloud storage options in Australia and see how tiered, channel-only pricing keeps client billing predictable. See Cost-Effective Cloud Storage in Australia.
Key statistics and sources
- 17% average cloud budget overrun in 2026 — AI workloads driving wasted spend up for the first time in five years (Flexera 2026 State of the Cloud Report)
- 49% of total cloud storage spend accounted for by fees beyond base capacity — egress, API, minimum duration (Wasabi 2025 Cloud Storage Index)
- 41% of one AWS S3 bill came from fees beyond storage capacity alone (Wasabi, 2025)
- 84% of organisations rate managing cloud spend as their top cloud challenge (Flexera 2025 State of the Cloud Report)
- A$50 million or 30% of adjusted turnover — maximum penalty under the amended Privacy Act 1988 (OAIC, 2024)
- $0.05–$0.20 per GB egress fees charged by major hyperscalers (EgressCost.com, April 2026)
Sources: Flexera 2026 State of the Cloud Report; Wasabi 2025 Cloud Storage Index; Flexera 2025 State of the Cloud Report; OAIC Privacy Act 2024 amendments; EgressCost.com April 2026; APRA CPS 230 July 2025.
Glossary
Object storage: A storage architecture that manages data as discrete objects — each with its own metadata and unique identifier — rather than as a file hierarchy or block structure. It is optimised for large volumes of unstructured data such as backups, logs, archives, and media files.
Object lock (WORM): A data protection mechanism that makes objects immutable for a defined period — they cannot be modified, encrypted, or deleted. WORM stands for Write Once, Read Many.
S3-compatible: Refers to storage systems that implement Amazon S3’s API interface, allowing any backup or application tool built for S3 to connect without reconfiguration.
Egress fees: Charges applied by cloud providers when data is transferred out of their environment — to another provider, to on-premises infrastructure, or to the internet. Major hyperscalers charge between $0.05 and $0.20 per GB for egress.
Data sovereignty: The principle that data is subject to the laws of the country in which it is stored and processed. In Australia, this has specific legal implications under the Privacy Act 1988, the Privacy and Other Legislation Amendment Act 2024, and APRA CPS 234.
Immutable backup: A backup copy that is protected by object lock, preventing ransomware, accidental deletion, or malicious insiders from altering or destroying it during the lock period.
